Your mortgage lender isn't as helpful as they profess to be

lynnskin13

My husband is ill and self employed. At 50+ with no savings or pension, the equity in our property long gone and now with an increasing negative equity and a high repayment sum we decided to sell up and rent from the local authority which will enable us to save in high interest accounts for our retirement fund. We approached our lender to ask if we could transfer our mortgage to interest only for a period of time whilst we sell to ease the burden of our outgoings. The answer was no even when we explained our reasons. Their offer was to let us have a period of 3 months at interest only after which we would revert back to repayment at a higher figure because they would add on the amount we had not paid over the three month period onto our mortgage debt. As the whole point of the exercise was to reduce our monthly outgoings this is not a good situation. Moreover we broached the issue of selling our property quickly resulting in a shortfall to the lender, we were met with shock horror even though the shortfall would only be a small amount and paid back to them fairly quickly following sale. It appears that they would prefer us to default on our mortgage which would enable them to repossess the property and then they could take forever trying to sell it themselves. Just how stupid is this? It is not surprising that people just stop paying their mortgage when they can't afford it. We have never missed a payment or been late with a payment so I suppose we could be classed as good customers. I would hate to be in a position where we defaulted. Goodness only knows what sort of attitude the lender would have then.

maninthestreet

Of course you can't sell the house and leave part of the mortgage outstanding - the mortgage is secured against your house. You really need to go on to the DFW board and post your SOA.

lynnskin13

Of course you can, with the lender's permission. In the current climate, and we are only talking about a relatively small amount in the grand scale of things, it would be better for us to sell our own property at a shortfall with an arrangement with the lender on how the shortfall will be paid, as opposed to us being in real strife and having not alternative but to default on payments resulting in the lender repossessing and then trying to sell. I may be a bit naive, but I thought the idea was to try and stop things from getting that far!

lynnskin13

Sorry maninthestreet, I did mean to thank you for your reply. As I am new to this, I wonder if you would tell me what is DFW board and what does SOA mean?

maninthestreet

'Debt Free Wannabe' and 'Statement of Affairs'

opinions4u

This link should get you there.

(top right corner of the forum is a drop down menu 'forum jump' with all the MSE boards)

lynnskin13 wrote: »

Sorry maninthestreet, I did mean to thank you for your reply.

Click the 'Thanks' button under a post you've found helpful.

Cannon_Fodder

If they give you the go ahead to sell at a loss, and you cannot get the figure you were aiming for, you might go ahead and sell at a figure you can obtain.

Being outside of their control, even if logic dictates it should be better than a repo at auction, is what bothers them, I suspect.

Have you investigated whether you will meet the criteria of any of the 3 Government schemes?

HMS http://www.communities.gov.uk/housing/buyingselling/mortgagesupportscheme/

MRS http://www.direct.gov.uk/en/HomeAndCommunity/Keepingyourhomeevictionsandhomelessness/Mortgagesandrepossessions/DG_174005

SMI http://www.jobcentreplus.gov.uk/JCP/Customers/WorkingAgeBenefits/Dev_016128.xml.html