Voluntary Repossession Explained | Need HELP? FREE Impartial Property Advice
What is voluntary repossession?
Voluntary repossession is when you are unable to continue paying your mortgage, so you give your keys to your mortgage lender without going through the normal repossession court proceedings. Although you may be avoiding the stress of legal proceedings, this should only be considered as a last resort.
What are the benefits of voluntary repossession?
If you are facing real financial difficulties and the likelihood of you being able to pay off your mortgage arrears is increasingly slim, your mortgage lender may suggest that voluntary repossession is an option that will help you avoid stress and credit black listing. A voluntary repossession is much like a normal repossession except you avoid going to court and once the keys are handed over you will put an end to the stream of demands and threats from your lender. Although you may save yourself some hassle, the reality is voluntary repossession is likely to lose you money and leave you in even more debt.
What are the disadvantages of voluntary repossession?
Where to start! The biggest drawback of voluntary repossession is that your debt is likely to increase. Although you have handed over the keys to your house you are still liable to pay the mortgage until the lender sells your home, whilst having to pay for other accommodation for yourself. Once you hand over your keys the decision of voluntary repossession is final and you have no control over the sale of your home so the longer it takes, the more costs could be mounting up that you are expected to pay. On top of this when your house is sold it is likely to be sold for less than its market value if a low offer is accepted or it is sold at auction. If it is sold for less that the amount that you owe, you have to pay the difference.
What costs will I have to pay if my mortgage lender sells my house?
There are lots of costs associated with selling a house, all of which you will have to pay. These could include auctioneer costs, estate agents fees and bills for repairs before the sale. Because the mortgage lender knows that you have to cover these costs they may not be looking for the cheapest and best deal for you. From the sale of your house you will be expected to pay the original amount you borrowed from the lender, plus interest, buildings insurance, arrears and penalty charges and council tax. With these charges mounting up it is very likely that the sale of your house will not be the end of your debt-problems, only the beginning.
What are my other options?
If you have exhausted remortgaging or different repayment plans to stop the repossession of your house, you should consider selling your house yourself. As you can see from the information above, voluntary repossession should only be considered as a last resort. You have no control over the sale of your house but you are still liable to pay the fees incurred and your mortgage until it is sold. Selling your house quickly yourself to a cash-buyer means that you are still in control of what offer you accept. Moreover once accepted the process can take less than 28 days, after which time your mortgage and debt could be paid off.
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