Options for catching up arrears and re-capitalisation

captainando

Hi, I have arrears on my mortgage after a redundancy. I actually kept up the interest payments, but we are in arrears of over 6 months.
I had a Bankruptcy in 2007 that is due to fall off this year, I want to look to sell the house in the next year so dont want to recapitalise the mortgage as is being suggested by RBS.
This is a £20K recapitalisation, which makes no sense if I am going to sell in a year.
What options do I have to lift the arrears off my credit file, I have been overpaying by £300 pcm for 6 months, but wont make much of a dent in £20K.
Would appreciate any assistance with regards to options, its the only thing holding back my credit rating.

Many thanks

Thrugelmir

What terms are they offering for recapitalisation?

Why are you against this?

captainando

If I recapitalise and then sell, I lose £20K.
The only time recapitalising would make any sense is so that the mortgage can be settled in full on time so meaning i stay in the house till the mortgage finishes.
I would prefer to extend the term of the mortgage, but they are not offering this option, I was looking for someone who maybe had an idea on what options I have.
Thanks

maninthestreet

How long have you been in arrears? What is the outstanding mortgage capital? Are you now in employment? Do you have any other capital, e.g savings, or investments? How much is the property worth?

captainando

Value £290,000
Current mortgage balance £198,000
+ Secured loan £30,000
Arrears £20,000
Term 15 years remaining
Monthly payment £1000 currently paying £1390 and have been for 6 months, mortgage has been on track for last year.
Self employed on long term contract

The arrears occurred over three years I managed to cover the cost of the interest during that period but not the full amount.
This is the only blight on my credit score as it says I am in arrears which is technically correct, but doesnt reflect the fact I have been making payments for a year on time and in full or more than the amount required.
I dont want to recapitalise as I effectively lose £20K toward the deposit on a new house. And being in arrears my mortgage options are therefore limited, catch 22.
Cheers

EMac_2

Unless I am missing something when you sell and repay the mortgage you will also have to repay the arrears so either way your not saving the 20k. Having been previously bankrupt too and having these arrears getting a new mortgage is going to be tricky as you know. You might want to consider capitalizing and overpaying a bit more to put a dent in the 20k, get the mortgage account up to date, have the bankruptcy fall off and maybe make life a bit easier for you. I'd say see a broker and get a full fact find done and get proper advice.

kingstreet

I agree. Whether you have the arrears added to the mortgage or they remain outstanding as arrears, when your solicitor comes to repay the charges, the full amount will be required.

If the charges are not fully repaid, the lender will not release the security to give the buyer unencumbered title to the property.

I'd say unless there's a considerable increase in your equity/deposit you will struggle to get a new mortgage with a historic bankruptcy and recent arrears.

I'd check out the chances of getting another mortgage before going too far with any other plans.

Thrugelmir

captainando wrote: »

Monthly payment £1000 currently paying £1390 and have been for 6 months, mortgage has been on track for last year.
Self employed on long term contract

Interest only mortgage?

captainando

Sorry for delay in responding, thank you all for taking the time.
I re capitalised as it was the best way to get my credit files in order.

Thanks again

getmore4less

Wait a minute what are the arrears?

They are either in the oustanding amount owing and have just not been paid OR that has reduced and gone into the arears.

if you have been paying the interest then you just owe capital.

Are you sure that you don't just owe £198k but that would be £178k if you had paid the correct amount.

captainando

My mortgage statement said pre recapitalising, outstanding £185K arrears 20K.
I thought the outstanding balance was the amount excluding the arrears, not really considered it including the arrears although that would make sense.
Now it s been recapitalised mortgage statement still reads outstanding £185K but to be honest I thought that was RBS and their incompetence (they have a history of it in my experience)