Handing Back House Keys To Mortgage Company (In Scotland)

Gaz83

Guys,

Due to various circumstances my wife and I have decided to hand back the keys to our flat as we can't afford the mortgage repayments and can't sell the place. These have been discussed to death before and we have come to this decision very much as a last resort - I don't want to get into it again but needless to say we have exhausted all other possibilities and due to these circumstances we have no other option.

Can anyone give me a step-by-step guide on how we go about handing our keys back over to the mortgage company? What kind of costs would we incur, how long would the process take (before the flat is officially no longer ours), how would it affect us going forward?

Although we are now married my wife purchased the flat whilst we were still just dating and I was living with my parents, so the mortgage is not in my name.

Thanks very much for any help.

WRabbit

I don't know what your full circumstances are, but I'm sorry you feel in this position.

Firstly doing what you plan will have a negative impact on your ability to obtain credit. Given what is unsaid in your post that may not be an issue.

Secondly the mortgage company will sell your house to try and recoup their losses. However this may not wipe out the debt. If they only get £100000 but your mortgage is £120000, they can and will look to recover the shortfall.

And lastly I don't know what your plans are for somewhere to live, but I believe many local authorities view this as making yourself intentionally homeless. This reduces their obligation in helping you find accomodation.

I know you've said you've talked this through and you've not to come to it lightly, but if you haven't spoken to someone about your financial issues please seek advice urgently from one of the many organisations out there. Citizens Advice Scotland, or money advice services may be able to help. Or post here.

Best of luck.

opinions4u

All costs involved in repossessing and selling, including bills from utilities, councils, insurers, solicitors, estate agents, ongoing interest accrual etc will be charged to you.

If, after this and clearing the mortgage, there is any equity left then that money is yours. If not, then the you owe any shortfall to the lender. This could be a large debt that lives with you for many years to come.

As above, I'd strongly recommend talking to the likes of Shelter or CAB before doing the deed.

Dave_Ham

Hi - this is a bad situation and I feel for you as I have just read your other post, which states why this flat is untenable.

For all of the answers to your questions, you need to speak with the lender. The issue you will have is if you are still not in arrears then they will not necessarily take you seriously.

I would see if they will cut you and them a deal to move the property on, as a mortgage on a place above a take away is almost impossible. Maybe have a word with the take away owner as typically the places above these where I live and have worked are traditionally owned by the owner so they can give free accommodation to the workers in hand with even lower wages, when maybe slightly new into the country.

If you can get an offer (lower than relative value) then you may find the lender will play ball.

Given you are not on the mortgage, do not try and subsidise the debt as this situation will not go away - I suspect from your thread start post you know this.

There will be lenders who will treat you as an individual when buying in the future and happy for OH to live with you declared, so imperative to keep your clean record.

I genuinely wish you well, lenders need to treat you fairly so have your OH explain the situation and you may be surprised (depending upon lender) how flexible they may be.

Good luck

ILW

Why not just rent the place out out?

The_J

Without question the worst thing you can do is hand the keys back to the lender. I suggest you have been watching too many American films.

Sell the place for as much as you can get and come to an arrangement with the lender for the balance or rent it out if that will cover all or almost all of the mortgage payment.

Gaz83

The_J wrote: »

Without question the worst thing you can do is hand the keys back to the lender. I suggest you have been watching too many American films.

Gee, thanks for the patronising.

The_J wrote: »

Sell the place for as much as you can get and come to an arrangement with the lender for the balance or rent it out if that will cover all or almost all of the mortgage payment.

The place CANNOT BE SOLD. It's not a case of that we've tried to sell it and it's not selling the now, it's a case of it CANNOT BE SOLD. If you want to see the reasons why have a look at my previous posts on the subject, as the chap above did.

For the same reasons as it can't sell, it can't be rented out.

Debt_Free_Chick

Previous thread here

https://forums.moneysavingexpert.com/discussion/2572587

Look at post #22

The_J

Gaz83 wrote: »

Gee, thanks for the patronising.

No problem, hopefully it made you understand the seriousness of the situation.

The place CANNOT BE SOLD. It's not a case of that we've tried to sell it and it's not selling the now, it's a case of it CANNOT BE SOLD. If you want to see the reasons why have a look at my previous posts on the subject, as the chap above did.

For the same reasons as it can't sell, it can't be rented out.

I didn't have a look at your previous posts, why the hell should I? Put the effort in to describing your situation now if you want my help.

Anyway of course it CAN BE SOLD, you just need to sell to a cash buyer. Of course, it will be at a massively reduced figure but that's what you get for allowing a takeaway to get a license underneath. These things are really hard to get if someone whinges about it. Having said that you probably could still get a mortgage on it.

If the bank repossesses they'll send it to auction, it will sell for way way way way less than the mortgage and your wife will owe the bank for the difference. She could try bankruptcy at that point but that means no mortgage for her for a while, I don't know much about bankruptcy but it seems the posters on the other thread don't fancy it.