The repossession process is perhaps one of the most stressful occurrences that a person endures. When it is your home in danger of repossession, the stress if magnified even more. But thankfully, there are some saving graces in your corner if this mortgage shortfall should happen to you. A bridging loan may just be what you should consider.
A bridging loan can be used to avoid repossession on a house if there is enough equity in the home and the lender is willing to accept. A bridging loan secured in this manner will help you avoid the repossession process and allow you to remain in your home while you catch up the monthly payments.
Here at Bridging Options, we know how stressful it can be to face home repossession. That is why our team of loan specialists are on hand to provide you with as much assistance as we can when you seek a last resort.
What is repossession?
If you have missed payments with your mortgage or leasing company, or you have defaulted on a secured loan with your house as collateral, can seek to settle the deficiency balance. Your mortgage lender has a financial stake in your property, so can take court action to reclaim your property.
This is known as repossession.
Repossessing a home should be a last resort. With this in mind, mortgage laws give your lender the right to seek legal action once you’re in arrears for 90 to 180 days.
How does repossessing a home work?
First, your lender will contact you about your arrears to try and find you a repayment plan so that you don’t lose your house.
If you both are unable to come to an agreement or, if you are unable to uphold the payment plan, the lender will typically begin the the process to repossess.
Before the lender can do this, they must provide you with a list of outstanding payments, arrears, and also your outstanding mortgage. Failure to do this can find the lender in default according to the protocols regulated by the financial conduct authority.
How long does repossession take?
The time it takes for the entire process to play out can vary. The courts will prepare the paperwork and set the date, time, and place for the repossession hearing to take place. The courts will also seek to clarify any outstanding mortgage and debts, as well as to clarify any repayments that were not met.
Once this hearing has taken place, the courts will then decide if you can stay in the property or whether you have to leave.
But what exactly happens during a court hearing for repossession?
What is a repossession court hearing?
As mentioned, receiving notice of a court hearing does not automatically mean that you will lose your home. The hearing will not be overly formal, and you will be given the opportunity to explain your circumstances and also position your repayment plans to the court this time.
It is important to bring all important documents pertaining to the mortgage, in addition to paperwork for any secured loans or any existing loan if this was part of the mortgage arrangement.
The lender and applicable solicitors will also explain their stance before a judge. The judge will ultimately make the final decision having heard both sides of the argument.
The entire hearing may only take between 5 to 20 minutes once in the judge’s chambers.
What happens after house repossession?
After your home is repossessed, not only do you now have to grapple with the stress and uncertainty of find a new home, your credit score, credit history, and credit file will show red flags on your credit reports.
In short, this is not something that you want to allow to happen. The best thing that you can do is to contact your lender if you think you will miss any payments.
The reason you should do this is because then the lender will likely come to an agreement to have you pay off the debt, which avoids this messy and detrimental process.
But there are other options to consider.
How bridging finance can be used to clear mortgage arrears
A bridging secured loan are one of many types of secured loans that you can consider if you are able to borrow money.
At Bridging Options, there are two main types of bridge loans that you can choose between:
Closed bridge loan
This type of secured loan requires borrowers to have a set date for repayment at the outset. This means that the borrower has a credible payment plan and can inform your lender of your exit strategy.
This may involve the sale of a property or the securement of longer-term finance. This type of bridge loan carries less risk for the lender, and therefore, tends to be offered with better rates of interest. Closed bridging loans account transactions are usually settled within a couple of months.
Open bridge loan
This type of secured loan can be taken without a specific end date or an exit strategy in place for the future. In other words, this type of secured loan is much more flexible, often with open ended repayment terms and is commonly used to obtain funds for urgent transactions without the immediate worry to repay.
This type of bridge loan carries significant risk to the lender and for this reason, the rates for an open bridge loan, inherently tend to be higher.
For the sake of avoiding a repossessed home, and granted that the lender is willing to accept repayments based on property equity, an open bridge loan may be perfect for settling the mortgages.
What are the costs?
When taking out a bridging loan, most people only consider the amount they want to borrow and look for the lowest rate possible. The trouble with doing this, however, is that the combined cost rarely equals the final amount as there are often large exit fees, fund management fees and other ‘hidden’ charges.
Contact us today to discuss the best rate possible pertaining to your situation.
Why choose Bridging Options?
At Bridging Options, we know how hard it can be when a lender wants to repossess due to debt. We regularly help clients with this issue, and strive to find ways to help those facing the prospect of losing their homes or property.
For more information on bridging loans, rates and repayment options, and how an open, new loan can help you avoid losing your home, contact us for an informal chat and a free, no obligation quote.
Experts in bridging loans, our friendly financial specialists are available for you to call or contact online today for expert advice.