Quick sale for less that outstanding mortgage?

steveh13d

Hi, Im in the process of selling my home that has a mge of £189500 still outstanding on it.

I am at end of fixed rate so avoid redemption penalties but given the current property market, Im aware that Ill likely be in negative equity.

In these circumstances and if I accept offer below outstanding mge, will my bank let me sell?

Does anyone know the process and any tips to minimise my exposure?

Many thanks

Steve

silvercar

You will have to find the difference between the sale price and the mortgage redemption figure, plus the estate agent and solicitor costs. Usually a unsecured loan is the way to go.

steveh13d

hey, thanks for that. I have provisions in place but wondered whether the banks are particulary sticky in this type of situation in allowing me to sell under the outstanding mge? I know faced with the alternative of them repossessing and selling at aution for less is a worse option for them but I have no experience of this situation. Could you shed any light on this?

Mutton_Geoff

You're responsible for the debt so the bank don't care how much you sell for, all they will insist on is the redemption amount on completion (else they won't release their security on the title). Your solicitor will therefore be asking for funds to be made available on completion to settle the outstanding debt (plus his and the agents bills). It doesn't matter whether this is £100 or £100,000 as long as the money is there at the time.

Handing the keys back for the lender to sell does not release you from your debt to them, and as others say in various posts, is often a much worse route to take.

silvercar

They won't have a problem if you have already secured other finance for the difference, this would need to be lodged with your solicitor before completion so he can clear the mortgage.

If you are trying to negotiate with the lender to get them to accept a reduced figure, you will find it an uphill task. IMHO the most they are likely to offer is an unsecured loan from themselves (depending on the lender), but you may be able to raise the funds elsewhere.

I have heard stories of lenders repossessing after blocking sales that didn't clear the mortgage. The only quotes I've ever seen of people claiming to get the lenders to accept less than the outstanding charge are from these people:

http://www.ridingtherhino.co.uk/Home/tabid/36/forumid/15/postid/507/view/topic/Default.aspx