We take a look at what you should do if you are struggling to pay your mortgage, or if your rental home is repossessed.

Home repossessions are used as a very last resort by lenders.

However, the number of repossessions is starting to increase as people struggle with the cost-of-living squeeze.

A total of 700 properties were taken back by lenders during the three months to the end of September, 15% more than during the previous three-month period, according to mortgage trade body UK Finance.

There was also an 11% jump in the number of buy-to-let homes that were repossessed, with 390 landlords losing properties after falling behind with mortgage payments.

However, the number of properties being repossessed represents less than 1% of cases where homeowners have fallen into arrears with their mortgage repayments.

The proportion was slightly higher for landlords, with just under 7% of mortgage arrears cases leading to repossessions.

Right now, 74,440 homeowners and 5, 760 landlords are currently in arrears of more than 2.5%.

A separate report by the Ministry of Justice shows that while repossession figures have increased significantly compared with the previous year, they are still around a third lower than the level seen before the Covid-19 pandemic.

Why is this happening?

There are two factors driving the increase in repossessions.

1: Higher food, petrol and energy prices, combined with rising interest rates, has made it harder for some people to keep up with their mortgage repayments.

2: Measures that were put in place to stop people losing their home during the pandemic have now come to an end.

What should I do if I’m struggling with my mortgage?

If you are struggling to pay your mortgage, it is important that you contact your lender as soon as possible.

Regulators require banks and building societies to work with people who run into difficulties and only repossess their home as a last resort.

Contacting your lender sooner, especially before you miss a mortgage payment, will open up more options to you.

There are a number of steps lenders can take to help you if you are struggling.

These include increasing your mortgage term, for example allowing you to repay your mortgage over 30 years rather than 20 years, or changing you to an interest only mortgage for a period of time.

Both of these options will significantly reduce your monthly mortgage payments.

They may also grant you a mortgage payment holiday for a period of two to three months to help you get back on your feet if, for example, you have been made redundant.

During this period, the interest that you don’t pay will be added to the outstanding amount that you owe. The payments you have missed will also have to be made up at a later stage.

Another option is to defer mortgage payments for a set period of time, after which the payments you have missed will be added to your monthly repayments and made up over the course of a year or two.

What are my rights if my rental home is repossessed?

If you rent your home, the prospect of your landlord having the property repossessed can be very stressful.

The good news is that in some cases you have the right to stay on in the property, for example if your tenancy is binding on your landlord’s mortgage lender.

It may be binding if the lender agreed to the tenancy, if you were already living in the property when the mortgage was granted, or if the lender has recognised your tenancy in some way, such as by asking you to pay rent to them.

If your tenancy is not recognised by your landlord’s lender and you do not have the right to stay in your home, you can still delay having to leave by up to two months.

You can do this through making an application to the court during the possession hearing, at which point the judge can agree to delay the date on which you must leave.

Unfortunately, you will have to pay a fee to make an application to the court.

If you miss the hearing when the possession order is made, you have another opportunity to ask for a delay when the mortgage lender applies for a warrant of possession.

Before the lender is allowed to evict you, they have to send a notice to your home saying they have applied for a possession order.

At this stage you can apply to the lender to delay repossessing the property for up to two months.

If the lender refuses or does not reply to you, you can apply to the court instead, but you will need to move quickly, as the court can issue a warrant of possession within 14 days of notice being sent to your home. You will also have to pay a fee.

The process can be a bit complicated, but charities such as Citizens Advice are able to help you establish whether you have a right to stay in the property.

They can also help you to apply for a delay in leaving it.

Key takeaways

  • Home repossessions rose by 15% to 700 properties in the three months to the end of September
  • There was also an 11% jump in the number of buy-to-let homes that were repossessed
  • If you’re struggling with your mortgage contact your lender as soon as possible, if you rent your home you may be able to stay in it, even if it is repossessed