Mortgage help for my diabled girlfirend please!

rickdews

Hello, This is my first post here but please could somebody give me some advice. :ABasically, my girlfriend is in a bit of state with her house and neither of us know what to do. It might help if I briefly explain how it's come about...

A few years ago before I met my partner she was running a courier business and earning around £30,000 a year. She took out a mortgage on a £170,000 house. But then totally unexpectedly she contracted severe Rheumatoid Arthritis and could hardly walk. She gave up her business and was unable to work. Now about three years later she is 31-years-old and living on benefits. Unfortunately she still has the mortgage on her three-bedroom house and due to the fall in house prices she would be selling it for less than she bought it - negative equity I think she mentioned. (I understand that this would give her debt and she already has some from elsewhere). All of her benefits cover the mortgage and not the essential things that they are intended for with disabled people. She struggles to pay the rest of the mortgage and bills which amount to around £1,000 a month. She's failed to make the payments on a number of occaions and come close to being re-posessed. She said that she had to re-mortgage for £200,000 to avoid this (I don't know how that works personally).

Basically, she desperately wants to leave the house which is draining her financially, emotionally and physically. I met her a year ago and I've helped her to decorate the house and sort out the garden a bit. She's not a scrounger and she sells some of her artwork (she graduated with a degree in fine art at from Leeds University) on the internet and she's currently applying for part-time jobs as they're all she can manage with the illness.

We're both stumped about what she can do with the house. It's frustrating because the financial help she's entitled is being wasted on mortgage payments and her life's being made even harder by it. She doesn't have any close family so help from them is not in the question. Please would anybody be able to tell me what she could do and what organisations she could contact to help get out of the hole she's in.
I've drawn up this list of options but if anybody could comment on them with their own knowledge or experience that would be really helpful.

1. Put the house on the market
2.Move lodgers into the house
3. Move out into rented accommodation and rent the house out to a family or several individuals.
4.Go bankrupt and leave the house
5. Give the house away to somebody who puts their names on the deeds? Does anybody know if there are organisations that will take a house off your hands with no costs involved?

Many thanks

Rick

VIGILANT22

Speak to Shelter.......

Annisele

You might get more help if you post on the Debt Free Wannabee forum. There's a sticky on there with a list of organisations that can help: http://forums.moneysavingexpert.com/showthread.html?t=2077631.

I'm afraid I'm not convinced that all of the options you've suggested would be open to your girlfriend.

1. Put the house on the market.
   Your girlfriend can only sell the house if she finds some way to pay the mortgage off at completion. If the value of the house is less than the outstanding mortgage plus selling costs, then she'd have to make up the difference - probably from a personal loan. If she can get a personal loan, fine - but given that you said she already has other debts that might be a problem.
2. Lodgers.
   She'd have to get her lender's permission, and tell her insurers, but it might be an option for her.
3. Let the house, and rent somewhere else.
   Very high risk strategy. If she has void periods (which she will), or nightmare tenants who don't pay the rent for months and trash the place, then she's going to have to pay the rent on the place she's living as well as her mortgage. Since she's struggling already, I think this is unlikely to be an option for her. Apart from that, she'd need her lender's consent to let - and if she's already in negative equity her lender is quite likely to say no.
4. Go bankrupt.
   Possibly an option - but seek advice first! Speak to one of the organisations mentioned in the sticky above.
5. 'Give' the house to someone else and walk away.
   Not going to be an option, sorry. Given that the house was worth £170k and the mortgage is at least £200k, there could easily be more than £30k of negative equity. In effect, you'd be looking for an organisation that will just give your girlfriend £30k, and that won't happen.

Edit - just realised the post is a duplicate. More responses on the other board http://forums.moneysavingexpert.com/showthread.html?t=2398135.