How to avoid repossession of your home with Equity Release
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How to avoid repossession of your home with Equity Release
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Equity Release can be used to repay Mortgages in arrears & debt. How much cash are you entitled to? Updated November 2022
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Remortgaging when in arrears to avoid repossession
If you are behind on your mortgage payments and have received letters from your mortgage lender regarding arrears on your mortgage, this means you have missed more than one month of mortgage payments.
If the situation continues your home could be repossessed, which is when your mortgage lender takes ownership of your home. They will then normally sell it at auction to recover the amount they are owed on your mortgage.
Repossession is a last resort and most lenders will work with you to try resolve the situation.
But if you’re struggling financially and in arrears releasing equity to repay your mortgage is one option to consider.
Can You Get Equity Release With Bad Credit?
You may qualify for equity release if you have a bad credit score due to arrears or defaults on your borrowing.
The sooner you seek expert advice the better, as dealing with the situation to find a suitable solution may improve your options with equity release lifetime mortgage lenders.
Request further information and an adviser will be in touch to discuss your requirements.
By submitting this form you agree to be contacted by our regulated partner to confirm your details and provide a comparison and quotation based on additional questions about your circumstances. Any personal data provided through this form will be processed in accordance with our Privacy Notice.
How long can your mortgage be in arrears before repossesion?
Lenders must use repossession of your home only as a final resort.
Most lenders won’t commence repossession proceedings until three months of arrears have occurred, and should refer you to independent debt advice for support.
If your mortgage is in arrears this can be a daunting time. Your lender will expect you to either sell your home or remortgage, which can be difficult when you are in arrears. If you are concerned about your lender repossessing your home and you are over 55 you may be able to remortgage to a lifetime mortgage.
The Limitation Act 1980 sets out the timescales for the lender to take action, such as court action or bankruptcy, to recover a mortgage shortfall. The limitation period is twelve years for any capital owed, and six years for the interest part of the shortfall. This means you are still liable to pay even if you have lost your home.
As a solution to avoid repossession when you are in arrears, lifetime mortgages are generally more flexible than mainstream mortgages, as repayments are flexible and the underwriting process is not based around your income or affordability. You may benefit from remortgaging to a lifetime mortgage to avoid repossession of your home.
Equity Release To Avoid Repossession FAQs
Using Equity Release To Repay Mortgages & Debts – FAQ’s
Can you take out equity release to pay off an interest-only mortgage?
Equity release can be used to repay an interest-only mortgage. Seeking expert advice is important to establish how equity release will affect your estate, as unlike typical mortgages, making repayments is optional, with an element of compound interest to consider when repaying your mortgage with equity release. Request an interest projection from your equity release adviser.
Most equity release lenders allow voluntary repayments to be made to enable you to maintain control of the interest costs on the mortgage.
Some equity release also plans allow a regular standing order payment to be arranged to maintain interest payments on the equity release lifetime mortgage plans.
Because equity release plans can be arranged on a 'drawdown' basis, this provides you with more control over when the money is taken, this really depends on your own circumstances and when you require access to the equity release money as to the best age to take out cash.
You can arrange a smaller lump sum to start with, and access the remaining equity release when you are older, at the best age for your own specific requirements when taking out equity release.
Using equity release for debt consolidation can help reduce financial pressure If you have a tight monthly budget, as equity release can offer much more flexible repayment terms.
This can free up more disposable income for bills and living costs, making using equity release to pay off debts an option to consider, especially If you are struggling with debt repayments.
Can you get equity release if you have debts or arrears?
Yes, you can still get equity release if you have arrears and the equity release lenders are more flexible especially if your debts are being repaid from the monies borrowed.
Any debt secured on your property will need to be repaid in full. You can repay these with the equity release cash you are taking out and this may also help reduce your outgoings and the financial pressure of your current commitments.
An expert equity release adviser will provide personalised illustrations on your options and ensure you are making an informed decision on repaying debts with equity release.
The main downside of equity release is the interest can compound (accumulate) and reduce the equity in your home for your beneficiaries, or your future care provision.
However, you can protect an inheritance with many lenders and make voluntary repayments to control the compound interest accruing. There is also a 'no negative equity guarantee' to protect your estate which is an Equity Release Council requirement for lenders and to ensure you and your family are protected.
An expert equity release adviser will provide personalised illustrations on your options and ensure you are making a safe, informed decision on equity release.
Can I give my house back to the bank UK?
Surrendering your home is a last resort.
Do you want to move home or are you struggling to pay your mortgage repayments?
You should seek financial advice before taking this step.
There are various costs involved if you want to sell your house.
You’ll need to pay for legal costs and the estate agent’s fees.
You may also need to pay for removal costs or a deposit if you’re moving into rented property.
If you are in mortgage arrears extra costs may be difficult to manage.
An alternative option to consider is equity release, which can be used to repay an existing mortgage and avoid moving home.
How long can a mortgage company chase you for debt?
If you are being chased for mortgage payments this can be a worrying and stressful time.
Talk to the mortgage lender to arrange to pay the arrears.
If you don’t repay the mortgage and arrears, they have 12 years from the date you missed a payment to take you to court to recover the money.
An alternative option to consider is equity release, which can be used to repay an existing mortgage and avoid moving home.
Why would I be refused equity release?
You may be refused equity release if you owe more money than you have in equity in your home.
You may be refused equity release if your home valuation is insufficient for lending purposes. The minimum property valuation is £70,000.
Compare My Equity put you in touch with Later Life Finance, industry experts in unlocking tax free wealth from your home.
Our equity release comparison service ensures you secure the best possible solution for your requirements.
Get in touch with us for a quote and we can discuss all your options.
IVA Alternatives
The Alternatives to an IVA
- Moving home
- Equity release
- Debt Consolidation.
- Debt Management Plan.
- Bankruptcy and Debt Relief Order.
- Administration Order.
Modern equity release plans are flexible and secure. Repayments on equity release mortgages are voluntary, therefore you have guaranteed home ownership for life. You can continue to enjoy your home in the years to come, whether you choose to make payments or not.
You retain full home ownership & security for life. Request your quotes today.
How do you avoid legal action or repossession?
How do I stop my house from being repossessed?
How to stop repossession
- Keep talking to your lender about your situation.
- Discuss your financial situation with professional experts, such as a financial adviser
- work out a repayment plan.
- Find out if equity release is an option to repay your mortgage
We can put you in touch with a qualified expert who will explain how equity release and lifetime mortgages work, and they will also search the entire market for your best possible deal.
You will receive detailed written illustrations to make an informed decision and to discuss with your family.
There’s no obligation to proceed and no upfront costs payable.
Debt Management Plans and Lifetime Mortgages
Will a debt management plan stop me getting a lifetime mortgage or equity release?
Your debt management plan would normally need to be repaid from the funds released.
We search the equity release market to determine how much tax free cash you can raise for your plans.
Use our quotation service to access interest rates and providers.
How long after debt management plan can I get a mortgage?
The DMP allows you to combine your monthly debt repayments into one amount.
But if you intend apply for a mortgage in the future you may be wondering how this debt solution affects you.
Your debt management plan would normally need to be repaid from the funds released.
Can you get equity release if you have a debt management plan?
With equity release you can take a tax-free cash lump sum for managing debt or supplementing your retirement finances.
Request a quote on gifting an inheritance and our expert advisers will help you find the correct solution for your personal needs.
Can You Get Equity Release To Pay Off Debts?
Equity Release has been around for many years and is becoming more flexible due to lifetime mortgages offering the option to make repayments to manage the interest. Firstly, most lenders have voluntary repayment features to allow regular interest payments.
Secondly, using equity release to repay credit cards, loans and mortgages can help you budget more easily with flexible repayment options.
Thirdly, and most importantly, equity release lifetime mortgages do not require mandatory repayments. Making payments is optional meaning you can choose to pay as little or as much of the interest as desired. If you do not pay anything back towards the interest it will compound and grow. A good equity release adviser with a reputable broker will provide you with projections of interest and explain these options in greater detail.
Many people query whether it is smart to use equity to repay debts. This depends on whether it will help your monthly cash flow and improve your overall ability to budget. If this is the case it can be beneficial to repay debt from your home equity.
Whether you plan to raise cash to consolidate debts or to cover daily living expenditure equity release can provide a cash injection to help.
Importantly, since this equity can be taken out tax-free, the mortgages provide an attractive & economical method of raising cash to enjoy and enhance your quality of life with a cash injection using a lifetime mortgage.
Considering Equity Release To Remortgage & Pay Off Your Debts?
Equity Release can be used to remortgage consolidate debt and reduce your monthly outgoings.
A frequent question is whether it a good idea to remortgage and repay debts from your equity. An important consideration is extending the overall cost and term of any debts repaid. This, along with the benefits of repaying debts from equity released can all be taken into account to ensure you are making the correct decision for your requirements.
Repaying debts from equity release can help increase your disposable income for managing bills and general living costs, especially if debts are becoming unmanageable.
A remortgage can take between 6-10 weeks on average, depending on your lenders internal processes and whether a valuation is required.
A typical remortgage will require mortgage advice and a valuation and then a mortgage offer will be issued confirming the lender is able to assist with the borrowing required.
How To Pull Equity Release Out Of Your House in The UK
Taking equity out of your home can boost your overall finances if you are consolidating debts.
Pulling equity out of your home to repay a mortgage can help you manage your finances more effectively.
Our equity release comparison service can help you repay your current mortgage
We can save you money with exclusive plans
Frequently Asked Equity Release Questions
What’s the difference between Equity Release & Lifetime Mortgages?
Equity Release is simply a term for raising equity. An equity release lifetime mortgage is the most common method of safely accessing this equity from your home, tax-free.
What are the typical interest rates available?
Equity Release interest rates are fixed for life, depending on the amount of money required as a lump sum and also any reserve facility taken. Request a quote today for a current market analysis.
The initial lump sum has a lifetime fixed interest rate which is agreed at the time of taking an equity release plan.
The reserve, also known as a drawdown facility is charged at the interest rate applicable at the time of borrowing the further funds.
Are lifetime mortgages safe?
All lifetime mortgage UK lenders are all fully regulated by the financial conduct authority (FCA).
Your lifetime mortgage quotes will only be from Equity Release Council Plans for your added peace of mind. The council are the industry trade body who provide several codes of conduct for your added security, including the essential guarantee you will never enter into negative equity.
Can I make repayments with equity release?
Usually you can repay up to 10% of the amount borrowed within any 12 month period. This is on a flexible basis and completely voluntary.
How do I find the most suitable option for me?
Understanding your options and suitability is important to making the best decision for you.
We can put you in touch with an expert who will review and assist with this process to compare equity release schemes and interest rates for you. We compare the entire equity release market to find your best solution.
The specialist broker we put you in touch with operate a zero-pressure policy, and will answer all your questions to ensure you are fully informed with no commitment.
Do I have to sell my home?
The most common form of raising equity is a lifetime mortgage where you maintain 100% full home ownership for the rest of your life, or joint lives where applicable.
Importantly, you can still move home if you wish and repay or move the mortgage with you.
Can I use my equity for early Inheritance or for tax-planning?
An equity release lifetime mortgage can be used for estate planning purposes. When you request your quotes, we will put you in touch with an expert adviser to discuss this in more detail.