If you have fallen behind on your mortgage payments or loans secured against your home, it is possible that your house may be repossessed, which could in turn lead to shortfall between the amount the property sells for because it is a forced sale and the amount that you owe.
Shortfall and property repossession could cause you severe financial problems - particularly if you are already in debt. As a result, it is important to ensure that you can act quickly to avoid shortfall and property repossession, and that you understand exactly what these terms involve.
What is property repossession?
Property repossession often occurs when you default on your mortgage payments or payments to other loans secured against your property for several months - potentially leaving you, and your family, homeless.
Once property repossession occurs, your lender will then set about auctioning off the property to recover the amount owed. Until this is done, it is important to remember that you still owe mortgage and loan repayments and are also liable for the cost of repairs and insurance.
What is mortgage shortfall?
The shortfall comes into play once your property has been auctioned off. Although your lender has an obligatory "duty of care" towards ensuring that your property is sold at the best possible price, it is possible that it could be auctioned for less than its value (the amount you owe), leaving you with a shortfall to pay towards your mortgage lender and any other secured loan providers.
Most lenders will pursue payment on a shortfall for a given period of time - usually six to 12 years. However, this can vary from lender to lender. New guidelines have now been issued to all lenders by the FSA on the management of repossessions.
To get advice on property repossession, contact Legal Advice Helpline free on 0800 612 3042 today and we will put you in touch with a legal expert.