What is repossession?
In this article we would like to say a few words on what repossession is, when it can occur and also we will discuss the buying of repossessed homes in a few words. Let’s get started
What do we mean on repossession?
While the action can occur in every country where it’s called in a different term, mortgage repossession as it’s referred to in the UK is basically about the credit institute taking a property away from its previous owner due to the owner’s inability to pay back the credit for a given number of months. This is generally stated in the contract terms and it’s more than worthy to pay attention to as after signing the contract the mortgage institute has all the right to take a property away, in case re-payment doesn’t occur on their terms. Unfortunately there are many, who do not pay attention to these details therefore thousands of properties are taken back by credit institutes every year.
When does it occur?
Repossession or mortgage possession generally occurs when the owner, the person who signed the mortgage contract and under whose name the property should be, fails the monthly payment several times or for a given number of months. This can range from 3 up to 6 months of non-payment, depending on the credit institute. It is worth to add, that this stands for any property which the borrower makes available as the security interest. But in general, when it comes to properties, most often than not the security interest is identical with the property for which the credit was originally obtained.
What’s the process?
Generally if the borrower fails to pay the monthly sum of the credit, first the credit institute will send one or more warnings, to have the amount to be paid. Failure to complete the payment will result in the lender (the credit institute who is also referred to as mortgagee or lienholder) obtaining a court order which will finalize in a decision ending with the evacuation and the selling of the property, in order to cover the debt of the borrower.
On buying repossessed properties
While there are many people, investors and civilians likewise who would like to buy repossessed properties, as these generally are sold only for a fragment of their original price, the fact of the matter is, that these properties are generally sold to a predefined circle of investors on closed / private auctions. While investors, especially those who are able to pay for a property in one amount can gain access to these auctions they are not opened for the public.
Repossession or mortgage possession has many ways to avoid, primarily with the ensuring that the borrower has a security deposit or a credit insurance which can cover the periods where the borrower is unable to cover the monthly amount which way set to be paid back to the borrower. We would advise you to sit down and discuss the credit with a good and vetted credit consultant before signing up for any credit to make sure that your property will never be taken away via repossession.