09 Mar 2015

A question about : Mortgage/repossession, please help...


I've been going round in circles and receiving so many different views on this, I'm really hoping that someone can help in terms of realistic/feasible options I might have...

I own a small property and am in negative equity to the tune of around Ј20,000. For a number of reasons too long to list here, I had to move to rented accommodation in a different area a couple of years ago and have been renting the property at a loss of circa Ј200 per month ever since. I can't keep taking the hit every month and as the flat gets older, more problems are arising requiring maintenance pushing me deeper and deeper into debt despite being in a reasonably well paid job. The area has declined quite a lot too, and so increasing the rent simply isn't an option based on other flats rented out at the same amount. I'm on a poor deal with my mortgage but it's fixed for a few more years yet...

I need to sell and to be honest, I would rather deal with paying off a shortfall than losing money each month both from the rent/mortgage difference and all other costs (maintenance, insurance, etc).

I am unsure if my mortgage provider will let me sell it at a lower price... does anyone know how likely this might be? Would they help with agreeing an affordable repayment plan? If not, should I go for voluntary repossession and then deal with the debt later?

I have no other assets - I don't own a car, I have no savings and I live using my overdraft/credit cards at the moment (never used to). Would they try to make me bankrupt?

I didn't intend this post to be so long... so my apologies, any advice would be gratefully received title=Smile

Thank you.

Best answers:

  • Before you make your decision, be realistic about your shortfall. Despite valuations of around Ј110k on mine, it was repossessed and eventually sold for Ј85k. A massive difference in what I thought.
    The shortfall is still with me today and I am paying it off - slowly.
    If your shortfall came in at Ј50k would you still hand the keys in? That is what mine was.
    (P.S. my SOA was over Ј1,000 a month negative at the time so I had a stark choice).
    I am bankruptcy supporters club member 248 for a reason... I didn't go for it in the end but this stuff is still life changing. My advice is take the route that minimises the change to your life.
  • I appreciate your advice Lensman, thanks. The truth is I really need to sell the property due to the sheer mental and emotional drain it is causing me; in many ways at this stage money/debt isn't my primary concern as I honestly feel like I'll have a breakdown if things continue the way they are.
    I only paid Ј55k for the property; its current value is around Ј50k so I'm trying to be as realistic as I can... it is in really good condition so I'd be surprised if it sold for less than Ј35k (haven't seen anything near to that elsewhere in the area).
    I guess what I'd really like to know is the likelihood of...
    (a) my mortgage company agreeing to a sale at a lower value and a repayment plan;
    (b) whether or not they would try to make me bankrupt; and
    (c) whether I'd be better trying to sell to a potential investor or go with voluntary repossession.
    Any advice greatly appreciated.
  • You really need to talk to your mortgage provider; none of us can second guess what they would say.
    You might also want to explore whether your income (once free of mortgage) and credit record would enable you to take out an unsecured loan for the amount owed.
  • I agree that you should speak with your mortgage provider to see if they will allow you to sell knowing there will be a shortfall.
    If you allow the property to be reposessed be realistic as repo properties more often than not sell for 15-25% below market value and so your shortfall will be much greater than if you sell.
    When the shortfall is finalised it is unlikey they will make you bankrupt and will have no option other than to accept a payment plan.