The figures for mortgage repossession have increased sharply according to the Department and Constitutional Affairs. The figures showed that the number of households in England and Wales in the early stages of eviction process had risen by 50% over the past year to 31,018, the highest level since 1993! Actual orders (made by courts to repossess a property) however have risen at a higher rate of 58% over the last 12 months, to 18,784.
The overriding reason behind this rise has been interest rates that have been kept consistently low for a very long period which has given an over confidence in a market where a cooling effect on house prices never transpired. The overall economy has given rise to an increasing number of homeowners but in terms of a percentage of overall home repossession cases, this has actually reduced.
The advice on repossession for people who are facing repossession is primarily to agree a schedule with the mortgage lender that would satisfy the court, as the decision to repossess is made by the circuit judge and not the mortgage lender, this is called an arrangement. The amount that is offered by the individual should not be derisory, nor should it be unrealistic as this would only lead to a possible default on the arrangement that was put in place and only serve to play into the hands of the lender.
So what is a reasonable amount to offer? This is very dependant on a number of factors, such as the level of arrears, previous conduct of the account, affordability etc. . Essentially if the arrears are in the region of Ł5000 and an offer of Ł50 per month was made, it would take 100 months for the arrears to be cleared, this would be disregarded by the lender but probably agreed by the Judge. However the wider picture is that the arrears would accrue administration costs and other fees including compound interest, in reality these would outweigh the Ł50 contribution and only serve to slow the rate of increase down of the arrears balance.
What is the alternative? The simple answer is to pay the arrears off in one go by either a secured loan or remortgage, two solutions for two different problems. The main problems with using a secured loan to pay off the arrears is you end up with two debts and two payments, and this will be at a very high rate anyway. Secondly you would need "consent" from your current lender to have a secured loan the, perversely this is more often than not refused because you are in litigation in the first place.
If you consider a remortgage this would give a completely fresh start but you may be ties in with a early repayment charge for two to three years. The current mortgage may have one of these so it would need to be factored in when considering your options, a good mortgage broker who specialises in house repossession can help with this by considering all the facts.
Advice on Repossession from Evict Stop - the UK's foremost dedicated repossession specialists. |
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