I cannot pay the mortgage on my house at the moment and I would like to know what possible action the lender take against me and how soon they can repossess my house?
Can you please explain what action a lender can take if I default on my mortgage?
The Answer from Solicitors Online
If a person defaults on their mortgage there are four well-known courses of action that a lender can take. These are foreclosure, sale, taking possession and appointing a receiver.
Foreclosure of a property can be taken at any time after the legal redemption date has passed.
The legal redemption date is a specific date in the agreement, if by this date the borrower is still arrears on their mortgage, the remaining amount left on the mortgage becomes repayable by that specific date.
Foreclosure gives ownership of the property to the lender and cancels the borrowers right ever to pay off the mortgage and retain the property.
Sale of the property
Under Section 101 and Section 103 of the Land Property Act 1925 the lender can have the right the power to sell the property, without the need to get permission from the borrower. This power arises when certain conditions are met.
The conditions are
(a) The mortgage must have been made by deed
(b) The mortgage debt must be due and the legal redemption date must have passed.
Once both of these conditions have both been met, then one of the three conditions below must have also be met for the power of sale to be exercised by the lender.
(a) Notice has been served on the borrower requiring payment, and three months have elapsed without the borrower repaying the whole debt; or
(b) Interest is at least two months in arrears; or
(c) There has been a breach of a term of the mortgage, other than one relating to repayment of capital and interest.
A lender can have the power to take possession of a property if the right reasons are present.
A common reason for taking possession is in order to sell the property with vacant possession, once the borrower has defaulted on their mortgage. However a lender must obtain a court order to take possession of the property and evict the borrower from the property.
Power to appoint a receiver
The power to appoint a receiver arises when a mortgaged land or property is subject to a lease, and the lender wishes to get the rent payable under the lease.
A receiver has the role of collecting the rent payments that otherwise would have gone to the borrower, such as payments for rent by a tenant in the property.
If you need legal advice on mortgage repayments, defaulting on your mortgage or dealing with a lender, you speak to our Solicitors online right now.