Defaulting on a mortgage on house rented out (no tenant).

Sandgrownun

Hope some of you knowledgeable people can help me.

I've got myself in a very sticky situation and need a bit of advice.

I bought a house in 2007 (dreaded NR Together Mortgage - I know I know it was a terrible decision, I was really young and naive and it's pretty much ruined my life since!), it was only a 1 bed but I found that I was pregnant in 2009 (again slightly irresponsible, but with my long term partner) so given that there is massive shortfall from mortgage loan total to price of house (£105,000 to 85,000) I decided to rent out my house and rent another bigger place, off my friend so it's cheap rent and lovely in a better area.

So rental went fine tenants were great,but they moved out in January.

I have taken a payment holiday until April, but if April comes with no rental there is no way I can pay the mortgage and my rent. Moving back in isn't an option as its too small (I'm pregnant with number 2), also money and commitment to the mortgage aside it's not the right thing for my family.

If I default, I'll probably not be able to recover to repay arrears - so house likely to be re-possessed. Otherwise I'm not too bad financially, some debts but I have a reasonable job and can service them. Just about to go on mat leave though so pay will be about 1/2 of what it is now - if it gets repossessed what happens to the shortfall? That is my main worry.

Sorry for the long post, hope you got this far and also hoping someone can offer me some advice.

Dogz111

I would hope you can get the property rented by April. If its in a decent area and the rent is reasonable you shouldn't have a problem?

If your house is repossesed you will be liable for any short fall. E.g. if you owe £100k and your house achieves £80k, you will be liable for the £20k deficit

You need to do everything you can to keep up on both your rent and mortgage payments.

Hope things work out for you!

wwtrend

Do not let yourself get repossessed. The reality is if you are repossessed apart from all the stress and heartache which leads upto that process there is a very high risk that the property will not be sold at market value but considerably below. This means you will be left owing the shortfall between the sale and the mortgage plus all the charges in between.

My recommendation here would be to seek out yourself a private property investor who may be interested in a bespoke deal with you. You are looking for people who say 'don't get repossessed'. Personally I wouldn't go for the one who advertise on television in massive adverts. They may be leaflets to your door, postcards in a shop window. You should try attending a local property meeting to find someone with a good history and background reputation. The organiser or one of the speakers may be a good person to look to for recommendations for someone who may be interested.

Like anything shop around. Don't take the first deal, you are highly likely to get an offer for the full amount of your mortgage, maybe with a few of your other debts thrown or a small cash sum on top. There are good deals out there and good investors who are prepared to work with you. Even if you decide not to use this route and receive different advice elsewhere it never hurts to know all you options before making a decision or becoming so much in debt and stressed out the decision is taken out of your hands by your creditors. Act now, know your options and I hope you get a tenant soon.

Sandgrownun

Ok thanks for your replies - I know it is quite a long time away til March but I do worry as it would be so difficult to cover my rent and my mortgage with no tenant. I've never defaulted though so I suppose I could as for a payment holiday, but I'd rather not as the loan value will just go up even more!

piglet74

Instead of thinking about the house getting repossessed why not give your lender a ring ans ask them about the assisted voluntary sale process, I have just sold me house like this (wanted to do something to get rid of it before I had to think about repossession!)

My lender covered all fees, EA, solicitor etc and wrote off 90% of the shortfall

I get to pay the remaining ten per cent over a few years,

Its worth a shot, IMHO, it was the best thing I ever done, I should have done it years ago! But I understand its not for everyone

Good luck with it, whatever you decide, just remember family is more important than bricks and morter, there is no shame in having to let the house go x

Thrugelmir

Suggest you contact the NationalDebtLine for advice.

http://www.nationaldebtline.co.uk/