1 year to go...

MegaMiniMouse

Hi from the new Mouse on the Block...

At the height of the boom (only a fortnight before the Property Market shut down forever, omigod), we remortgaged at 85% of valuation on a self-cert interest-only mortgage with a repay-by date of August 2011.

Clearly this is probably not going to happen.

We can easily afford the monthly interest, but the capital repayment is probably unattainable. Self-certification has gone up in smoke, so re-mortgaging is not an option.

Are we in a strong bargaining position (the lender stands to lose a lot of money by repossessing), or are we heading for bankruptcy?

MMM

Thrugelmir

Is the entire mortgage repayable in 2011, or does the mortgage prodiuct you currently have in expire in 2011 ? There is a difference.

Play hard ball if you wish. Expect likewise treatment if you do. Much better to approach the situation pragmatically with a long term objective. Do you wish to retain your home?

If so, start overpaying your mortgage. This way the capital balance will be reduced. Overtime your financial position will slowly improve. Less money owed less interest to pay.

My suggestion is only the first step of a long road. That's unless you'd prefer to rent for the remainder of your lives.

MegaMiniMouse

Hi ThrugelMir, and thanks for a thoughtful reply...

The entire deal ends next July/August, with no built-in options to switch to any alternative product.

Our best hope is that the lender might be wiling to re-negotiate the end-date, but we would be reluctant to shell out on any kind of valuation charge, or re-arrangement fee, because the lender stands to gain more than we do by avoiding the need to re-possess.

We are old, with few commitments, and Bankruptcy is not particularly frightening. Renting was looking like a reasonable option, until the cuts in Housing Benefit came over the horizon...

Cheers

MMM

Thrugelmir

MegaMiniMouse wrote: »

Hi ThrugelMir, and thanks for a thoughtful reply...

The entire deal ends next July/August, with no built-in options to switch to any alternative product.

Our best hope is that the lender might be wiling to re-negotiate the end-date, but we would be reluctant to shell out on any kind of valuation charge, or re-arrangement fee, because the lender stands to gain more than we do by avoiding the need to re-possess.

We are old, with few commitments, and Bankruptcy is not particularly frightening. Renting was looking like a reasonable option, until the cuts in Housing Benefit came over the horizon...

Cheers

MMM

Best to speak to your lender now rather than later. Then you've time to explore the options. Lenders have a duty to assist as far as possible.

Lenders factor in defaults and losses into their lending. So to them you're just another statistic.

Wish I could offer constructive suggestions to assist you.

MegaMiniMouse

Thanks again Th.mir.

I think that right now might be a little premature to contact the lender - they would simply put a tag against our name.

I am interested in your comment that lenders are 'obliged to assist' - what does that mean, precisely?

From my viewpoint, it is the lenders who generated the present situation, and therefore it is they who should 'bear the brunt'.

We are able and willing to extend our original contract with the lenders, but the collapse of the value of the property which they accepted as good collateral is entirely due their their own misjudgments.

MMM

Thrugelmir

Whether you approach now or later. Is a matter for you to decide. I doubt if the situation is going to change materially in 12 months.

As from the 30th June, lenders are obliged to use repossession as a last resort. You mentioned that you could comfortably afford the mortgage interest so maybe there's an agreeable solution or compromise.

Personally when I see an obstruction ahead I deal with it. As that way you have more control of events. Rather than events dictating to you.

The current situation is a combination of poor Government Regulation of the banks and mortgage markets, some bad banks (failing to maintain sensible lending policy) and peoples natural greed (to make money money by doing nothing). Now everyone pays the price.

If you don't wish to speak to your lender try the CAB for advice.

MegaMiniMouse

Thrugelmir wrote: »

Whether you approach now or later. Is a matter for you to decide. I doubt if the situation is going to change materially in 12 months.

As from the 30th June, lenders are obliged to use repossession as a last resort. You mentioned that you could comfortably afford the mortgage interest so maybe there's an agreeable solution or compromise.

Personally when I see an obstruction ahead I deal with it. As that way you have more control of events. Rather than events dictating to you.

The current situation is a combination of poor Government Regulation of the banks and mortgage markets, some bad banks (failing to maintain sensible lending policy) and peoples natural greed (to make money money by doing nothing). Now everyone pays the price.

If you don't wish to speak to your lender try the CAB for advice.

I have contacted more than one Debt Advice Service, and with the best will in the world, they are equipped only to deal with people who have lost control of their financial situation. Like you say, the time to take action is sooner rather than later - I am looking more than a year ahead, and, if anything, the situation is likely to deteriorate.

I do not accept your 'trade-off' between the banks' stupidity and the customers' greed - in my view, the banks were greedy and the customers were stupid, but the responsibility lies entirely with the banks. It is noticeable that the new LibDem government (in the name of Vince Cable) no longer criticises the Banks, but commits itself to massive Conservative cuts in Welfare Support instead of taxing the State-Supported Banks!

MMM

Thrugelmir

MegaMiniMouse wrote: »

I do not accept your 'trade-off' between the banks' stupidity and the customers' greed - in my view, the banks were greedy and the customers were stupid, but the responsibility lies entirely with the banks. It is noticeable that the new LibDem government (in the name of Vince Cable) no longer criticises the Banks, but commits itself to massive Conservative cuts in Welfare Support instead of taxing the State-Supported Banks!

MMM

"Banks" is a broad generalisation. Its hard to attack banks which haven't taken state support. Lloyds, HSBC and Nationwide to name but 3 have remained profitable throught the credit crunch and not required Government funding. The issues at Lloyds all relate to HBOS.

The failed ones are the drain on taxpayers money. NR and B&B.....

Jojo1daffy

Hiya! - Me again!
I have to let you know that your lender would not 'bear the brunt' or 'lose a lot of money by repossessing' - you would. You would be held accountable for the shortfall, selling fees, legal fees, possibly interest and they can pursue you for 12 years and more.
You need to think very carefully. If all is ok just now but you feel that difficulties are on the horizon then you need to batten down the financial hatches now. If you are so worried about the mortgage you might be better selling, or cutting back and making additional payments ( as others have suggested).
I would really advise you to speak to your lender.
Good luck.

MegaMiniMouse

Jojo1daffy wrote: »

Hiya! - Me again!
I have to let you know that your lender would not 'bear the brunt' or 'lose a lot of money by repossessing' - you would. You would be held accountable for the shortfall, selling fees, legal fees, possibly interest and they can pursue you for 12 years and more.
You need to think very carefully. If all is ok just now but you feel that difficulties are on the horizon then you need to batten down the financial hatches now. If you are so worried about the mortgage you might be better selling, or cutting back and making additional payments ( as others have suggested).
I would really advise you to speak to your lender.
Good luck.

Thanks for your reply. Unfortunately, the entire mortgage is due to be repaid in one year from now, and no amount of belt-tightening will produce the desired result. I have been trying to 'sell up' for the last three years, with diminishing chances of success.

I am close to retirement, and if the lenders decide to repossess and sell at auction, then there is zero chance of them recovering their shortfall from me.

But if they would choose to allow me to continue with my existing repayments, then there is a chance that, before I die, the property would recover in value to the point at which the lender would be able to recoup their original investment.

MMM

Jojo1daffy

MegaMiniMouse wrote: »

Thanks for your reply. Unfortunately, the entire mortgage is due to be repaid in one year from now, and no amount of belt-tightening will produce the desired result. I have been trying to 'sell up' for the last three years, with diminishing chances of success.

I am close to retirement, and if the lenders decide to repossess and sell at auction, then there is zero chance of them recovering their shortfall from me.

But if they would choose to allow me to continue with my existing repayments, then there is a chance that, before I die, the property would recover in value to the point at which the lender would be able to recoup their original investment.

MMM

Well you need to put that solution on the table for them and see what they say. To be honest I think this is a situation that is going to arise a lot and the mortgage lenders should have a strategy to deal with it, so I would bite the bullet if I was you and go and talk to them. Will save yourself a years worth of sleepless nights if it's dealt with and you know whats going to happen.