Avoid repossession loans
Repossessions occur when a registered charge owner, normally a bank or building society, obtains a court order to gain possession of a property from the borrower. This usually occurs when the borrower has failed to make the agreed-upon payments on a mortgage or loan secured on the property. Late-stage repossession proceedings only allow the borrower a short period of time to either makeup shortfall arrears payments or, in certain circumstances, sell the property before final possession by the lender. A repossession order can be put on hold if the borrower makes or agrees to make payments. This allows the borrower to keep control of the property’s destiny and gives much-needed time to either enable a sale at market level without having to take a reduced repossession price or restructure finances.
Avoid repossessions by taking out one of our loans
Bridging finance can be used to prepay mortgage arrears even if a client has a property that is being repossessed. Provided that enough equity remains within the property and that the exit route is deemed reasonable to the lender, then the use of a bridging loan is a possible way to repay the arrears.
It is, however, important to note that in today’s more financially prudent climate, where it is becoming more and more difficult to refinance any borrower who has credit problems, the sale of the property is normally the only reasonably accepted exit route for the majority of bridging loan lenders. Most bridging loan lenders will also demand that the security property be placed on the market to show the borrower’s true intentions before they advance the loan monies required. Although bridging finance may be an expensive way to raise money, depending on the severity of the situation, it may well be the best and only option.
Use of a bridging loan to clear mortgage arrears and avoid repossession
Re-mortgages are pretty much no longer available to clients who have poor credit, even if a large percentage of equity is available within the property and even if the client can afford the monthly re-mortgage payments as they have a good income. Secured loans follow similar requirements to a mortgage, although they are slightly less stringent in their requirements. If neither a re-mortgage nor a secured loan is available to the client, then the only remaining option would be a bridging loan or the immediate sale of the property at a possible below-market value price in order to stop an imminent repossession.
Bridging finance allows you to sell your property
The bridging loan would give the applicant the time required to sell the property in an organised fashion and within the timeframe as agreed with the lender. The alternative could be that the client is forced into accepting a low offer for the property or to accept the house being repossessed and sold quickly by the lender in order to get the money owed repaid back to them.
Although certain protocols now have to be followed in terms of how the property is sold after a repossession, the widely held belief amongst most buyers is that repossessions are sold at bargain below market value prices to the buyer. A repossession also leaves a stigma attached to a client that will stay on their credit file for a long period of time, if not forever. This could make it virtually impossible for them to raise any property finance at any time in the future.
Example:
In this example of using a bridging loan, we explain how you may have missed payments with your mortgage lender, and they have been through the legal stages required to repossess your property. You are unable to refinance with another mortgage lender due to the missing payments now showing on your credit profile. You are therefore unable to stop the repossession, even though the loan secured on the property is relatively small. A bridging loan can be used to clear all arrears and possibly raise extra finance to repay other mounting debts. Once you have a period of successfully making payments, refinancing with a more traditional lender may be possible to repay the bridging loan. Alternatively, the property could be sold or another method used to repay the bridge.
You can potentially avoid repossessions by applying for bridging finance by using our online bridging loan calculator. Rest assured, UK Property Finance will do its utmost to stop your home repossession.