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Figures for the amount of repossessions in the UK show a rise of 70% in 2007. With homeowners increasingly reliant on loans to help them make repayments for their mortgages, a spiral of debt is sweeping Britain, leaving many homeowners with no savings and, in some cases, no homes.
Figures for the amount of repossessions in the UK show a rise of 70% in 2007. With homeowners increasingly reliant on loans to help them make repayments for their mortgages, a spiral of debt is sweeping Britain, leaving many homeowners with no savings and, in some cases, no homes. There is also a nasty sting in the tail for some who believe themselves to be debt-free, even after repossession. Because of the rising tide of enforced property sales, many mortgage lenders are in a hurry to sell on the properties to recoup their losses. Often, this means that they are not getting the best price for the house and the evicted homeowner still finds that they owe the lender considerable sums of money. Sometimes properties can be sold for up to 40% less than market value. In response to this criticism, lenders state that when it comes to the selling of a repossessed home, they turn to professional advice. Standard industry practice dictates that the lender has an obligation to ‘obtain the best possible price within a reasonable timeframe.’ Between April and June of 2007, the courts issued 32,922 mortgage possession claims. A mortgage possession claim is the first part of the process, in which the lender applies to the courts for actual repossession of a residential home. However, it seems that most of these did not end in full repossession, as the borrowers are given the opportunity to present a case for not proceeding, or even came to an arrangement with the lenders in question. Lenders resort to repossession if the lender is unable to make repayments. Usually they will allow two months of default before the process starts, although if the borrower makes contact, usually an agreement can be arranged. However, if it cannot, the lender will then make an application to the County Court to begin the procedure in earnest. If the arrears continue for 4 – 6 months, the lender will then contact their solicitors. The solicitors then write to the borrower, demanding full and immediate payment of the loan or repossession will take place. In this event, a date will be set by the County Court, at which the borrower is expected and advised to attend. Courts tend to view repossession as a last resort and may make any number of decisions during the hearing. If the case needs further information or the borrower is absent, they may decide to adjourn in which case a new date will be set. If the arrears have been paid in full by the time of the hearing, the court may decide for Dismissal or Indefinite Adjournment, allowing the borrower to contact the lender again and try to reach an arrangement. If this conclusion is not reached, the court may grant an order for Possession, in which the lender is entitled to repossess the borrower’s home after a fixed time period, which is usually a month. This, again, offers the borrower a chance to try and make the outstanding repayments or reach an arrangement with the borrower. Another option is for the court to grant a Suspended Order for Possession, which means that a full month’s repayment is immediately payable while the aggrieved parties reach an agreement over the arrears. If the borrower defaults, then the lender is entitled to immediate possession of the home. The final option available to the court is a Notice of Eviction. In this event, a date and time is set and the borrower is escorted from their home. It’s important to be realistic when taking out a mortgage or large loan, a worthwhile first step is to make use of one of the many readily available loan or mortgage calculators, most major lenders should have one on their website (there’s one on the Natwest loans page for instance). This should help clarify in your mind how much you can afford to borrow and what sort of repayment arrangement would best suit you. It’s also a good idea to consult a loans comparison site (again there are plenty out there – USwitch or the loans centre on fool.co.uk are good examples) to ensure you find a good deal. At the time of writing the Alliance and Leicester personal loan and the Moneyback Bank Personal Loan were top of the Motley Fool best buy table.
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Article Added Saturday, 08 September 2007 | 1496 Hits |
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