Author Topic: Can't pay Mortgage on let house  (Read 5344 times)

Sarah

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Can't pay Mortgage on let house
« on: Apr 27, 2012, 03:25:20 PM »
Hi there...I am hoping somebody can offer me some advice...? Any gratefully received. I moved out of my house last year because I couldn't afford to run it following redundancy, and let it for £250 per month less than the actual mortgage payment. The tenants are moving out shortly - at the same time, my low-paid temp job is coming to an end and I have no stable source of income on the horizon. I don't see how I am going to pay the mortgage!


Even if I get another job quickly and could manage to continue covering the shortfall between rent and mortgage payment, I don't want to enter into another rental agreement if I can help it because it makes me very anxious -  I have no money to deal with any problems that arise with the house. Ideally I would sell the house, but of course that could take make many many months.


I reckon there is about £10-£15k equity in it - I tried the cash sales people and the offer was several thousand under my mortgage. I thought about voluntary repossession but gather it can be horribly costly. I am already in a debt management plan for my other debts, and I have not been earning enough money to qualify for an IVA. If anybody has some strategies they would recommend I would be really grateful! Thanks.


James Falla

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Re: Can't pay Mortgage on let house
« Reply #1 on: Apr 27, 2012, 07:25:48 PM »
Hi Sarah
 
I do believe that there are some companies who can provide solutions for people in your position. I understand this involves them agreeing a sale price for your house with you but then delaying the actual slae process. However i the mean time they take responsibility for renting the house on your behalf and making sure the mortgage is paid. Unfortunately this is not really my area so I do not know much more about it I am afraid.
 
What I can tell you is that if worst comes to the worse and you are forced to allow the property to be repossesed, the problem is normally that the eventual sale price that the mortgage company gets for the property will tend to be less than the cost of the mortgage. This would then leave you with a shortfall which you would still be liable for which could be many thousands of pounds. This sounds bad. However many get around this problem by then declaring themselves bankrupt. This clears the shortfall debt and any other unsecured debts in one go.
 
Granted, this is a worst case. However if all else fails it is a real way out of the problem and allows you to move on with your life debt free.
 
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Sarah

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Re: Can't pay Mortgage on let house
« Reply #2 on: Apr 29, 2012, 10:24:05 AM »
Thank you, James

robin.shaw

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Re: Can't pay Mortgage on let house
« Reply #3 on: Apr 29, 2012, 07:54:51 PM »
Hi Sarah

Really sorry to hear about your situation. It's not uncommon and well done for proactively doing something about it.

In order to find a solution for you we'd need to understand a little more about your situation.

We do what are called "lease options" whereby we agree a price to buy your house at a point in the future and then take away your pain of the mortgage. In addition, we take care of the maintenance too and reduce any voids.

In order for us to see if we can help you in this instance we would need to talk to you.

Regards

Robin





Sarah

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Re: Can't pay Mortgage on let house
« Reply #4 on: Apr 30, 2012, 12:39:23 PM »
Dear Robin
I would be interested to hear about this potential avenue. Please could you let me know how I can contact you?
thanks.


robin.shaw

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Re: Can't pay Mortgage on let house
« Reply #5 on: Apr 30, 2012, 01:43:08 PM »
Hi Sarah

I'm afraid we're only allowed to provide impartial advice and cannot promote our own product or services so unfortunately it's not possible.

What part of the country are you in?

Regards

Robin

Sarah

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Re: Can't pay Mortgage on let house
« Reply #6 on: Apr 30, 2012, 02:03:58 PM »
I'm in the Liverpool area.
thanks.

James Falla

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Re: Can't pay Mortgage on let house
« Reply #7 on: Apr 30, 2012, 03:05:45 PM »
Hi Sarah
 
There are more and more investment companies springing up who will make a deal with you to buy your property at some time in the future for a pre-agreed sale price. They will then take over the management of the property and maintain the mortgage payments. Normally this is paid for by renting out the property.
 
However you must remember that until the property is actually sold, you remain on the mortgage and ultimately therefore you remain responsible for the mortgage payments. If the investment company does not pay the mortgage for any reason, the mortgage company will repossess the property as normal and you will still be persoanlly liable for any shortfall. As such, before entering into a deal like this, you need to be 100% confident that the investment company has sufficent resources to pay your mortgage with or without a tennant.
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robin.shaw

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Re: Can't pay Mortgage on let house
« Reply #8 on: Apr 30, 2012, 03:44:39 PM »
Can't fault that advice James.

It's always wise to have copies of the mortgage statement sent to you and the investment company so you can see payments are being made regularly.

This is only 1 of many solutions to enable you to still keep your property whilst solving your cashflow crisis.

Robin


robin.shaw

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Re: Can't pay Mortgage on let house
« Reply #9 on: Apr 30, 2012, 03:48:07 PM »
Might be overlooking the obvious here Sarah but is your mortgage a repayment or interest only?

You may well be able to close the £250 shortfall by switching to an interest only mortgage to take the pressure of yourself a little.

Is the repayment supported by an endowment policy? Can you explore a payment holiday with them if it is?

Just thoughts.

Robin



James Falla

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Re: Can't pay Mortgage on let house
« Reply #10 on: Apr 30, 2012, 04:07:29 PM »
Very good points from Robin, Sarah. Speaking to your mortgage company and seeing what options might be available such as reducing the cost of the mortgage by switching to interest only would be a very sensible first step.
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Sarah

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Re: Can't pay Mortgage on let house
« Reply #11 on: Apr 30, 2012, 11:18:28 PM »
Thanks, both, I really do appreciate you troubling to reply. They would not let me switch to interest only because of the downturn in property value -  I phoned the company to say I was anticipating problems, but I am not currently in arrears, so they said I would need to explore other options when my circumstances have actually changed.
I hadn't heard of the lease option route, so will definitely look into that. Thanks.

simonmisiewicz

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Re: Can't pay Mortgage on let house
« Reply #12 on: May 01, 2012, 04:42:43 PM »
Hi Sarah


Help is always at hand and there is great advice from Robin and from James. I assume that you have not currently defaulted on the mortgage so there is no immediate rush so take all advice on board and make an informed decision.


How much do you think the property is worth and why? How much is actually outstanding on the mortgage?


You mentioned that the rent received was £250 more than the rent. How much is the monthly mortgage and how much rent was you receiving?


Do you have any unsecured debt that is tied against the property?


What is the post code of the property?


How many bedrooms does it have?


I do apologise for the questions but for people to help you best it is important to know the facts


I see a number of solutions:


1 - Extend the mortgage period
2 - Sell the property within the next 6 months and survive until then
3 - An option is too risky for you without certainty, a deferred completion which is legally binding is more suitable. In this arrangement the person buying the property becomes liable for the mortgage. Which I am happy to do. A contract is written, signed by us witnessed by solicitors.
4 - IVA but far too early for you to do that


[size=78%]Dont panic keep in there a solution is just around the corner[/size]

Sarah

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Re: Can't pay Mortgage on let house
« Reply #13 on: May 01, 2012, 06:56:26 PM »
Thanks, Simon.
I had the property valued a few weeks ago - one estate agent said £175000 with a view to taking mid £150s, another said putting on market between £150000-£159000. Zoopla has it at £145000. It's a cottage in a conservation area. It has two double bedrooms with feature Georgian cross glazing (wooden, d/g). It is not overlooked and is in a quaint, quiet street. Those are the plus-points. It's in reasonable order but not sparkly and new, and ideally I'd invest a bit. Parking is on-street.

So that's the situation....
best
Sarah.

simonmisiewicz

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Re: Can't pay Mortgage on let house
« Reply #14 on: May 01, 2012, 07:30:21 PM »
Hi Sarah


Given that the mortgage is £800 and the rental is just £600 I would go the route of:


1. Extending the mortgage period
2. Living their and sharing for the time being.
3. Sell the property


Best of luck


Simon