My House May Be Repossessed Soon

Remy_LeBeau · 25 April 2008 at 12:43PM

Hi,

I haven't paid the mortgage in full for the last 2 months; just what I could afford, which wasn't much, so it's now in arrears. I'm also in arrears on various credit cards. My total debt is ~£400k, and the value of my home £550k, and I'm over 50, as is my partner. Our joint income is now ~£25k. It is a family home, and 2 of our 4 children still live with us, but are both working/further education and over 18. We no longer have anything in savings.
I presume that if the mortgage company repossess the house, they
will give us substantially less? Is our best move to put the house on the market as soon as possible? - I've read that if it is repossessed it will be sold very quickly, for substantially less than its worth, but aside knowing how the procedure works, I don't know if the mortgage company even give back the change after the debt is covered, what fees they may levy etc, and besides, if I go down the route of doing nothing and allowing them to repossess it I won't be able to take another mortgage out for 12 years (is it 12 years?).
Just looking for some friendly advice, hope I'm on the right board - surprised there's no sticky about this anywhere.
Would the council house us if we had nowhere to live? How would the ~£150k (less whatever fees/costs are involved) in the bank affect us?

Thanks

glen8 · 25 April 2008 at 12:47PM

Hi Remy,

Where has the 550k valuation come from?

minimike2 · 25 April 2008 at 12:51PM

I would strongly suggest you look to sell the house, your current debt to income ratio is flabbergasting to say the least. the problem you will have is the market is so slow and you may not be able to find a buyer at short notice without taking a substantial reduction on price.

Have you had any debt coucelling for the credit cards? I would say that you look to get some arrangements sorted with those too, to ease the pressure off.

There are things that can be done to help you, the important thing is to stay calm, aproach it methodically and to stop spending immediately on everything apart from basic necceseties.

Remy_LeBeau · 25 April 2008 at 1:17PM

Hi,

glen8 wrote:

Where has the 550k valuation come from?

The £550k valuation is plucked from the sky. Good point (it's reasonably accurate though; I used nethouseprices, etc from Martin's guide regarding Council Tax Banding).

I've been to see Citizen's Advice Bureau about a fortnight ago about the whole situation, who advised me to concentrate on paying the mortgage and stop paying the credit cards. I currently have personal income of about £8k/annum; I pay the mortgage, etc, and my wife pays food, childrens education etc (actually, they pay university costs), clothing, household products etc - she's not on the mortgage deeds, and has no debts.

For the past 20+ years I've been self-employed, and have supplemented my income with credit cards and loans for the past 15 or so - I was a Financial Advisor (selling investments products, life insurance etc - not credit products) for over a decade, which is likely why, until about 2 months ago despite the sizeable debts, I had a perfect credit record, despite a lack of income - I basically took out new credit cards to pay off old ones. About 4 years ago I sold a property I inherited for ~£200k and the proceeds of the sale all went on paying off debts.

EDIT: I should probably come clean; I'm posting on behalf of my Dad, trying to get a gauge on what's going to happen next, what needs to happen next, etc. I only very recently became aware of the situation.

minimike2 · 25 April 2008 at 1:45PM

Whilst citizens advice is a good start, it wont help to start getting the siuation resolved to be honest.

The main proirity needs to be a considerable downsize and getting what you can paid off. Obviosuly I do not know your circusmances but can you not look for better paid work? Obviously now it would have to be outside of the FS industry.

You can try and get a quick sale on the house, or another option may be to look at a debt management plan, or even an IVA or Full & Final settlement. I dot not advice this route lightly, only in extreme circumstances where there really is no other option.

If the house is repossesed, if it gets that far, you recevie the balance once the mortgage and fees etc have been paid, but obviosuly a repossesion is not someting anyone wants to go through.

Jonbvn · 25 April 2008 at 1:49PM

Remy_LeBeau wrote: »

For the past 20+ years I've been self-employed, and have supplemented my income with credit cards and loans for the past 15 or so - I was a Financial Advisor (selling investments products, life insurance etc - not credit products) for over a decade, which is likely why, until about 2 months ago despite the sizeable debts, I had a perfect credit record, despite a lack of income - I basically took out new credit cards to pay off old ones. About 4 years ago I sold a property I inherited for ~£200k and the proceeds of the sale all went on paying off debts.

EDIT: I should probably come clean; I'm posting on behalf of my Dad, trying to get a gauge on what's going to happen next, what needs to happen next, etc. I only very recently became aware of the situation.

I find the above somewhat unbelievable. Even by juggling cards, would it be possible to make substantial mortgage payments for 15 years?

AdrianHi · 25 April 2008 at 1:57PM

Clearly the house has to be sold ASAP and that 400K of debts cleared. If all that 400K was at mortgage interest rates the interest payments would be around 2K a month. On a gross income of only a touch more than 2K it obviously does not add up.
If you (or your Dad) puts the house on the market at least you have some control over what happens from now on and a chance of selling it quick enough.

100-150K in your pocket and 3 x £25 10-15 year mortgage (about how far away retirement is from 50) should get somewhere to live and is doable since credit rating is still in tact. Any pension arrangements?
I wish you the very best of luck.

Remy_LeBeau · 25 April 2008 at 3:42PM

Had an estate agent come round and value the house today, £470k, eek!

UK007BullDog · 25 April 2008 at 3:43PM

As long as you have money the council will not house you.

Sell the property, clear all the debts. Throw away all the credit cards and start living in your means by renting somewhere affordable.

minimike2 · 25 April 2008 at 3:56PM

I wouldnt take that valuation as set in stone either. Estate agents are still over valuing.

minimike2 · 25 April 2008 at 4:45PM

Not touting for business there are we, Peter?

My House May Be Repossessed Soon

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