Second Charge on Property and Moving...

silvercar

If you move that first mortgage to a new property, will you still have to pay the redemption charge? A lot of lenders allow their loan to be moved without redemption provided you continue to have a mortgage with them.

That will save you £8k in redemption charges which means both loans could almost be paid off.

Silvafox

Thats a good idea, however, its one we're already looked into. Our existing lenders won't mortgage a shared ownership property! So we have to break ties with them, hence losing £8k, otherwise it would have been a good situation then.

Main concern and question is... does anyone know for definate whether the loan company can physically stop us from selling?

MarkyMarkD

Yes, of course they can.

You cannot sell a property on which loans have been secured without redeeming the loans, either first, or from the sale proceeds, unless the lenders agree.

I can't see that it's likely that your second charge holders will allow their charge to be released, in order that the first charge holders get paid off in full (including their £8k penalty) but they get screwed over. Nor will they want to end up with an unsecured debt from borrowers who have got into this situation due to arrears on their mortgage.

How long does the penalty on the first mortgage apply for? Would it be feasible to keep the first property, rent it out, and move somewhere smaller (and with lower rent) just until the mortgage penalty runs out?

I have to say that it's apparent you borrowed off a crappy lender in the first place, to have an £8k penalty on a £150k loan - that's almost a year's interest at a sensible rate.

Silvafox

Well thats the situation we're in, whether we used 'crappy lenders' or not. I will seek the appropriate advice and post back on this thread once I know exactly what will happen so its drawn to a conclusion in case anyone else finds themselves in the same boat as us.

HelpWhereIcan

Silvafox,

1. Post details of who your current main lender and who your current second charge lender are. How much longer will your early repayment charges apply for? are you sure you have had a settlement figure for your secured loan or just a balance figure?

2. Is it a National builder you are buying from eg, Barratts etc, or a small local builder.

It may well be that with this information, someone may be able to come up with a plan for you - even if that means staying where you are for the time being.

Silvafox

OK here goes....I'll try and keep it stright to the point....

We are only moving because we feel we have to, not because we just fancy a change, I don't want people misunderstanding me.

Our existing mortgage lender is Kensington, they have a suspended posession order over us that we have gradually fallen back on, due to my partner losing her job and me having to pay for everything and relationship problems.

They applied for eviction which was due for next week unless we raised £3200 to get back on track. This we have managed and are now back on track with them but still have the suspended order.

This leaves the figure of £141,000 originally borrowed.

Arrears of £7000

Redemption of £8460 (6% of original loan and is until June 2007 and then drops to 4%)

Second charge is with Welcome finance who didn't even ask Kensington for permission (this has been confirmed by kensington that they knew nothing about it) The original loan was £15k and the balance is £22k and the settlement is £18k. We've have never missed a payment with them.

So we're left with £156,460 to pay kensington and and the house is up for £165,000 - thus leaving £8540 to give to welcome, leaving us short.

The new house that we wanted to move into, is 50% ownership with David Wilson and we have got an approved decision in principle for a 100% LTV mortgage on a 50% share believe it or not?! Therefore, we need no deposit to move in.

We can't go into rented as when we applied to two agencies, we failed the credit checks and either had to pay a year in advance in rent or weren't allowed to take the house!

So, you can see why we're trying so deperately to move into the shared ownership. It seems our only option and we have everything in place EXCEPT we're short for Welcome Finance and don't know what they can or can't do legally. If we stay where we are we'll eventually fall behind again and Kensington have said that if the apply for eviction date again, we'll have to pay ALL arrears to stop it...which we won't be able to do as we only just managed to get £3200 to stop this one.

Phew......thanks for even reading this....we're very stressed and worried so please, no unhelpful comments...thanks.

HelpWhereIcan

Silvafox wrote:

Our existing mortgage lender is Kensington, they have a suspended posession order over us that we have gradually fallen back on...This leaves the figure of £141,000 originally borrowed...Arrears of £7000...Redemption of £8460 (6% of original loan and is until June 2007 and then drops to 4%)

Because your penalty drops by so much in June next year, one option will be to try and make an arrangement with all of your creditors (unsecured etc) to try and reduce your commitments to hopefully make it easier to maintain/satisfy the suspended repossession. Have a word with CAB and the Consumer Crdit Counselling Service to see if they can help you do this.

Silvafox wrote:

Second charge is with Welcome finance who didn't even ask Kensington for permission (this has been confirmed by kensington that they knew nothing about it)... £8540 to give to welcome, leaving us short.

You will find that Welcome have what is called a caution rather than a charge on the property. The effect is essentially the same, but they do not need Kensington's permission to register a caution.

However, this may work for you as Welcome register a caution when they know that the main lender will not consent to their charge either through policy or because there is not enough equity.

I happen to have some knowledge of Welcome's practices (albeit mainly through people I know there) and believe there may be a glimmer of hope for you.

Welcome do have the facility to 'flip' the remaining balance to an unsecured loan. However, they do not like to do it and need to be persuaded on a case by case basis that it is financially worth their while. I believe that you may be the sort of case where they will look to do this. If the house is repo'd, they will not get their full whack. Because a repo order has already been granted, they may be persuaded that they are more likely to get their 8000 back if they can pursue you for an unsecured loan.

The other alternative they have is to do what is called a rewrite to re do your loan on a lower rate and/or longer term to make your repayments more manageable. Again, they need a reason to do this and staving off a repo where they may lose out could be incentive enough. If they rewrite your loan, it may give you the breathing space you need (combined with an agreement on your other commitments as per my first answer) to get back on a level footing for at least as long as it takes to reduce your early repayment charge/balance that Kensington need to be repaid.

Silvafox wrote:

The new house that we wanted to move into, is 50% ownership with David Wilson and we have got an approved decision in principle for a 100% LTV mortgage on a 50% share believe it or not?! Therefore, we need no deposit to move in.

If Welcome do not release the caution, the sale of your house will not go through. They may be willing to transfer it to a new property (again remember that a caution does not require the consent of the first charge lender - although the builder may need to consent) and so this may be down to welcome agreeing to transfer the loan from one property to another.

There are some lenders that will allow the transfer of Welcome's charge/caution, but I am not sure if they will accept shared ownership too - I will do some research and let you know.

For the time being, my advice is to approach the CAB and CCCS to try and restructure your other commitments. Then approach Welcome to see if they will 'flip' the balance loan to an unsecured one (totally discretionary I'm afraid).

Will let you know what I manage to find out.

Hope this helps

Silvafox

Thank you for your time and effort on this matter. Its really appreciated.

I have posted our situation on another site and am already in contact with the CCCS. I believe, before I do anything, I should call Welcome tomorrow and explain the situation. As you say, and what I was trying to say... is that if the repo goes ahead in the near future they will lose out more, whereas if they 'flip' or do something else then they will get several grand straight off and we'll carry on making payments.

The only thing i worry about is telling them that a) we're under suspended posession order and b) that we're trying to sell the house. However, from what you have written, that may be the 'glimmer of hope' that they make a decision in our favour. The other thing I'm worried about is that Welcome have been very unhelpful in the past and quite frankly I don't trust them! Should i try their head office or the local branch? The lcoal branch have always dealt with us but I don't like them, whereas the people at the main office seem more 'professional'.

One other thing we're thinking of...but hugely last resort.... is can we move into the new one anyway since we have a 100%LTV mortgage and so need no deposit etc....? Then we would deal with the other house when it got sold?

Regards

MarkyMarkD

No, because the new 100% LTV mortgage will normally be subject to clearing existing debts, and that might apply whether you sell the existing property, leaving an unsecured debt, or don't redeem the existing mortgage and loan at all.

My previous comment re "crappy lender" was just an observation, and the fact that you've now revealed it's Kensington merely proves the point.

I understand your problems with obtaining rented accommodation; I raised that possibility for the benefit of those to whom it was a feasible option and I'm sorry it won't work for you.

Silvafox

Thanks for your comments. Nothing was taken wrong and now you know the full picture you can see the situation we're in. Kensington are a crappy lender, but they offered us a 90% mortgage when we needed one so we took it. If hadn't of fallen into arrears there'd be no problem but.....we have. There's been some harsh lessons learnt and thats why we're trying to get out of this mess the best way possible. I suppose I better save my keyboard and ring Welcome tomorrow! I'll post their comments on here as soon as I know. I hold virtually no hope of getting through this the way we want it to go. We'll end up handing the keys in at this rate....whether we try to do the right thing or not...

MarkyMarkD wrote:

No, because the new 100% LTV mortgage will normally be subject to clearing existing debts, and that might apply whether you sell the existing property, leaving an unsecured debt, or don't redeem the existing mortgage and loan at all.

My previous comment re "crappy lender" was just an observation, and the fact that you've now revealed it's Kensington merely proves the point.

I understand your problems with obtaining rented accommodation; I raised that possibility for the benefit of those to whom it was a feasible option and I'm sorry it won't work for you.