When everyone has a home

Housing advice for Northern Ireland

What happens to the property?

When your home is repossessed it is usually sold to pay off your debts. This will also happen if you hand over the keys to your home voluntarily. The money you get may not be enough to cover everything you owe.

Stopping the sale

In rare circumstances, it may be possible to stop the sale if you can raise the money to pay off your debts soon after the eviction. You must act quickly if you want to do this. You have to get an injunction stopping the sale. You can't stop the sale if your lender has already exchanged contracts with another buyer.

The court will normally only agree to allow you to return to your home if you can show that you will be able to pay off all your mortgage debt. Get advice from a solicitor if you want to do this.

Paying your mortgage

Yes. If your home is repossessed or you hand over the keys to your lender, you are responsible for your mortgage payments until it is sold. This will include:

  • any arrears
  • ongoing mortgage and interest payments
  • buildings insurance
  • penalty charges for missed payments.

The amount you owe could increase even if you aren't living in your home any more. Your lender is obliged to get the best possible price for your property and they may not necessarily go for a quick sale just for the sake of selling the house.

Get advice if you are in this situation. An adviser may be able to help you negotiate to keep penalty charges to a minimum. You may also be able to make a complaint to the Financial Services Ombudsman, who can instruct your lender to pay you compensation.

The person or company who is given possession of your home is responsible for looking after the property until it is sold. This includes dealing with essential repairs, and possibly basic maintenance. Any costs involved in repairing your home will usually be added to your debt.

Lender sells the property

Your home may be put on the market in the normal way, but some lenders sell repossessed properties at auction. You may not get as much for your home as you would get if you sold it yourself. This is because your lender only wants to get back the money you owe as quickly as possible.

If the property has been undervalued, you can ask the courts for an injunction to prevent the sale. This can be done at any time before the completion date. Lenders have to get the best price for the property that can reasonably be obtained. If you think your lender has failed to get a fair price, get advice from a solicitor. You may be entitled to compensation.

Selling the property yourself

Even after you have been evicted you may be able to sell your home yourself if you think that your lender has accepted a very low price. If you can show that you have received a better offer from a serious buyer, the courts may be willing to make an order allowing you to sell the property yourself. If you think this is possible, get advice from your solicitor immediately.

Proceeds of the sale

Your lender uses the money from the sale to pay off your mortgage and any costs your lender incurs when selling your home, such as:

  • legal fees
  • estate agents' or auctioneers' fees
  • bills for any repairs that are needed
  • insurance.

Your mortgage debt will be paid off from the proceeds of the sale.  Second charges, such as secured loans, or any orders charging land will be paid in order of priority until the proceeds have been exhausted or the debts are discharged. Any money left over after you pay all your creditors will be yours. Even if a secured loan company has taken you to court and evicted you, your first charge holder (i.e. your mortgage provider) will be paid first. If you are on means-tested benefits, any money you get from the sale will be counted as capital, and your benefits may be reduced.

Still in debt after house is sold

The money from the sale may not cover everything you owe. This might be the case if your arrears are very large, or if the value of the property has fallen since you bought it. This is known as negative equity. If this happens, you will be responsible for repaying what you still owe.

If you had to pay for mortgage indemnity insurance when you took out your mortgage, it will pay all or part of the shortfall to your lender. However, you are still responsible for the shortfall. Your lender or insurance company can ask you to pay back the money after the property is sold.

Sometimes your conveyancing solicitor can negotiate with your secured creditors to accept reduced payments and write off the shortfall. However, this only happens in certain circumstances. You should get legal advice in this situation.

If you are facing long-term debts, you should get specialist advice. A local advice agency or citizens advice bureau may be able to help you.