Help!!!

reallydesperate

I am a separated mother of two young kids. I split from their dad some 16 months back and the house has been on the market since then with little interest. We have a large secured loan on the house which is killing him making the payments. I recently got a settlement figure with a whopping £21,000 added to the original amount we borrowed. So the house is not worth the outstanding mortgage and the secured debt together.

We are stuck paying both of these with no prospective buyer on the horizon.
I called the secured loan place and asked if they could help... to which they said they couldnt. They explained we would have to settle the mortgage and then settle with them. I explained that the house even sold at the valuation 16 moths back will not cover the debt. They said we would have to take unsecured loans to clear the debts.

I have approached a number of quick sell firms who have explained that they cannot help as the secured loan place would stand in their way regardless.

Help, I cant see any way out other than repossession and probably bankruptcy. Anyone have a similar experience. Anyone have any advice at all?

Debt_Free_Chick

You seem to be the "negative equity" trap whereby the mortgage/loans on the property would not be covered by the selling price

Unfortunately, unless you can arrange alternative borrowings to replace what you have, then you have little option but to plod on, until such time as the selling price is sufficient to repay the loans.

Either that, or repossession but that really won't help as you will still owe the shortfall (difference between selling price and outstanding loans)! And ... you may get whacked for charges to do with the repossession proceedings.

You will find it difficult to get another loan as your credit record will show that you already have existing loan commitments. Most online applications will assume that you want a new loan in addition to the existing loans - and you'll get refused as your total (assumed) borrowings would then be considered to be "more than you can manage".

I called the secured loan place and asked if they could help... to which they said they couldnt.

They kind of "don't care" - either they get what's left over once the main mortgage is paid off when the house is sold; or they don't get 100% of what you owe, so they'll pursue you for the rest; or you'll eventually repay what you owe on the current repayment plan. They simply don't care - sorry.

They explained we would have to settle the mortgage and then settle with them. I explained that the house even sold at the valuation 16 moths back will not cover the debt. They said we would have to take unsecured loans to clear the debts.

They know they will get their money back somehow (unless you go bankrupt!) so they are not likely to rush to help you out. The comment about taking out a unsecured loan assumes you can find a lender who understands that you want to refinance existing debt with a new loan, and not take out another loan in addition to existing debts.

I have approached a number of quick sell firms who have explained that they cannot help as the secured loan place would stand in their way regardless.

Please, please don't go to "quick sell" firms. They will either have unpleasant terms; or extortionate rates of interest; or both. They are only a step or so away from a loan shark :eek: They are the lenders of last resort for those who are "desperate" as they have no other option

Assuming that you don't want to consider bankruptcy - and we don't know enough to even consider it as an option for you - then your only real chance is to lower all your other outgoings to make the current repayments affordable.

Some refinancing might be an option, but what's your credit record like? Any defaults or CCJs?

Even with a refinancing, I think you're looking at a remortgage, but that probably won't solve the problem if you have negative equity. You might be able to remortgage the main mortgage, but not the secured loan.

I feel for you - you are stuck between a rock and a hard place and it won't be difficult to get out of this without making some lifestyle changes in order to lower all your other outgoings.

Have you thought about looking at the Debt Free Wannabe board? In particular, look for posts about SOA - this is essentially a monthly budget which someone posts and we then suggest where savings could be made on existing outgoings.

Hang around to see if there are other more inspired suggestions for you, here.

LisaT186

What has your estate agent said about any biewings that have happened? Have you had any feedback on why the house hasn't sold?

You could possibly look at going to a mortgage broker to remortgage to a 100%+ mortgage, but you would have to take into account fees, redemption penalties if you sill still pursue the sale etc. Also it depends on your exes other commitments eg rent, other loans etc.

Have you approached the mortgage company to see if you can go interest only for a while? It may reduce payments enough to help you maintain everything for a while (assuming you are on a repayment mortgage)?

reallydesperate

Debt_Free_Chick wrote:

Assuming that you don't want to consider bankruptcy - and we don't know enough to even consider it as an option for you - then your only real chance is to lower all your other outgoings to make the current repayments affordable.

Some refinancing might be an option, but what's your credit record like? Any defaults or CCJs?

.

Thank you both for your replies. I have a good credit rating, no defaults, no CCJ's up to now. The way things are going that may well change!

Debt_Free_Chick

reallydesperate wrote:

I have a good credit rating, no defaults or CCJ's.... Thats for now, the way its going that may change

Consider LisaT186's advice in the post above (#3).

Ignore the secured loan for now ... can you switch the main mortgage to interest only? Would that help?

Are you currently "tied in"? If not, could you remortgage?

Perhaps seing an independent mortgage broker would help - but shop around. Get two or three opinions before you sign up to appoint a broker.

And still consider if you can trim your other outgoings e.g. unnecessary personal expenditure; treats; excessive mobile phone bills; Sky TV etc.

reallydesperate

LisaT186 wrote:

What has your estate agent said about any biewings that have happened? Have you had any feedback on why the house hasn't sold?

Have you approached the mortgage company to see if you can go interest only for a while? It may reduce payments enough to help you maintain everything for a while (assuming you are on a repayment mortgage)?

We were with The Halifax and had feedback on a couple of viewings.. Just not what they were looking for. Switched in November and so far havent heard anything.

I will try the mortgage company with your suggestion..... thank you!

hearts

Is the house in both names or just his?
I personally think that to continue with this is pointless. If just in his name get him to go to his local CAB office and see about going bankrupt. The debt from what I read is just increasing.