voluntary repossession questions

MaKaToM

Hi guys,

I am nipping into the bank this afternoon to request information on the ins and outs of voluntary repossession, but I have learned not to trust banks to tell you the whole story, so maybe you guys can explain some potential pitfalls?

2009 has been the worst year of my life so far - everything has gone wrong. We bought a house a couple of days before the prices and interest rates dropped and we fell deep into a recession, work slowed down for myself, my partner was made redundant with immediate effect, jobs were hard to come by in her sector, a town close to us 'got rid' of it's council estate so everyone has been rehomed on our street, my partner got another job but a few months in was made redundant again...

It's been a hard year.

So now as we stand;

We have
£4,500 arrears on the mortgage
£800 arrears on the car
£700 arrears on the council tax
then other bills that are pilling up.
Our street is full of hoodie, balaclava wearing yobs that intentionally damage cars, houses, break down fences, kick gates through, hurl abuse at you and it's just not worth it.

So...

My partner started her new job on Monday and my work has picked up, so I contacted the bank to find out about voluntary repossession, as we bought at such an expensive time, our mortgage is HUGE, if we live in this hellish place for a few more years, we will still be in negative equity, if we put the house up for sale it will be vandalised....and we know we could rent a nice little house in a nice area for £600 per month.

The Natwest mortgage adviser on the telephone informed me that it is simply a case of handing the keys into the bank - then it belongs to them and is no longer ours. We would be liable for covering wht was lost on the sale of the house, but everything sounds like it could be the best thing for us. We don't need to own a house right now, we just want to improve our quality of life. Then after a few years of renting, when our credit has built back up and the ecconomy has settled, we can get back on the property ladder.

This all sounds too easy to be honest, and although we have made our minds up because 5 years of crap is enough, please could you guys let us know about anything that we may have missed? How this affects our credit? How will this affect our chances of a future mortgage?

Thank you in advance :beer:

Peelerfart

I'm not qualified to offer any advice all I am qualified to do is to wish you the best for the future.

No amount of money is worth living your life in misery,especially through no fault of your own.

I am sure someone will be replying who is more qualified than me to offer advice

Good Luck

bigheadxx

If you hand back the keys to the lender the property still belongs to you and you will still be responsible for paying the mortgage and insuring the property.

In these situations a property is likely to sell for less at auction meaning more of a shortfall to make up after the sale. Plus if the property is empty and likely to be vandalised this will reduce the sale price further or the property may not sell and you will still be liable for the mortgage.

You are liable for mortgage capital shortfall for 12 years so you really should consider different options.

http://www.adviceguide.org.uk/index/life/debt/mortgage_problems/how_to_sort_out_your_mortgage_problems.htm

MaKaToM

Thank you for your replies and best wishes.

It's not about us being unable to afford the mortgage - we can still afford it when we are both in work, which thankfully we are back in, but life has given us a hell of a ride this year and our quality of life is appauling - which nobody deserves.

You are liable for mortgage capital shortfall for 12 years so you really should consider different options.

Does this mean we will have an arrangemet in lace to repay the shortfall for a maximum of 12 years? You will have to excuse my ignorance, I've never had to deal with anything like this before.

Thank you

Rockporkchop

Don’t be fooled for one minute – voluntary repossession is far from easy.

If you hand back the keys the building society will sell the house for whatever rock bottom price they can. They will add the cost of any interest from repossession time, estate agents fees, administration fees, any sale costs, legal costs of repossession, interest on interest etc. And they will come chasing you for the balance straight away, and for the next 12 years - there will be no civilised arrangement to pay back the money as you seem to think. If you already owe £4500 you can bet that you will owe the bank tens of thousands of pounds by the time the house is sold, and this will increase by the day.

This will affect your credit rating for a long time. Most mortgage firms now ask whether you have ever been repossessed before granting you a mortgage.

Your best bet is to price the house low to sell quickly, take the hit and move into rented. At least this way the problems from owning the house won’t follow you around for the rest of your life.

If the local council estate was closed down, maybe check with the council to see whether they would like to buy or rent your house from you – some councils do this if there is a shortage of housing.

Good luck, and please consider this a bit more before going ahead.

MaKaToM

Thank you, I will definitely consider this.

I am paying a visit to the bank today, as mentioned, but also popping into the CAB to see if their is a debt counseller available to speak with me regarding this.

I don't believe that putting the house up for sale at a low price will sell it, as the minute the for sale sign goes up it will probably be burned and the house vandalised - as there is one family inparticular who have taken a severe disliking to us after we contacted the police following damage to our property.

It may be the case that selling it to the council is a better option, but I fear they would be willing to pay less than it would go for if the bank were to auction it off.

I'm confused about the whole thing at the moment, so no decisions will be made in haste, my partner and I just want out of here for good, as quickly as possible - we work too hard and have enough stresses and strains to have to cope with this.

Thank you

g_attrill

Selling it at auction might be another possibility, and ask the auctioneer to not put up a sign (just say you are looking for a discreet sale). In fact you could ask that of any estate agent really.

blueberrypie

Rockporkchop wrote: »

Your best bet is to price the house low to sell quickly, take the hit and move into rented.

The OP is in negative equity - won't they have to find funds to cover the difference between the sale price and the mortgage balance? If they can't do that, what are their options?

To the OP - my sympathies. I hope you find a way out of this that is as painless as possible.

MaKaToM

Hi guys,

Thank you for the support.

I went to the CAB and the best they could manage is an appointment to speak with a debt counseller in 3 weeks, which isn't their fault - it's just not what I want to hear as things are becoming more desperate, and 3 more weeks of this hell, not sleeping at night, vandalism, abuse, intimidation and paranoia through the day is not what I want for my partner and I.

I did manage to speak with somebody at the bank, however, who sympathised with our situation and suggested we get a deposit and first month rent together and get out of there, then worry about the house from a better place. The lady suggested we either put it up for sale and ask them NOT to put a board up or try selling it to the council.

She informed me that if we give the keys to the bank, whatever shortfall we have after the property is sold will be at least doubled, as banks sell for nothing but charge us a hell of a lot for the privelage. Then, they will get a CCJ out on us which will effectively ruin the rest of our lives, no mortgages, no new bank accounts, no loans!

She went on to explain that if we sold the house for, say, £20,000 less than our mortgage, we would be able to set up an arrangement with the bank to repay this + costs and fees - or we could get a loan to repay this as 'owing' money is far worse than paying back a loan.

Are there any debt counsellers that frequent this site who may be able to assist us. We're tired and want out - we just want to make sure we take the smallest hit possible but get out in the quickest time.

Thank you again!!!

blueberrypie

MaKaToM wrote: »

Hi guys,

Thank you for the support.

I went to the CAB and the best they could manage is an appointment to speak with a debt counseller in 3 weeks, which isn't their fault - it's just not what I want to hear as things are becoming more desperate, and 3 more weeks of this hell, not sleeping at night, vandalism, abuse, intimidation and paranoia through the day is not what I want for my partner and I.

Of course not - it's a horrible situation. Until you've lived with bad neighbours, you can't imagine how hellish they can make life for you.

I did manage to speak with somebody at the bank, however, who sympathised with our situation and suggested we get a deposit and first month rent together and get out of there, then worry about the house from a better place.

It sounds like good advice - but before you do it, check on your home insurance. If the house is vacant for more than a certain length of time, or if you've moved out, your insurance might become invalid. The last thing you want is to end up with a vandalised or burned-down house and no insurance to put right the damage.

The lady suggested we either put it up for sale and ask them NOT to put a board up or try selling it to the council.

She informed me that if we give the keys to the bank, whatever shortfall we have after the property is sold will be at least doubled, as banks sell for nothing but charge us a hell of a lot for the privelage. Then, they will get a CCJ out on us which will effectively ruin the rest of our lives, no mortgages, no new bank accounts, no loans!

She went on to explain that if we sold the house for, say, £20,000 less than our mortgage, we would be able to set up an arrangement with the bank to repay this + costs and fees - or we could get a loan to repay this as 'owing' money is far worse than paying back a loan.

Make absolutely sure that you *can* get a loan before making your decision.

Are there any debt counsellers that frequent this site who may be able to assist us. We're tired and want out - we just want to make sure we take the smallest hit possible but get out in the quickest time.

There's a CCCS sticky thread on the Debt-Free Wannabe board - that's probably the best place to ask.

Good luck.

MaKaToM

Just an update for you all...

I have just spoken with my mother over the telephone and she reccommends calling the council, housing agencies and 'we buy your house for cash' firms, as these would probably be the quickest methods of selling the house.

Does anyone know anything about 'we buy your house for cash' firms to offer advice on their procedures, if they are a viable option etc?

Thank you again