Repossession - how does it work?

MegaMiniMouse

It is possible that I will have to face repossession some time next summer, and I would like to know exactly how the process takes place...

If I receive an offer to buy which is less than the outstanding mortgage, how will the lender react? Will they negotiate over how to pay off the balance, or will they pursue me to Bankruptcy?

Will they release the charge on the property even though I have not paid off the mortgage in full?

If I decide to walk away from the property, how soon will the lender take action against me? How soon will I no longer be responsible for insuring the propertry and paying Council Tax etc?

MMM

LisaLou1982

MegaMiniMouse wrote: »

It is possible that I will have to face repossession some time next summer, and I would like to know exactly how the process takes place...

If I receive an offer to buy which is less than the outstanding mortgage, how will the lender react? Will they negotiate over how to pay off the balance, or will they pursue me to Bankruptcy?

Each lender is different but typically they will progress to repossession if you cant clear the outstanding amount on completion.

Will they release the charge on the property even though I have not paid off the mortgage in full?

If the property is repossessed, the charges will continue until the property is sold although the mortgage interest payments should stop once the court has decided the lender can take possession

If I decide to walk away from the property, how soon will the lender take action against me? How soon will I no longer be responsible for insuring the propertry and paying Council Tax etc?

The lender can chase for upto 12years for debts outstanding on the property. You will cease to be responsible for council tax and insurance on the day repossession takes place.

MMM

hope this helps xx

SouthCoast

Facing the prospect of repossession can be frightening, but it’s important to remember that you are not alone. There is a lot of help available from government, from lenders and from advice agencies. The information here will give you the tools you need to prevent your home being repossessed. You'll also find stories from some of the 330,000 homeowners who have already received help and advice.

http://mortgagehelp.direct.gov.uk/default.aspx

And:

http://england.shelter.org.uk/get_advice/repossession

Jojo1daffy

"If I receive an offer to buy which is less than the outstanding mortgage, how will the lender react? Will they negotiate over how to pay off the balance, or will they pursue me to Bankruptcy?"

They will negotiate with you and you would be able to come to an arrangement to pay. They may also accept a full and final settlement offer on the mortgage shortfall balance that is less than you would actually owe.

Fire_Fox

MegaMiniMouse wrote: »

It is possible that I will have to face repossession some time next summer, and I would like to know exactly how the process takes place...

If I receive an offer to buy which is less than the outstanding mortgage, how will the lender react? Will they negotiate over how to pay off the balance, or will they pursue me to Bankruptcy?

Will they release the charge on the property even though I have not paid off the mortgage in full?

If I decide to walk away from the property, how soon will the lender take action against me? How soon will I no longer be responsible for insuring the propertry and paying Council Tax etc?

MMM

Why would you allow that to happen if you have a year's notice? Why not sell up, get consent to lease and rent somewhere yourself or take in a paying lodger? Do you understand the implications of bankruptcy?

MegaMiniMouse

Thanks for the replies guys!

The big difference between my situation and the situation of most people facing repossession, is that I am having no problem at all making my monthly payments. My problem is that my mortgage has an End Date which is next summer (July/August time), with no option to transfer to another product.

It seems almost certain that I will be in negative equity, and since Self-Certificated mortgages are no longer available, I will be unable to re-mortgage.

It would make sense for the lender to simply ignore the End Date, and allow the mortgage to continue, but I would not be willing to pay out any kind of fees, because the Lender would stand to gain even more than me from a simple extension of the mortgage.

Are there any solicitors etc who would specialise in taking on the negotiations with the lender? Most of the highly admirable debt advice agencies are geared up to helping people who are seriously struggling with their day2day expenditure, and I am reluctant to take up their time.

MMM

MegaMiniMouse

Fire_Fox wrote: »

Why would you allow that to happen if you have a year's notice? Why not sell up, get consent to lease and rent somewhere yourself or take in a paying lodger? Do you understand the implications of bankruptcy?

Selling up is not an option bcos of negative equity. Bankruptcy is less of a problem for me than for many others because I am old and have no commitments. Lodgers are a pain, but right now it is lodgers who are paying my mortgage!

Don't forget, my mortgage is due for redemption, no questions asked, this time next year

MMM

Fire_Fox

MegaMiniMouse wrote: »

Selling up is not an option bcos of negative equity. Bankruptcy is less of a problem for me than for many others because I am old and have no commitments. Lodgers are a pain, but right now it is lodgers who are paying my mortgage!

Don't forget, my mortgage is due for redemption, no questions asked, this time next year

MMM

Are you sure your entire mortgage is to be called in - it's not the fixed rate that is ending so you go onto the standard variable rate? Have you hit 25 years (or whatever term), if so why are you still in negative equity?

How old are you, why can't you get a salaried position instead of needing to self-certify? Have you written to your lender yourself or approached a mortgage broker? It is better for the lender if you sell than are repossessed and go bankrupt and they are supposed to be helping borrowers. Are you sure you are not entitled to any benefits such as Support for Mortgage Interest?

MegaMiniMouse

Fire_Fox wrote: »

Are you sure your entire mortgage is to be called in - it's not the fixed rate that is ending so you go onto the standard variable rate? Have you hit 25 years (or whatever term), if so why are you still in negative equity?

How old are you, why can't you get a salaried position instead of needing to self-certify? Have you written to your lender yourself or approached a mortgage broker? It is better for the lender if you sell than are repossessed and go bankrupt and they are supposed to be helping borrowers. Are you sure you are not entitled to any benefits such as Support for Mortgage Interest?

My wife and I remortgaged at 85% of valuation just days before the banking crisis began.

The intention was to pay off lots of debt, renovate the house, and then sell (before separating and going our own separate ways). A self-cert mortgage was our only option.

Our repayment record is faultless, and there is no reason to think it will not continue to be faultless.

But the mortgage was for a fixed term which ends next August - the assumption at the time was that property prices would continue to rise, and that the lenders would have a rock-solid security for their money. Re-mortgaging would be easy, and if necessary, the property would sell overnight. Their mistake!!!

As you say, lenders are required to re-possess only as a last resort, and in any case, there is a lot of water to pass under the bridge before next summer, so I am not yet ready to start negotiating with them. My intention is to try to get them to extend the term of the mortgage, but without incurring any costs or charges - it is in their interest as much as mine to avoid re-possession.

MMM

sooz

My wife and I remortgaged at 85% of valuation just days before the banking crisis began.

Do you mean a couple of years ago? Or some other banking crisis?

What type of mortgage did you take out - repayment or interest only? And for how many years?

Are you sure you are not misreading the terms of your mortgage, if indeed you do mean the recent banking crisis, & that next year is the end of your fixed rate, not your fixed term?

MegaMiniMouse

sooz wrote: »

Do you mean a couple of years ago? Or some other banking crisis?

What type of mortgage did you take out - repayment or interest only? And for how many years?

Are you sure you are not misreading the terms of your mortgage, if indeed you do mean the recent banking crisis, & that next year is the end of your fixed rate, not your fixed term?

The original mortgage is dated July 2006, with a repayment date of July 2011. It is a self-certified interest-only tracker mortgage.

In August 2007, just before Northern Rock hit the buffers, and the Mortgage market dried up, we took out a further advance which took the total debt up to 85% of valuation. The further advance is also a self-certified interest-only tracker, with the same repayment date as the principal loan.

Our intention was to use the further advance to sort out a few things that needed doing to the house and also to re-organise our personal finances so that we could sell up prior to separating and start our new lives with very little capital, but completely debt-free.

I now live in the house by myself, with a changing succession of lodgers. Maintaining the monthly payments is no problem at all, and never has been, but what I would like to do more than anything is sell the house and pay off the mortgage as originally planned.

Unfotunately, the state of the market makes it very likely that I will be unable to sell for a price which will cover the mortgage repayment.

I think there must a chance that the lenders would renegotiate the end date of the mortgage (I think they would be crazy not to, given that there has been no problem whatsoever with my repayment record), but my personal view is that the housing market is likely to take anything up to a decade or more to recover to the point where I would be certain of being able to repay the loan, and I really have no wish to have such a millstone around my neck for that length of time.

If I cannot sell by next July, I will be very tempted to simply walk away from the property, and let the Lender deal with the situation in whatever way they see fit - as I have already said, I am close to retirement, with no pension, and no assets, so Bankruptcy is not a particularly frightening prospect.

MMM