What happens if you are in arrears on secured loans and second mortgages

If you miss payments for several months to your secured loan or second mortgage, your lender could take action to repossess and sell your home. This section explains more about the procedure your lender must follow and action that you can take to delay or prevent your home from being repossessed. This procedure is slightly different to the standard repossession process and how many months of mortgage arrears it takes before repossession depends on your individual case.

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What is the Consumer Credit Act (1974)?

Secured loans and second mortgages are usually regulated by the Consumer Credit Act 1974. The Act protects you because your lender will have to go through extra steps before repossession.

Notices of sums in arrears

If you fall behind with the payments to a secured loan or second mortgage, your lender must first send you a notice of sums in arrears. They must do this before they can send you a default notice.

What is a default notice?

If your secured loan or second mortgage is covered by the Consumer Credit Act, your lender must send you a default notice before they can start the repossession procedures.

What is a time order?

If you've received a default notice from missing your secured loan or second mortgage payments, you may request a time order to pay the loan, arrears and stop the lender taking further action.

Last updated: 22 December 2017

Housing laws differ between Scotland and England.

This content applies to Scotland only.

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