Giving Back Keys

Charlie23

Hi i need some advice please. I currently have a 100% mortgage with Northern Rock. I think the house is worth about the 110% but i don't think we could sell it in the current market. There are also quite a few problems with the house which we just can't afford to fix. We are looking at giving back our keys to our mortgage provider as we are about to start missing payments on things. I also need to give up work (stress and not coping with working full time) most of my money is taken in childcare so wouldn't make too much change but there will be less money.
So what we want to do is give our keys back, rent a smaller house and start a DMP.
My DH went to CAB the other day and they wouldn't advise us as they want us to stay in the house (it's falling down in places).
Are we completely mad? i understand that there are people being reposesed and they don't want to be and i feel lucky that (at the moment) we are not in that place.
Any advice appricated
Charlie

ad9898_3

I'm sorry to here of your situation, unfortunately unlike the the USA, you cant just give your keys back. NR would then repossess your property, sell it at auction and pursue you for the difference between what you owe and what the house fetched at auction, unless you declare bankruptcy.

I'm sorry to be the bearer of bad news, I was nearly in this situation myself but got out of it by the skin of my teeth because I had equity.

poppysarah

If you get repossessed you may be more likely to get council housing.

I suggest you give shelter a ring too or go back to the CAB for more advice.

Premier_2

Mortgage lenders don't buy houses on a sale or return basis.

The borrower buys the house and borrows the money from the lender. Whatever happens, the lender will want their money back.

If you don't want the house any more, it's up to you to flog it. The Mortgage company will charge you one heck of a lot of fees if you don't pay the mortgage and expect them to make the necessary legal applications to a court to repossess and end up having to sell your house you no longer want.

If you can't sell the house for enough money to allow you to repay the mortgage in full, you may have a problem selling i.e. the lender may not allow you to sell. Speak to your lender now to see what they advise.

If you do allow the mortgage company to sell, it may well sell at below the price you would otherwise gain (e.g. you won't be able to spuce it up and convince any potential buyer what a wonderful house it is). If they sell it for less than you owe, they will chase you for the remainder, sometimes years later when the kids have grown up and you take a job again because there's no need to pay childcare fees.

pinkshoes

As others have already stated, you can't just hand your keys back! This is potentially the worst thing you can do, as they would sell it for perhaps much less than you could sell it for, then chase you for the rest of the money you owe them!

i.e. if you bought for £100k and your mortgage is interest only, they might now sell it for £70k, and you'll then still owe them £30k, which you will HAVE to pay.

You need to compare what you pay now in mortgage vs the cost of renting as well as paying the debt owed to the mortgage company.

You do still have options... Could you not get a job in evenings when your DH can look after your kids? That way you'd have extra money for less hours due to no child care costs.

neas

feel for you op i do but...

Your post is ignorant.... of real life... the financial commitment you have agreed... is that the bank lends you X amount of money... you agree to repay it over time with interest..

If you pay it quicker by selling it then thats fine.

But you cannot simply hand keys back and be 'free'. If you handed the keys back they would sell it fast.. in the current climate and then chase your for years for the debt you owe them.

Say your mortgage is 100kl.. they sell it cheaper for 75-80k.... you will still owe them 20-25k + fees... for a looong time.

I'd try and sell and repay them in full.. Drop the price to 5-10k less than is desireable .... sell it fast...and repay the debt afterwards..

This would be your only option other than delcaring bankruptcy after a repossession... then theres negative consequences to that too (no credit for 6 years!)

hethmar

Ask the CAB to contact housing associations for you. Some will purchase a house and pay for repairs and then possibly allow you to rent it. However, there is likely to be a shortfall between your purchase price and that they value the house at.

Get back to the CAB.

It must be a terrible worry for your family and I do wish you well.

GracieP

neas wrote: »

Say your mortgage is 100kl.. they sell it cheaper for 75-80k.... you will still owe them 20-25k + fees... for a looong time.

I'd try and sell and repay them in full.. Drop the price to 5-10k less than is desireable .... sell it fast...and repay the debt afterwards.

And there is no guarantee they would sell it for that much. If they take it to auction and sell without reserve it could sell really cheaply. A flat in Wales sold recently for 12% of what the previous owner had purchased it for last year.

http://www.newsoftheworld.co.uk/news/article52613.ece

hethmar

Gracie, to be honest, I dont think that place is truly representative. We have heard a lot more about it since that article appeared and I dont believe it actually sold at all to anyone - the builders seem to have bought up a large house to separate into bedsits and then gone bust - so the "flats" and I use the term loosely from the internal photos which look dreadful - are being sold to recoup the price of the original building.

I do think its very irresponsible of the Nof the W (well, they have a reputation for that dont they).

lynnexxxo

Plus the 'fees' that Northern Rock will charge you are not going to a couple of hundred quid. Based on what other people have been charged, 10k would not be unexpected.

So your options are:

1. Sell it yourself, albeit for a lower price than you hope - maybe end up with a small (in comaprison) deficit.

2. Get reposssed, end up owing NR a fortune


3. Stay put, accept you job is not great and that after paying everything you are skint. Childcare costs don't last forever - when they are three you get a funded place (only 12.5hrs) but it helps.

ruggedtoast

Charlie23 wrote: »

. I currently have a 100% mortgage with Northern Rock. I think the house is worth about the 110% but i don't think we could sell it in the current market. T

Oh lordy. If you cant sell it for 110% of your mortgage it isnt worth that much. Something is only worth what people will pay for it.

You badly need to work out what you actually can get for your property and whether or not you are in negative equity.

Hopefully you can get shot of it and pay off your mortgage. Otherwise you'll have to suck it up and try and make the payments.