Trying to solve my mortgage problem

angeldimana

Firstly Hi to all!!

Ive viewed these forums with interest previously but just signed up and now hoping someone may be able to help with our growing problem.

Ok, this may be a bit 'long winded' but let me try to explain as well as i can.

My wife and our 1 year old son emigrated last year and left behind our old house in the UK that is still for sale, empty and we are still paying the mortgage.
The problem is that we now at the point where we cant afford to pay the mortgage anymore. We have several other out goings, bills and also another private mortgage in our new country of residence (Italy).

The UK mortgage was taken out just before the recession hit and we have been paying around 6.58% on a 5 year fixed rate (interest only) with about 2 years left to run.
The house has been for sale for 3 years and up until yesterday we thought we had sold the house but then the buyer pulled out of the sale.
Ive tried negotiating with Nationwide our lender but they will not shift us to a different deal, reduce the mortgage payments or accept a lower settlement on the mortgage to help us with our sale.

Theres no equity left in the house as we re-mortgaged to help fund our Italian purchase.

We have considered renting but the rent will not cover the monthly mortgage payment giving us around a £100 shortfall so dont really want to do that and also because of the hassle that renting brings.

Some people have suggested that we just forget about the UK house and make a clean break over here but i really would like to pay the mortgage of and have no recourse should we return to the UK at any time. However, my priority now has to be to ensure that we make payments on our family house in Italy and that is at jeopardy from the UK payments that we have to make.
Paying both mortgages would account for virtually 90% of my monthly wage.

Any help would be greatly received.

Sorry for the long explanation but to be honest thats about as short as i can make it.


Thanks

hillcats

Oh dear, if only you had waited a little longer until you had sold in the UK first...
Is there any room to lower the market price any more, to guarantee a sale - it may leave you with a smallish debt owing at the end but maybe a bit better than existing situation?

angeldimana

Not really an option. I dont really want to carry on with any debts left from an house that i no longer own.
Outstanding on the mortgage is roughly - £120,000 + £3600 early redemption payment.
So about £123,600
Realistically its probably worth about £130k ish and surveyor valued 3 years ago at £140k.
We recently had an offer of £117k from a cash buyer with no chain who wanted it to offer as rental.
So i thought OK i'l ring nationwide and see if they'd accept it as a final settlement. Bearing in mind that i now live abroad so presume that if i defaulted on my mortgage they would find it very difficult to pursue me for any other costs and also the fact that they would still be making a reasonable profit from me following three years of high interest mortgage payments.

To one extent, i dont care if they take the house as i'm done with and it doesn't make any difference to me other than loosing face with my old neighbours, etc

I just want to clear it and resolve the mortgage.

McKneff

They could repossess your house, sell it and get 30K less than is needed, but you will be stuck with the 30K debt.

Better to sell at 117K, have a debt for 6.6K than a debt of £30K or more surely

Thrugelmir

angeldimana wrote: »

Bearing in mind that i now live abroad so presume that if i defaulted on my mortgage they would find it very difficult to pursue me for any other costs

Easier than you may think. If they so wished.

European Order for Payment (EOP) procedure
The EOP was introduced in December 2008 and provides an easier and quicker process for creditors to recover uncontested monetary debts in a cross-border claim.

The procedure operates on the basis of standard forms and a uniform process across all EU member states. It can be used in both civil and commercial matters and does not require the use of lawyers. The EOP is optional and can be used instead of existing procedures under national law.

If you obtain an order using the EOP process, you will not have to undertake intermediate steps to enforce the decision in another EU member state.

angeldimana

Yeah, OK - but ive already thought of what has been suggested so far. And i'm obviously trying to make a solution and pay the mortgage.

What do people think of the possibility to convince Nationwide to let me re-mortgage in order to make the payments more affordable and enable us to rent?

Our current mortgage deal is crap!!

They have made a profit on our deal so far as we have paid back to them about £23,000 in monthly installments over the three years we've had it so i thought they might at least consider it or accepting a lower offer for full redemption.

Thanks

WellKnownSid

angeldimana wrote: »

Paying both mortgages would account for virtually 90% of my monthly wage.

angeldimana wrote: »

They have made a profit on our deal so far as we have paid back to them about £23,000 in monthly installments over the three years we've had it

You you're paying 638 a month-ish interest only on the UK property and together the mortgages come to 90% of your wage. That's not an income to be servicing two mortgages. Where is the exchange rate risk - are you earning in Euros or Pounds?

Is there no way of increasing your income? I cannot see the Nationwide accepting you for anything else - you're already on interest only anyway, with zero equity and zero affordability.

Have you done everything you can to get a sale? If the house has been empty that time, then it may not be in a great state to market - a few tins of Dulux and a good airing may be needed.

What options do you have on your Italian property? Can you rent that out over the summer and move into a cheaper rented apartment / whatever to generate some cash? You will have to think outside the box on this one. I don't think changing your UK mortgage will be an option...

angeldimana

Thought of that but not really an option.

I work from home freelance and all my equipment is here. My Italian property isn't really the problem. Its the UK house that i want offload.

I think we may have to bite the bullet and rent it at a loss but what will happen in two years when we are at the end of our 5 year fixed mortgage?

At least the early redemption would be over and that would save £3600 +.

In two years would Nationwide be more willing to give us an alternate mortgage product? and what will the mortgage rates been in 2013?

? ? ? ? ? ? ? ? ? ?

Thrugelmir

angeldimana wrote: »

My Italian property isn't really the problem.

Then maybe you sell it to clear your UK debt, and enable you to then move on with your lives.

firesidemaid

i think your best option would be to rent your uk house out and make as much as you can per month.

in the mid to late nineties i and many others had to do the same as the houses we had bought just a few years earlier had done down in value too.

contact your local council in the uk to see if they would like to rent it from you, it might make it a bit easier. do you have permission from your lender? you will have to inform your buildings insurance co plus consider any tax etc implications.

another option, is to ditch the fix, pay the penalty and re-mortgage - but with NO equity you would not get a better rate, if anyone to lend to to you at all.

good luck

WellKnownSid

firesidemaid wrote: »

i think your best option would be to rent your uk house out and make as much as you can per month.

Don't forget that the OP has been in Italy more than 183 days so will be liable to pay tax there and not in the UK.

They will have to declare their worldwide income including any income from renting out their UK property, but may not depending on the Italian rules be in a position to offset any expenses as they could if they were UK tax residents. This could absorb a %age of any rental income.