mortgage and sec loan in BR

molskie

Hi, could anyone tell me if there is a possiblity we could keep our home in BR. Currently owe £109,000 on mortgage, 19,000(if payed early) or 30,000(if let run 10yr course) on secured loan but house only worth £115,000. We also have 2 young children and have NO arrears on the mortgage

Thanks

National_Debtline

Hello there.

The short answer is yes, you may be able to keep the property. The reason being is that you have a situation where your owe more than the value of the property - You have negative equity. As such there is no value in the property at the moment which could be realised for the benefit of the creditors.

This is the long answer (taken from our fact sheet)

Property and your home


The value (or ‘equity’) in a property can be worked out by taking away from the value of the property the amount you owe under any mortgages and secured loans. We use the term ‘beneficial interest’ to describe your share of the equity. If the property is solely owned by you, your beneficial interest will usually be all of the equity. If the property is jointly owned with someone else, your beneficial interest will be part of the equity.

• If you own property then this might be sold depending on whether it has any equity in it. If your partner and children live there then there are rules about how quickly this can happen.
• Once you have gone bankrupt, your beneficial interest in your home is transferred to the official receiver or trustee.
• If you are the sole owner then the whole of the value in the property is transferred to the official receiver or trustee.
• With jointly owned property the official receiver or trustee is usually only entitled to the bankrupt person's share of the equity (that is their ‘beneficial interest’).
• Depending on your circumstances, you may be considered to have a beneficial interest even if you are not named on the mortgage. This is a complex area.
• It may be possible for the joint owner or family and friends to make an offer to the official receiver or trustee to buy out your share of the equity. This can be particularly helpful if there is little or no equity.

How long does the official receiver or trustee have to deal with my family home?

If you went bankrupt after 1 April 2004, the official receiver or trustee has a maximum of three years from when you went bankrupt to deal with your family home. However, as described later, this action may be taken before three years have passed. If you went bankrupt before April 2004 and you are now being asked to sell your family home.

The term ‘family home’ means:

• the place where you normally live;
• the place where your spouse or ex-spouse normally lives; or
• the place where your civil partner or ex-civil partner normally lives.

Other properties (such as those you rent out) will not be dealt with under the rules described in this section. If you have a beneficial interest in a property that is not classed as your family home.

Within the three years, the official receiver or trustee could:

• come to an agreement with you about the property;
• sell your beneficial interest to a joint owner or other third party;
• apply for an order of possession of your home;
• apply for an order for sale of your home; or
• apply for an order to give them security over your home (known as a charging order).

If they do not deal with your home within the three year time limit, it will automatically pass back to you.
Hope this helps!

JCS1

molskie wrote: »

Hi, could anyone tell me if there is a possiblity we could keep our home in BR. Currently owe £109,000 on mortgage, 19,000(if payed early) or 30,000(if let run 10yr course) on secured loan but house only worth £115,000. We also have 2 young children and have NO arrears on the mortgage

Thanks

Can you afford the mortgage and secured loan repayments? Bankruptcy would only cover your unsecured debts, so taking any payment for those out of the equation, would you be able to pay the secured debt?

debtinfo

how much are the mortgage and secured loan payments each month and what is the average local rent for a property of the size you need