House Repossession maybe bankruptcy?

Gareth83

My girlfriend and I are looking to buy a house together as she is expecting our first child in July.

The problem that we have is that she has a house with her ex partner (obviously she doesn't live there) that has been up for sale for 14mths.

He is supposed to be giving her x amount of money a week to cover the mortgage and also money he owes her family. He keeps coming short of this so she keeps having to pay it out of her own pocket.

They need to get £102,000 minimum for the house to cover the mortgage and it's arrears (£93,000 including. a £6000 exit fee!!) a secured loan (£5,000) and associated selling fees. They also need to get £2000 to give her grandparents some money.

They also owe £12,000 or so to her family which will no doubt have to be written off.

The problem is that someone offered the £102,000 but the valuation survey has come back with lots of problems and they say it's only worth £80,000 or so.

The house needs to go but certainly not less than the £102,000 as stated.

What are the short and long term implications of allowing the house to get repossessed?

I think it's something that can't be taken lightly and may backfire on us in the future with her having poor credit etc. and may put our home (if we get one) at risk if they try chasing the money.

Would it best for her to just go bankrupt?

Would there be anyway to get out of the £6000 early termination fees?

Caz3121

If the house is worth £80k and they allow it to be repossessed it may get sold for a lot less and they can both be chased for the outstanding debt - so if they were to sell for £62 then the bank would still expect them to come up with £40k plus all the fees associated.
If she then went bankrupt she would not be able to get any credit (including mortgage) for a number of years.
Who actually lives in the house? you say she doesn't live there but he is giving her money for the mortgage - why does he not pay the mortgage direct? If he is there and cannot afford to keep the property himself could he move out and rent it out to cover the mortgage then the two of you look to rent not buy (might be better in current climate - you can see how much your girlfriend has lost - not sure how the mortgage payments compared with renting but renting might have been a less expensive option in the long run)

Gareth83

Her ex lives in the house with one of his mates.

he doesn't pay the mortgage direct because he has poor credit and doesn't have a bank account (I believe) and he probably wouldn't bother paying it and he certainly wont when he finds out her and I are looking to move in together.

if he were to move out and they rented it out it would incur fees, a new boiler etc. etc.

basically she wants out of the house period not hold on to it.

we may rent, we are undecided yet. But I cannot justify renting when I have enough for a deposit. It just seems dead money in my eyes and with a baby on the way I would like to make a home not just a place to live.

Gareth83

We have spoken with GE money and they have a scheme in place which means they will void the 6% early termination fee, however this is only guaranteed for the next 28days but will likely to be extended.

This will mean there is a balance of £87,411.37 (£86,164.89 + £823.80 arrears + £422.68 fees & interest).

This will be saving her £5244.68 (£87,411 x 6%) which is actually less than the £6000 she thought the exit fees were.

With her secured loan being £5157.00 the lowest she could realistically accept is £92,568.37

If she were to sell it by herself but use a solicitor she could obviously accept way less than the £102,000 she initially calculated.

a) How much roughly to use a solicitor for selling? Do they work on a no sale/no fee basis?

b) If they were to sell it themselves, with one of the numerous house selling websites available how long do they keep it on the market for?

c) Is it just the HIP pack she will need to obtain prior to selling? I guess it's a case of pick the cheapest...?

d) If the house were to sell for a minimum of £93,000 is it then just a case of getting an agreement drawn up with her ex to repay his debt to her family?

poppy_f1

her ex will still have to agree that the house be sold and if things are as you say he might not agree if he realises you are moving in together.

If the survey is coming back saying its valued at £80k ish then its very unlikey that someone will pay more than that due to the survey especially if the problems that its found are pretty serious (people would be looking for a further reduction in the price if this is the case)

can they prove that the money from family was a loan, if not then its unlikely that it will ever get paid back if the ex says it was a gift

i know its not what you wanted to hear but (i cant beleive im gonna say this) IF you have enough for a deposit and earn enough to support the mortgage, and your gf can stomach having her credit file trashed and possible having to pay any mortgage shortfalls then maybe having the house reposessed is the way for you to go, i know its not ideal but if the house has been on the market for 14 months and its still not sold then its likely to be overpriced.

Purplenails_2

This is not really advice (because I am not qualified to give such), however I will relay what happened to me in 1992 during the last market crash.

I bought a house for just my young daughter and myself to live in. The house fell into approximately £10K negative equity. At the same time I met my current partner and fell pregnant. The house was then too small for us. I wrote to the building society and explained that I could either

a) sell and buy in a larger house in a cheaper area (keeping the same size mortgage but still selling the first house at a loss) or
b) sell at a loss, rent new accommodation and have the negative equitity turned into a loan

I wrote the the building society several times but they just kept saying that the full amount of outstanding mortgage debt would be payable on the day the house was sold. Impossible for me.

In the end we found alternative rented accommodation. I walked into the building society on the day we moved out. I handed them the keys and a letter stating that I could no longer live in the house and that the house was already on the market with interested buyers. I also gave them my new address.

They contacted me 6 months later to say that the house had been sold at a £12K loss. Another month after that they sent me a statement showing the outstanding mortgage payments from the time I left to the time of sale and the £12K loss.

I never heard from them again!!! They heard from me because I wrote to them again when I moved address. Ultimately I fully understand and appreciate that I owe them money and always expected them to ask for payment, but they never did.

My partner was the first named on a property we bought 2 years later without any major problems. I couldn't personally get credit for about 5 years afterwards. Strange that I couldn't walk into an electrical store and get £400 credit for a TV, but I could be named on a joint mortgage! My name is totally clear now.

I was told that there was an insurance premium that is paid when you first take on a mortgage (I remember paying something like that), and that it probably paid off what I owed. However apparently some of these insurance companies did chase people back in the 90s.

In your case, is this a joint mortgage with her ex partner? If so surely half the debt is his. If not she should evict him!

The debts owed to her family I feel are unfortunately hers alone now.

Repossession is not something to be taken lightly but it is sometimes the only way out. I assumed I would end up with a debt that would take me years to pay off. I am also sure that it was a fluke that we were able to buy another house so quickly!

Dan_1976

Just a bit of info.

secured lending is outside bankruptcy, the property is seen as an asset so that falls within the bankruptcy.

I the property has equity they will want to sell the house, if it does not have any equity they will either ignore it and let it be repo's or they can wait and see what happens.

Get proper advice before you do anything.

Rednoseranter

Repossession / Bankrupcy is always the last resort - if the ex's credit history is as bad as you say (and he doesn't even have a bank account) there is no chance that your GF will be able to take her name off the mortgage - an option although maybe not an appealing one is to offer to put yourself on the mortgage (and remove the ex) use your deposit money to do up the house etc and put some equity back into the house. Good luck.