What happens if you cant keep up the payments?

jt1965

I was looking for advice as to what normally happens in the following scenario.

Suppose you buy a house and you contibute 70% of the purchase price from your own funds and borrow the remaining 30% of the price in the form of a mortgage. You then find a couple of years down the line you've lost your job and cant keep up the payments so the lending bank repossesses the property. I presume to cover their losses the bank then tries to sell it on. Do they own it 100% at this point i.e. having put 70% of your own money in in the first place do you get anything back or does the lending bank keep everything.

globalds

Surely you would just sell it yourself . Then just give the bank back the money you owed them ?

clutton_2

you will need to pay back the amount you borrowed ... however on top of that will be your lenders fees and additional charges simply because you are in financial difficulties...

somewhere you will have a leaflet telling you what these are...

you could ask to go onto Interest Only repayments for a temporary period, as this may reduce your monthly payments.....

talk to your lender.... thats a must......

have you applied for any state benefits to help you ?

SouthCoast

Having problems with your mortgage payments?

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

Ankatden

In the case that you mentioned where you have put in 70% of the equity then clearly you are in a better position to sell youself rather than allowing the bank to reposess and sell on.

The bank's only interest is clearing their debt so for example if the property was worth £100k and you still owed £30k when repoed the bank will sell it to recover their money plus interested and charges and everything else they could think of.

If the property still theoretically worth £100k went to Auction it may sell for £60k on a good day BUT after Auction fees say 5% plus vat, Mortgage redemption £30k plus £15k of interest, penalties and charges you might get back £10k V £70 k equity you put in.

Turn this around and you sold yourself with the bank fully aware of you selling to repay them, most banks will be supportive if they know there is enough equity to ensure they get repaid. So if you sold for £85k as a quick sale then paid off bank £30k plus some interest but a lot of their charges are not relevant as they didn't reposess it. Even at 7k of charges plus £3k of agents and solicitors fees you would end up with £40-45k.

clutton_2

""Mortgage redemption £30k"" i doubt that very much......

jt1965

Thanks to everyone for their advice