Question about mortgage, secured loan and reposession

mmace

Apologies if this is in the wrong section, I wasn't sure where to ask...

OK, here's the situation.
7 years ago me & the wife bought a 1 up 1 down (tiny) back to back terraced house. The lounge is around 10' x 7', the bedroom a bit smaller.
The mortgage is interest only and for £90,000, we bought the house for £110,000. Not long after we moved in we got a secure loan for £25,000 and nearly 7 years later we still owe over £30,000 on that loan!

We now have a 4 year old and 1 year old. We literally have no room left. In a few months our youngest will have grown out of his cot and we physically have no room to put a bed anywhere for him.
The house has plummeted in value and is now only worth just over £100,000.

What I'm wanting to know is, what would happen if we rented somewhere and said to the mortgage and loan lenders here's the house, you can reposses it?

Would they chase & hound us?
I know it would affect our credit rating, but the way it is going right now we won't be able to afford any bills etc by the end of the year so that would screw us up anyway.
It's upsetting when my 4 year old says he has no room to play and he wants a garden to play in but we cannot sell the house as we cannot pay back the £15,000 that we would need to (both lenders have said we cannot take the debt with us and put on another house, we would need to pay it all back)


Any help/advise would be appreciated

CloudCuckooLand

They would pursue you for any shortfall.

Get to the debt-free forums, post your SOA (statement of affairs), and get help with trimming expenditure.

Two boys can sleep in the bedroom, you sleep in the lounge.

Not easy, but you made a choice not to be prepared...twice.

mmace

CloudCuckooLand wrote: »

Not easy, but you made a choice not to be prepared...twice.

No, we didn't, we prepared, it just so happened the house prices crashed at the exact time we went to sell the house, the house was on the market for 2 years without a single viewing. We already had an offer accepted on another house nearby, then the sh*t hit the fan all over the world. To say we weren't prepared for the kids is stupid.

originalmiscellany

How were you planning to pay off the mortgage? Interest only assumes you have a strategy to clear the mortgage...
Adding on a loan for 1/3 of the mortgage is worrying too - again you seem to have no way to clear that.

Sadly, I think you'll be the first of many people in the next few years who have over borrowed with no understanding of paying off your debts.

Thrugelmir

mmace wrote: »

No, we didn't, we prepared, it just so happened the house prices crashed at the exact time we went to sell the house, the house was on the market for 2 years without a single viewing. We already had an offer accepted on another house nearby, then the sh*t hit the fan all over the world. To say we weren't prepared for the kids is stupid.

Being on an interest only mortgage means you have not repaid any of the mortgage debt in 7 years.

In addition you took out a secured loan, one assumes to clear other debt.

Many people gambled that rising property prices would effortly resolve their debt problems. Unfortunately that was never going to be the case. As just like a game of pass the parcel the music eventually stops.

So your priority should have been to repay as much as you could afford to. That was your choice.

Suggest you follow CloudCuckooLand's advice. As although it may be a long haul often there is a way of tackling issues. If your heart is really into achieving something.
.

al1989

I hate how judgemental people are on this forum, I thought people could come here to ask for help and would receive valuable advice without the reply being 'it's your own fault and they have to live with your decisions'. I'm sure the bloke knows he's not in the best of situations, hence the reason he's on here asking for advice.

'Not easy, but you made a choice not to be prepared...twice.' Thanks so much for your vaulable input. That's really making his situation better isn't it?

Saying things like 'you should have' also isn't going to help. The guy is asking what his options are, not what he should have done 7 years ago!

I've only been part of this forum for a few days and I don't think I'll be sticking around long...

Thrugelmir

al1989 wrote: »

I hate how judgemental people are on this forum,

I've only been part of this forum for a few days and I don't think I'll be sticking around long...

Facing reality and accepting personal reponsibility is a major step forward for many people. As there isn't normally a quick fix solution. Just sheer hard work . That requires committment. Which you've either got or not. So ultimately destiny lies with the individual.

Being judgemental is being on this forum for a few days then not sticking around. Just because you disagree with other posters comments. That's not making any contribution at all.

surreybased

I know that the comments feel very harsh and I understand how frustrated you feel about living space but the benefit is that your children are still young so you have some time to correct the situation.

The answer to your question about being pursued for the debts has been addressed and walking away from the debts will just increase the stress and pressure you feel now.

I think you should post on the Debt Free forum and post details so that others can give you advice. Behind the issue of interest free mortgage and loan is a overspending problem/budgeting problem and the other posters are encouraging you to sort out the root cause. It's likely you will need professional free debt advice and this is really the best avenue to follow.