Is Returning Your House Keys To The Mortgage Lender An Advisable Way To Stop Home Repossession?

By Author: Nicholas Hunt
Total Articles: 434
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As property values and incomes both plummet for many because of the international economic downturn, millions of mortgagepayers are finding it increasingly challenging to keep up with their home loan repayments. Arrears levels are rising, and home foreclosure proceedings are being commenced at a rate not seen since the economic downturn of the nineties.

Given these problems, many borrowers who are having serious problems keeping up with their mortgages are tempted to just hand back their house keys to the mortgage provider and leave behind the whole nightmare, so avoiding the stress of court foreclosure proceedings. In fact, this 'unforced repossession' alternative is sometimes even advised by the mortgage company as the best solution for their distressed customer.

Regrettably, this supposed solution supplies a much better outcome for the loan advancer than for the householder. The lender will be able to nullify the costs resulting from the home repossession action, and will be able to sell the property more quickly and so get the debt repaid faster. For the mortgagepayer, things aren't as clear cut.

For ...
... a start, until the house is offloaded and the mortgage cleared, you will remain responsible for making repayments, and will be hit with penalties if you don't meet them, This will drive up the debt at a severe rate. Also, meantime, you'll still have to have somewhere to live, and you could find yourself renting while racking up larger mortgage debt - and this position could last a long time bearing in mind the depressed property market of today.

There's also the difficulty that the lender will probably attempt to dispose of the house quickly at a property auction, and this could mean the asking price is massively discounted - it may not even bring in enough to redeem the mortgage, so you'll have lost your home yet nevertheless owe money on it.

There's no simple answer to mortgage troubles, but hoping to head off home repossession by handing back the keys isn't in the main a good idea. Trying to cope long enough to trade the home yourself on the private market is likely to give a more positive outcome than walking away and hoping your mortgage lender will keep your best interests in mind when settling the debt.

About the author: Nicholas writes for Debt Nation where you can read more about handing keys back to the mortgage company at http://www.debtnation.co.uk/hand-back-keys.html along with other mortgage debt problems.