what happens when we hand keys back

worryworm

im really stuck.i have a mortgaged flat which we lived in for a few years then had a growing family. we could not sell the flat and after awhile we were lucky enough that my family purchased a family home for us which is now in my name with no mortgage. we cannot sell the flat and cannot afford the mortgage.we have tennants in but they only pay a small amount each month. we have been struggling for over 2 years now. we have had advice saying best option is to hand keys back but how will this affect our current home. there will be a shortfall from the sale of the flat but can they take our house?? we dont want to make money, just ease the burden

casualwalks

When you say cannot sell, how hard have you tried? Keep lowering the price. The bank are going to be selling the repossession in the same climate, so I don't see that you are better off in this way. Have you tried selling at Auction?

fatbelly

The lender will eventually approach you regarding the shortfall. What happens then is covered in this factsheet

Factsheet | Mortgage Shortfalls

antrobus

I believe that the sequence of events would be something like:-

- lender takes possession of property
- lender issues notice to evict tenants
- lender sells property for whatever it can get
- lender pursues you for the shortfall
- lender registers a charging order against your current home for the shortfall plus associated costs

The charging order would mean that the lender had first dibs on the sale proceeds of your current home should it ever be sold. The lender might also ask a court to order the sale of the home, so that it can get its money back immediately. Normally that doesn't happen, but in your case you've effectively received a large wodge of money which has been spent on buying another property rather than on clearing your existing debts, so a court might take a different view.

And whatever happens the lender will register a default against your name which will likely hamper your chances of obtaining any other kind of credit in the immediate future.

worryworm

the flat has been on the market for about 4 years starting off in the boom valued at 120000 now we dont have any interest at 65000, auction has not been tried as we didnt know what to do re outstanding mortgage, our estate agent wont market at mo because we have tenants in, we cannot afford without the tenants and last time it was empty for nearly a year and we were realy struggling. catch 22 we are in

Trollfever

Tenanted flats will find auction buyers.....................

..............at the right price.

Cut your losses whilst you can.

p00hsticks

Trollfever wrote: »

Tenanted flats will find auction buyers.....................

..............at the right price.

Cut your losses whilst you can.

But from the sound of it, unless the OP can raise finance to pay off the mortgage shortfall at the point of sale, this isn't going to be possible.

OP, is there any possibility of rasing a mortgage on your current property to enable you to pay off the mortgage on the rented property so that you could then freely put it up for auction ?

fatbelly

antrobus wrote: »

I believe that the sequence of events would be something like:-

- lender takes possession of property
- lender issues notice to evict tenants
- lender sells property for whatever it can get
- lender pursues you for the shortfall
- lender starts court claim
- lender gets county court judgement (could be to pay by instalments or in one lump)
- if you default on the ccj, then the lender can consider enforcement, which in your case is likely to be:
- lender registers a charging order against your current home for the shortfall plus associated costs

Just addded a couple of extra stages in there...

DVardysShadow

fatbelly wrote: »

I believe that the sequence of events would be something like:-

- lender takes possession of property
- lender issues notice to evict tenants
- lender sells property for whatever it can get
- lender pursues you for the shortfall
- lender starts court claim
- lender gets county court judgement (could be to pay by instalments or in one lump)
- if you default on the ccj, then the lender can consider enforcement, which in your case is likely to be:
- lender registers a charging order against your current home for the shortfall plus associated costs

Just addded a couple of extra stages in there...

Looks to me like the sensible thing to do is go to the lender and discuss first.

I think there is a solution along the lines of remortgage the current home with the same lender. Might as well, since it would go that way ultimately. Turf the tenants out at the earliest opportunity. Sell the flat for 40,000 and put this to reducing the mortgage.

Trollfever

DVardysShadow wrote: »

Looks to me like the sensible thing to do is go to the lender and discuss first.

I think there is a solution along the lines of remortgage the current home with the same lender. Might as well, since it would go that way ultimately. Turf the tenants out at the earliest opportunity. Sell the flat for 40,000 and put this to reducing the mortgage.

From the information posted OP appears to be able to negotiate with the existing mortgage lender from a position of strength, not weakness.