Voluntary Repossession

andyandflo

Hi, a couple of months ago we had to give up our home. Since becoming ill and having to leave work we could no longer afford the mortgage. We received no help with the interest from the Government.
All of the monthly repayments had been made in full since 2002 so we had no arrears.
The house was valued at £195,000, but for a quick sale it would go for £175,000.
There was a mortgage of £103,000 on it with the Woolwich.

I handed the keys in at the local Barclays Bank, signed a letter or something and moved out into a rented flat.

What happens next? Will the bank give us the equity?

GMS

Any excess funds after the costs of sale and outstanding mortgage will be returned to you.

Speak to the lender for an update.

opinions4u

The equity, when sold, should be yours.

The problem you have is that banks usually have a raft of fees linked to this situation on top of all the selling costs. Repossessions also tend to attract lower sale prices. This could significantly reduce the amount you end up seeing. Keep in touch with the bank regarding the sale of the property.

While you may have had good reason to hand the keys in, other readers should treat this is a last resort. Achieivng a private sale is often a far better course of action.

Good luck.

andyandflo

opinions4u wrote: »

The equity, when sold, should be yours.

The problem you have is that banks usually have a raft of fees linked to this situation on top of all the selling costs. Repossessions also tend to attract lower sale prices. This could significantly reduce the amount you end up seeing. Keep in touch with the bank regarding the sale of the property.

While you may have had good reason to hand the keys in, other readers should treat this is a last resort. Achieivng a private sale is often a far better course of action.

Good luck.

Hi,

Thanks for that.

Yes the reason I had was that whilst we were up to date with the repayments, I realised that we would be better off renting and having help with the rent payments than carrying on with the mortgage payments with no help.

I can't really understand why you would say that it is the last resort. I was told by my bank that I had to do something now instead of waiting to see what happens. It was the bank that suggested handing the keys in. They said that I didn't have any choice in the matter.
I could have continued to pay the mortgage in full, but it was leaving us a little short for our normal daily living expenses.

peterbaker

Whilst I can understand your desire to be masters of your own destiny, who at the bank, exactly, told you that you had no real choice in the matter? Surely they didn't suggest it was the only course?

Is this really the way it is in UK now?

CLAPTON

andyandflo wrote: »

Hi,

Thanks for that.

Yes the reason I had was that whilst we were up to date with the repayments, I realised that we would be better off renting and having help with the rent payments than carrying on with the mortgage payments with no help.

I can't really understand why you would say that it is the last resort. I was told by my bank that I had to do something now instead of waiting to see what happens. It was the bank that suggested handing the keys in. They said that I didn't have any choice in the matter.
I could have continued to pay the mortgage in full, but it was leaving us a little short for our normal daily living expenses.

if you could have continued to pay the mortgage then it would have been much better to stay and sell ... the bank will probably get a lower price than you and add lots of fees etc.

absolutely the last resort.

andyandflo

peterbaker wrote: »

Whilst I can understand your desire to be masters of your own destiny, who at the bank, exactly, told you that you had no real choice in the matter? Surely they didn't suggest it was the only course?

Is this really the way it is in UK now?

Thanks for that.
I went to the bank to ask for help. I explained that I could not get any help with the mortgage interest through Pension Credit. It was tight every month, but manageable. I asked what would happen if I stopped making the repayments, they said they would repossess the house. They explained that if they did that, I would have a black mark against me.
They pointed out that now is the time to get things sorted before they got to that stage.
They asked if I could guarantee to make every payment in the future which I said I couldn't, but would certainly try.

They pointed out that as time went on and if I got more and more into arrears, the equity may not be enough to cover it.
They said that to keep my good credit name, I should voluntarily hand over the property and they would sort out the sale for us, and after clearing the mortgage, we would get the equity that was left.
They made no mention of fees etc other than estate agents fees and certainly made us feel that it would cost no more for them to sell it than if I sold it myself. In fact they said it would cost a lot more if it went to court.
They came up with a letter which we both signed saying that if the proceeds didn't cover the mortgage, then we would pay the difference. The form, which I have here now, says that the decision to hand over the property was ours and that we had been advised of other options available - whatever those are, other than the choice of compulsory repossession. There were no other choices given.
So obviously we accepted and trusted the bank to give us the best advice possible. All we were concerned with, and we accepted that the property would sell for £175,000, was that the £70,000 or so we had in equity should come to us. It is our life savings.

The person at my local Barclays Bank was the 'mortgage advisor' or something like that.

opinions4u

Does the letter you signed make any suggestion that you should take legal advice first?

Trying to make a private sale is a million times better (in most cases) than voluntary or involuntary repossession.

While doubtless there is more to it, what's been posted so far makes me feel quite ill.

I would suggest you get a "free half hour" with a solicitor and ask them if there is any recourse following the signing of that piece of paper. Alternatively talk to CAB or Shelter.

andyandflo

opinions4u wrote: »

Does the letter you signed make any suggestion that you should take legal advice first?

Hi, Yes there is a line at the bottom that says that I do have that right. I asked about that, and the bank told me that that would cost money for a solicitor, and the advice the bank had given would be no different.

When I thought about it, I could not see any other choices available to me, other than to win on the lottery to pay off the mortgage, or get an inheritance.

Could I continue to pay the mortgage - yes and no, it was a struggle.
Should I stop making the payments - no because of what the bank would do and I would lose my good name.

Best was to get out, sell the house quick, pay off the mortgage and have the equity.

Senior_Paper_Monitor

I've been pondering how to answer this thread (normally I just leap in) but I didn't wan't to be seen to critizing the OP who perhaps had managed to resolve his situation to his and his partner's satisfaction and I didn't want to add to what has been a difficult time for them. BUT (primarily to warn others about going down the same path) .....

I cannot follow the wisdom of going to a bank for 'advice' at the best of times, I can picture no way they are are qualified for debt counselling (or for one of their biggest rip-offs, that of being executors, attorneys or trustees - but that is an argument for another day).

For anyone facing similar problems to the OP please go and see a debt counsellor or a small mortgage adviser/ifa, who will spend some time with you talking about the options, before taking a final decision. Most will do so, at least initially (certainly my boss will happily donate a few hours in such circumstances to see what can be done - if only with a future customer and/or referrrals in mind) without charge. Also avoid anyone who starts talking debt management plans/IVAs/bankrupcty (particularly if charging for the same - support for these is available free of charge from charity/government funded organisations) without a far more detailed consideration of the facts.

On the information above I suspect the OP was actually in a controllable situation, but it appears no overall evaluation was made nor other options considered.

I am also concerned that he appears to have been advised that this action was not going affect his credit rating (I just don't believe that), he was not made aware that interest/penalties would continue to be accrued (I strongly suspect both will) and that additional costs administration fees will be incurred (as they certainly will).

I am frankly horrified at what appears to have been highly amateur 'advice' from an inexperienced and junior bank employee and which has major repurcussions on the OP and his family.

I applogise unreservedly if in saying these things I am causing the OP further anguish, but if this can stop just one person going down this route without full consideration and understanding of the overall position and options then I feel it necessary.

RecoveringAlcoholic

OP's other posts may help to add some clarity.