A strange mortgage related question.. Please help

CakeShopMark

Hi

I'm currently assisting a long term friend with a few financial difficulties and I have a question which I hoped would be answered by some knowledgeable users of this forum.

I won't bore people too much with the ins and outs of this rather long story but I was hoping someone could answer this for me..

My friend currently lives in a property with his girlfriend which is mortgaged. My friend has a smaller property which is also mortgaged (residential mortgage) and has recently been rented out but is now unoccupied and up for sale.

The rental property is struggling to find the right tenant or interested buyers and has been for some time. My friend is currently experiencing a problem with cash flow due to a lack of work and is struggling to maintain mortgage payments on both properties.

Would anyone be able to tell me what the comeback would be, if any, for my friend and partner in their current property if the rental property were to be re-posessed?

I know this might sound slightly irresponsible to some but I feel this is the only place I could ask this question without being judged and hopefully seek some good advice at the same time.

Cheers

Doozergirl

If the property is repossessed the house will be sold by the mortgage company. If the amount it sells for is less than the amount owed then your friend will continue to be pursued for any shortfall.

In addition, your friend will be liable for all the costs associated with repossessing and re-selling the property - all the admin fees, bailiffs, court, estate agent etc. That's without the additional damage to the credit rating.

Your friend is much better off seeing the property sell himself.

Debt free wannabe would be a great board for your friend to start - to see what can be cut back where to help with the mortgage payments in the meantime. Has he asked for a payment holiday? The money wil still be owed but it eases the pressure temporarily...

A conversation needs to take place with the estate agent or another to find a sensible price at which the property will sell quickly. The mortgage compnay will only get what it's worth - it is much better to sell it at a sensible price now than to incur all the additional costs as well and have no control at all over how much it sells for.

A link to the property would allow us to advise on the current asking price. Are any viewings taking place at all?

Fire_Fox

Reduce the price, it will be far more cost effective than being repossessed and chased for the shortfall. The lender will put a huge black mark on your friend's credit file and possible a second charge on their home. Has your friend asked to go interest-only on both mortgages?

CakeShopMark

Doozergirl / Firefox

Thank you so much for your helpful replies.

To the best of my knowledge, a conversation is taking place with the estate agents at somepoint in the next couple of weeks to discuss a possible reduction in the advertised price of the property, which, hopefully, might start a bit of activity as there hasn't been any serious interest yet and no viewings.

The mortgage on the property is a repayment mortgage and I wasn't aware that it could be changed to interest only??

Plenty of food for thought here I think

Thank you again