Bankrupt with interest only mortgage

sortingitout2010

Well after all my robbing peter to pay paul for years, so to speak, i've spoke with the CAB and decided to go BR (hopefully in January)

I have an 'interest only' mortgage with Santander and because my sister gave me a substancial deposit in the property, i'd like to try and keep the mortgage using the Negative Equity reason. (not sure if she'll ever get the deposit back but i'd like to try and hold on to the house)

1. Has anyone had any experience with keeping a mortgage on interest only? (missed one payment/have been late 3 times in the past 4 months - but i'm now back up to date with them - removing the other debts should keep me right. Also some of my debts are with santander. Will this cause problems?)

2. Also, i've decided to transfer my wages into my girlfriends account this month (so payday loans can't be taken) but i'm not sure if i should attempt to pay my credit cards / loans etc? Will it make a difference? And if not should i cancel all my direct debits with the bank?

Im hoping to use my wages to pay for my bankrupcy. Will that cause problems?

3. I have debts with barclaycard and i've read that that can cause problems opening their basic account. If i open a CO-OP cashminder account before i go bankrupt will they not ask me why i don't open a current account?

Thanks.

droiderm

I would really give thought to keeping on an interest only mortgage in negative equity . Maybe think about switching to repayment ?
I would put a post on the mortgage forum.
It may end up being a millstone around your next for many years to come.

How much in negative equity are you ?
Are you on a fixed rate? What does it go to after any fixed rate?
How long is left? How do you expect to pay the balance at the end of the mortgage?
I would definitely seek advice on this.

Do you expect a realistic chance of repaying your sister back from equity in the house ? How long to you think that might take? Do you think a lender would easily give you an advance anytime soon with you being an ex bankrupt? That's even if you have substantial equity.

sortingitout2010

After speaking with the CAB they advised going bankrupt and including the house was my best option.

At the beginning of the month i have now done this and recieved a letter today to say the mortgage company has passed this to a solicitor due to being 4 months in arrears. The solicitors letter states the mortgage company will now enter into the premises and take possession of the premises on the expiration of 7 days.

I plan on ringing the solicitor tomorrow and i realise i now need to find somewhere to live. I was advised when i spoke to the CAB previously i would have a court hearing arranged for repossession before the actual repossession took place. Can anyone tell me if there is a further procedure in place that must be followed before a bank can possess? Or upon sending this letter can they come at any time? Thanks

iquit

All the best. I kept the property I live in - interest only mortgage with very llittle equity, which I paid . I didn't try to re-negotiate with the bank at the time of my br, hoping to do so once my br commitments are over. Keeping up with the mortgage payments and keeping a clean slate which will hopefully put me in a good position.

sortingitout2010

iquit wrote: »

All the best. I kept the property I live in - interest only mortgage with very llittle equity, which I paid . I didn't try to re-negotiate with the bank at the time of my br, hoping to do so once my br commitments are over. Keeping up with the mortgage payments and keeping a clean slate which will hopefully put me in a good position.

Thanks for the reply. I wished i could have continued to keep the house, but i could see the logic from the CAB that with all my outgoings (after bankruptcy) and with 50 - 60k negative equity, if interest rates went up again or if the property needed maintained, i would once again be left struggling.

I'm just worried i won't be able to find somewhere by next week.

fiveyearplan

I also kept my home with an interest only mortgage. The low interest rates is what has kept me going. We have about £50,000-£100,000 equity in the house which at the time of my BR was much less so I'm pleased we were able to keep it! Also, with the low interest rates there is absolutely no way we could find to rent anywhere less than 3X what our mortgage costs.

mattannar

fiveyearplan wrote: »

I also kept my home with an interest only mortgage. The low interest rates is what has kept me going. We have about £50,000-£100,000 equity in the house which at the time of my BR was much less so I'm pleased we were able to keep it! Also, with the low interest rates there is absolutely no way we could find to rent anywhere less than 3X what our mortgage costs.

Where do you live as most house prices have stagnated or fallen in the last 5-6 years?
You have been lucky!!