Cannot repay interest only mortgage at end

ukclare

My friends have an interest only mortgage and are unable to repay the mortgage which is due to finish in a few weeks. They have not been able to find a mortgage with another company as so I am sure will be facing repossession.
Can anyone shed any light on this - they owe about 100,000 which they are unable to repay. I believe the loan was with Capital Home Loans, which are no longer lending (but have been taken over by Bank of Ireland.) They are under the impression that, as they have always paid and never had arrears, a judge would not grant a repossession order in this climate- would this be the case as they clearly owe the money?

Any ideas or input would be gratefully received!!!!

wymondham

ouch.... have they not been paying into anthing like an endowment policy etc? Did they realise that as it's interest only, they have not really been paying off the mortgage at all over these years??

ukclare

They were hoping that property prices would rise and they could clear the balance with the sale - leaving a nice little profit.
In actual fact they must have had their heads so deeply buried in the sand .... maybe they did not notice the slight blip in the economy!

However, the mistake has been made and it is too late to rectify now - we just have to work out their best way forward.

Seriously, there may be some capital in pensions or policies knocking about but only a token amount and nothing very substantial to offer the company.

Radionotme

I'm amazed that it's only with a few weeks to go that they're worrying - shouldn't alarm bells have been ringing for the last couple of years at least?
As for the judge and repossession, surely the very best they could hope for is some sort of negotiated agreement to pay off the debt, but if they're at the end of one mortgage, then the term of that debt is likely to be very short, and depending on equity the rates could be pretty bad too. Any idea what the house is worth now?

ukclare

It has been a bit of an uphill battle getting them to face it at this stage but we are getting there. (insert very frustrated Smilie here!)

house value about 140,000
outstanding about 115,000

They are almost at retirement age so I would imagine a long term solution is not going to be on offer!

ILW

Sorry, but on the info posted your friends are just idiots. Wht would a judge not issue a possesion order? They owe £100,000 to a lender and through their own choice have no way of paying it. They may be able to sell it to a property company who will then let them rent it.

Cannon_Fodder

Sell, as repossession would result in a lower figure being achieved and possibly ending up owing some money.

If they sell for £135k, at least its £20k to supplement their pensions, find a little rental property somewhere, etc...

Cannon_Fodder

Another potential angle. They must have re-mortgaged to withdraw equity previously - the crash didn't undo 20 years of price growth...

Have they assets from the equity they could sell ?

alona1

Are you sure their mortgage is ending or is it just the fixed term?

Just seems odd not to realise this...

Hope they get sorted though.

ukclare

Thanks so much for the replies - I do appreciate them!

I tend to agree with ILW on their status but that's another story!!!

I don't believe there is any extra equity anywhere.

I am sure they will have to sell - it will probably just take time

ukclare

It was taken out for a period of time which is just about to come to an end in a few weeks