What is the difference between foreclosure and repossession in the UK?

In the UK, the terms “foreclosure” and “repossession” both refer to the process by which a lender can take back possession of a property due to the borrower’s failure to keep up with mortgage payments. However, the usage and specific meanings of these terms can differ slightly.

Repossession is the more commonly used term in the UK. It describes the process where the lender, usually a bank or mortgage company, takes legal action to recover the property after the borrower has defaulted on payments. 

This process typically involves going to court to obtain a possession order. Once the order is granted, if the homeowner has not managed to rectify the situation (e.g., by paying off the arrears), they may be evicted, and the property is sold so the lender can recover the money owed.

Foreclosure, on the other hand, is not as commonly used in the UK as it is in the US but it refers to the same thing. In the UK legal context, foreclosure is a specific legal process where the lender seeks a court order that extinguishes the borrower’s rights to the property, thereby allowing the lender to sell the property. 

Foreclosure is less common and typically used only when other options like repossession have failed or are not suitable. Unlike repossession, after a foreclosure, the lender becomes the owner of the property and can sell it without the borrower’s involvement.

The main difference is that repossession involves evicting the homeowner and selling the property, usually with the homeowner still legally owning it until it’s sold, whereas foreclosure involves a legal process to remove the homeowner’s ownership before selling the property. In practice, repossession is much more common as a remedy for mortgage arrears in the UK.

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