Will the bank take your house?

C

Countygirl

Guest
I have just moved into a house that was completetd in December and have been given notice of redundancy. Bad timing what with all savings gone. What is the scenario if you contact your bank and inform them that you are unable to pay the mortgage. I understand that a 6 month break will be granted , but am worried that with the state of the economy it may be longer than 6 months before I am back on my feet.
 
There is nothing that obliges the bank to give you a 6 month break. There have been some talk of some of the UK banks not foreclosing on people in your position for 6 months and some of their Irish subsidieries (eg Ulster Bank/First Active) may apply this as well. However they have no legal obligation to give you a payment break. Some lenders will for a few months, others may move you to an interest only payment mortgage for a period. If you name your lender, you'll probably get more detailed advice from people on here

Depending on your circumstances you may have some entitlement to a redundancy payment which may help you for a while. You should also investigate your social welfare entitlements as there may be some support available for you there on your mortgage. Other practical things to consider are letting out a room and you should take a long hard look at your outgoings and see where you can cut back.
 
Sorry to hear about your predicament.

(1) Do contact your bank before you run into trouble with paying Direct Debits. They'll be more likely to negotiate with you if you come to them first, rather than them contacting you about missed repayments.

(2) Before you meet your bank, try to work out what level of repayment you can afford once you figure out your entitlements from the State. You're more likely to get a hearing if you're approaching the bank offering to pay something, rather than proposing that you'll simply default on your obligations altogether.

(3) If you don't pay, the bank can repossess your house, although there is a fairly lengthy legal process before that happens. If they do repossess your house and sell it for less than your mortgage, you are still liable to pay them back the difference. It will also have an effect on your credit rating and will make it difficult, if not impossible for you to get a credit card, overdraft, car loan etc., again until years after the original debt has been fully repaid.
 
Well, I met to the bank yesterday. They have agreed to a 2 month break for the moment until I can figure things out. The advisor was quite helpful but all decisions have to be sanctioned by head office first. Fingers crossed! Thanks for the advise
 
I feel very strongly that the banks should not be allowed to reposess property if the 'occupant' (assuming that the banks own the greater share of properties bought in the last 5 years and the 'owner' is occupant) is genuinely in financial crisis and is contributing a fair % of their income (ie: if one was bankrupt they would still be entitled to monies enabling them to carry on trying,,,). If the reposessions increase all property will be impacted- similar the the situation that we now have with vehicles whereas cars with a insurance value of 50k (example) are selling at car auctions for much less after reposession with credit companies taking the hit...as it is much better to get a something (then nada!). So if we follow through on this line reposessions will impact everyone who has property not just the ones at default. A better way of dealing with this, I suggest, would be for the banks to reverse the mortgages and 'let' to the 'occupant' until such time as the situation settles down (occupants turn in fortune or economics reveal another way). Although I am not in this situation I do know others who are suffering and their house is their home...its not about the money (as it was for so many in years past). If you take someones house because they cant meet the cost then they'll be on the street (moving is costly by the way) and the house will sit without the heat (and care) required to keep it up and, more then likely, it will be a struggle to sell or rent and if it does get rented it will certainly not rent at the cost of the mortgage repayments that were defaulted on.
 
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