Mortgage deficit/shortfall - who gets paid first?

siowenson

I am trying to sell my house at the moment and since I have reduced the price to 165K and my mortgage is 163K I was wondering, after all the fee's (roughly 10K - EA 3.5K, solicitor 1.5K and early redemption fee 5K) are subtracted, who gets paid first and how do I go about paying the rest?

Thanks in advance,

Si.

betmunch

I believe you will have to supply the shortfall to your solicitors before contracts are exchanged. If you are unable to do this I dont think the solicitors will exchange the contract.

I could be wrong, so if someone knows better please correct me here

Cheers

Trying_to_be_good

The mortgage is a secured debt, so I believe that has to be paid first and in full. I don't know if the ERC is also considered as secured debt, or whether that could be paid separately (e.g. by a separate loan/credit card etc - slippery slope). If the sale money from the house isn't enough to clear the mortgage, the lender won't remove the charge on the property and you won't be able to sell it.

The legal and estate agent bills are not secured, but the solicitor may not do the work unless they know the bill is going to be paid, so might ask for that upfront, I suppose, if they know the sales money won't cover it.

Good luck with the house sale.

siowenson

So, in other words, I'm fooked.
Looks like I'll be paying a hefty loan for the next few decades.

B0LL0X!!!!!!!!

iinvestor

Negotiate with all the parties concerned and get a reduction in all the fees. It is possible.

siowenson

iinvestor wrote: »

Negotiate with all the parties concerned and get a reduction in all the fees. It is possible.

What sort of figures are we talking about here? Even if all parties reduced their fee's by 20% I would still have to take out a loan of 6k.

Dan_1976

Yep, your in for a sting in the wallet!

Do you have to sell? Can you rent it out for year or two?

siowenson

I'm one of those "the end is nie" folks so I want to sell as quickly as possible before the !!!!!! really hits the fan.

Dan_1976

Are you buying again?

silvercar

The lender won't release the charge until the mortgage is cleared. That means the mortgage amount and the ERC, so you need to raise £168k; if not all from the sale then via a loan or borrowing elsewhere. Your solicitor is not going to be happy without some payment, so you also need to find that money.

Theoretically the estate agent could be forced to wait until after the sale goes through as he can't actually prevent the sale completing.

If you are only marketing at £165k you could easily get offers of around a max of £150k. Looks like you need to rethink your plans.

siowenson

No, I wont be buying again or ever again. We "bought" the house 9 months ago for 183k and now we have to sell it because my ex and I have split. We've already lost our 20k deposit and I do realise that to sell the property we need to be ahead of the wave when it comes to pricing so we'll be reducing the price periodically untill it does.
It's only been on the market a week at 165k and we had a viewer but unfortunately they also enquired about another house identical to mine being sold by persimmon in the same estate and they agreed to give them the house at 160k. They just undersold us the barstewards. I think that was the last house persimmon had of that type to sell so fingers crossed we get more interest. If not, then we'll have to reduce the price further and be even longer debt.
Happy day's!