Voluntary repossesion on our shared ownership house please help!

Paul_TT

Hi all, new to the forums, a little about me:

I'm Paul and 2 and a half years ago we made a bad, bad decision! We saw adverts for the shared ownership scheme and long story short ended up in a £186,000 house with a 25% share (75% rental to housing authority on this) this is an interest only mortgage, we have contacted them and the housing trust and told them we are struggling but basically neither of them are prepared to help)

We have never missed any payments out but a combined rent/ mortgage of nearly £850 a month means our combined wage of £2000 a month doesnt go a long way at all once weve paid bills/ petrol/ bus fares etc etc etc we always run out of money about 2 weeks into every month and frankly we are sick of it!

There's only me and the wife now, our daughter has just moved in with her fiance and we are sick of struggling for cash every month, we both work in local hospital and have found a gorgeous flat 5 minute walk away from there which would not only save us £200 a month in living costs (the rent is only £650 a month) but would save all our travelling costs (petrol/ bus fares etc which is around £150 a month)

So what we wanted to do is simply hand the keys back to the mortgage company, I know this isnt the best option but with the current market putting our house up for sale might take years even if it ever did sell and till then we dont have enough money and its getting us down so what can we do?

Has anyone else simply handed the keys back? Speaking to someone else in our position might help

Anyway, thanks for taking the time to read all this and any help would be great!

Regards

Paul (stressed)

Wickedkitten

You can't just hand the keys back, you'll still be liable for the mortgage payments until the house is sold, and all of the lenders costs for selling it along with any shortfall.

Have you tried doing an SOA to see if there are any ways you can cut your costs at all?

Paul_TT

Thanks for the reply but whats an SOA?

Jowo_2

Good advice here. Shelter have different sites for all parts of the UK. They have a helpline for owners who are struggling to pay their mortgage and they outline some of the schemes available to prevent repossession.

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

Abandonment by handing back the keys can be an expensive option

"Giving back the keys doesn't mean that you no longer have a mortgage. You will continue to be responsible for your mortgage until your lender sells your home, even though you are no longer living there.
You will also be responsible for:

• the capital you originally borrowed plus interest
• buildings insurance
• any arrears that you have
• penalty charges for missed payments
• your endowment policy or ISA (if you have an interest-only mortgage).

It may take a long time for your lender to sell your home, so the amount you owe may increase considerably."

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

You say that by moving property, you will save approx £350 per month (which isn't actually the case because your liability to pay your mortgage/rent will continue regardless of your occupation). On a wage of £2000 this represents 17.5% - you could download the MSE budget planner from the free tools section and work through the site to see if you can save the £350 in other ways, such as better tariffs, cheaper groceries, etc. For example,a member of MSE has published a recipe planner, approved by a nutritionist, that feeds a family of four for £100 for all meals in a month. Both the general site and forums are full of money saving advice. They also have an 'Up Your Income' section with info on easy ways to make a bit of extra money.

melancholly

SOA = statement of affairs. head to the debt free board for lots of examples and templates.

£1150 on bills, food and lifestyle should be do-able (not 'easy', but certainly do-able). have a look at the DFW board and take a look at your whole budget, including other outgoings.

BitterAndTwisted

£1150 isn't just do-able it should a flipping breeze. There's heaps and scads of useful tips and advice to be had about getting the best deals on your bills etcetera on this site.

Head over to the Old-Style forum to get the most out of your house-keeping money.

One really good way to get the spending down is for both of you to keep a notebook as a spending diary and write down every single last penny spent for a month. Things that can be cut down on or got rid of altogether will practically suggest themselves.

PLEASE, do not for one moment consider "handing back the keys" or torturing yourselves with the idea of this cheaper rented place nearer to work. You MUST NOT under any circumstances whatsoever risk losing this house. If you've got a spare bedroom you could even consider taking in a lodger: that could earn you about £300 a month tax-free, maybe more depending on where you are.

bigheadxx

http://england.shelter.org.uk/get_advice/finding_a_place_to_live/Buying_and_selling/other_ownership_schemes

dancingfairy

You may be able to sell it and transfer any negative equity into an unsecured loan but you would have to ask your lenders and see what a realistic price would be and how much negative equity you were in.
Otherwise you would be liable for the house if it was repossed and any shortfall anyway which maylead to your and your OH's bankruptcy.
You should get proper advice on this - try National Debtline or CCCS or your local CAB as the implications could be vast. You may be better off going for the voluntary repossession or you might not but you need proper advice on it all.
df

melancholly

BitterAndTwisted wrote: »

£1150 isn't just do-able it should a flipping breeze.

well i agree but i was trying to sugar coat it a bit! cutting outgoings in half isn't always easy to start with, even if in principle, most people could comfortably live off the money that the OP will have!

(i wish there was a button for 'ignore this completely daft advice' because i'd like to have used it for the housepricecrash post above)

Jowo_2

melancholly wrote: »

..
(i wish there was a button for 'ignore this completely daft advice' because i'd like to have used it for the housepricecrash post above)

It's an option, however unpalatable to some, that the OP investigates a debt strategy that will leave him able to walk away from his financial obligations. The recommendation to stay away from paying for debt advice is a sound one.

But he needs to weigh up all his options.

He needs to consider the limited security of tenure in the private sector, the downsides of never having more than 6 months length of tenure, the problems of encountering a landlord that won't meet their repair obligations, possibly not being permitted to decorate the place to their own taste.

I've known people from a previous bubble (in the late 80s I think)who couldn't keep on top of their repayments, handed back the keys and got a council flat, saying its the best thing they'd ever done and how relieved they were.

BitterAndTwisted

Agree about the lack of an ignore/disagree most strongly button!

Cutting down on expenses can take a wee bit of time, I agree. Most of us have some form of short-to-medium-term liabilities which we can't get shot of overnight but I suspect that more people enjoy a champagne life-style on a brown-ale income than they realise. "Because they're worth it". It's only once you start really scrutinising those expenses very closely that you can see where they can be cut but it takes iron-resolve or impending disaster to concentrate the mind enough to want to make the necessary sacrifices.

The OP is in a sticky situation but not one which could justify abandoning their home. Yet.