Second Charge on Property and Moving...

Silvafox

Can anyone shed any light on our situation please? I'll make it as short as possible with figures:

We are looking to move as we can't afford to live where we are and are looking into a shared equity scheme for the time being with the house builders on a new development.

We have a mortgage and a second charge on our existing property. The house has just been valued and we have found where we'd like to move and have a decision in principle o nthe mortgage....

House is for sale at £165,000
Outstanding mortgage and penalties £155,800
Second charge settlement figure £18,000

So if we sell our house for the £165k, I understand the mortgage people will get there money as they are the primary charge etc.... but what happens to the second charge? Will the solicitors pay the remainder from the sale automatically to the second charge owners? If so, that means they'll get roughly £9,000 towards the settlement.

My main question is though.... can the second charge owners physically stop us from selling because we can't clear the whole amount? We are happy to carry on paying as normal for the laon but they will have lost their security on the loan.... Should we tell them we're selling up or will our solicitors tell them? Would they ask that the charge was secured o nthe new property...and if so, do shared ownership mortgages allow this?!

If someone has been in this situation, we'd really appreciate your comments.

Thanks.

lynzpower

Usually, you cant get shared ownership Im afriad unless you are a first time buyer. Have you contacted the landlords of the SO you want to purchase?

Sorry to be the bearer of bad news, probably not what you wanted to hear.

Silvafox

No problem. We are already approved. Its shared equity with the builders. They've approved us and we have the mortgage in place...thanks anyway.

Anyone know anything about the above queries....?

lynzpower

(Oh I thought you meant SO with a LA or HA, sorry!)

and nope, not my forte im afriad!

Silvafox

...LOL no problem! Far too many abbreviations going on here! :rotfl:

regularsaver1

You probably will not be able to sell - unless all charges are repaid

unless the second charge company are willing to change this to an unsecured basis - or can youy get an unsecured loan to repay it?

Silvafox

I hope thats not the case?! Thats what I was worried about. Suppose I better ask a solicitor. What would happen if the house was repossessed then? They have no choice then but to let us pay outside of a secured arrangement. If we had enough equity in the property we'd happily pay it off but as we don't, can they actually stop us from selling? Becuase if they do, then we'll get repossessed anyway as we can't afford it anymore?! Either way, the house will go and we'd rather do it amicably and not cause grief.

regularsaver1

I'd check with solicitor, but currently you are in negative equity - how come the lenders allowed you to go into that situation?

the buyer can not take your charge on, so you have to settle
if you get repossessed, the 1st party will get all funds, and the second - however much, but not sure of the finer details

if you gdo get repossed, this could have implication on you buying again

Silvafox

I'll have to get advice on all of this then as we're heading towards a nightmare. The situation is that we can't stay and will eventually not be able to keep paymants up and then get reposessed so we're trying to do something about it and be construstive, by moving into a house with lower payments and we'll get stuffed by the second charge. Nightmare. The negative equity is mainly due to the fat that we have arrears on an interest only mortgage and a big redemption charge (£8k) Add them altogether and we are left with very little to give to the loan people. I did ring them a few months ago (the loan people) ad the manger quite plainly said that a negative equity position will not happen...well it has!

I'm worried now! We're trying to do the right thing and move into cheaper accommodation and are willing to carry on paying the loan but we can't if what you say is correct. Either way the house is going no matter what happens as we simply can't afford it! We were moving so as not to get a reposession on our files.

regularsaver1

Good Luck with it, let us know what your solicitor says

Silvafox

I will do mate. I really hope I can sort something. I've been trowelling the net but can't find anything relevant to help me. I just hope the loan company can be amicable and see that we either sell and offer another way of payment or we get reposessed and they get virtually nothing and then have to take us to court. We are, after all, trying to do the right thing all round and last thing we want in the world is a reposession, but we HAVE to move or it will be enevitable!