When applying for a mortgage or loan with banks, borrowers will typically be required to provide some form of security. When purchasing a home, the security will automatically be the house. For secured loans, many use their homes as security.
In either instance, the security provides lenders with a method to recover their money if borrowers default on the loan. With the permission of the court, lenders can seek a house repossession order and thereafter, sell the house in an auction. However, lenders use repossession as a last resort as their profit margin will be greatly affected.
If you are faced with the threat of home repossession, ensure that you are in constant dialogue with the bank. Ask for their help and suggestions instead of avoiding their calls. This will, at the very least, give you an extra few months to sort through your finances.
Once banks or financial institutions are satisfied that they can no longer expect a repayment from borrowers, they will instruct their solicitors to commence with the house repossession process. They are legally required to serve you with a notice of this. Lenders also reserve the right to end the loan agreement due to the default by issuing a calling up notice, which requires borrowers to immediately repay the entire loan amount.
However, the recently updated Land and Conveyancing Law Reform Act 2013 has provided additional layers of protection for consumers. For instance, even after a lender has filed for repossession, borrowers can defer the judgement under the Administration of Justice Act 1970, if they can satisfy the court that they are able to repay the overdue amount and resume loan repayment within a reasonable amount of time.
Please note however that borrowers are wholly liable for court costs, including that of the lender, if they fail to convince the court. As such, it remains in the borrower’s interest to maintain a dialogue with the lenders and persuade them to accept a repayment plan well in advance of any legal action.
Once the court issues a Section 24 notice and writ, borrowers must vacate their home. Otherwise, court sheriffs can use any and all means to remove you and your possession out of the house.
If you are facing a personal crisis, such as loss of employment or illness, and expect to have trouble meeting your terms of repayment, quickly get in touch with the bank. You might be surprised at the extent they will go to help you out. It is not unheard of for banks to grant borrowers waivers of several months to help them get their finances in order.
If the situation has progressed to the legal stage, make sure to speak to a property solicitor to ensure that you are receiving accurate and timely advice. Remember, it is never too late until a Section 24 Notice has been issued.
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