Voluntary repossession and renting

Overstretched

I am looking for some advice. We are currently owner occupiers and on an interest only mortgage of £700 a month. Our house does not suit our needs and we have just enquired about going back on repayment and the payments are in excess of £1100. We have found a house to rent for £900 which suits out needs. My question is will the OR frown on us giving our house back and renting something that is more than our current interest only payments, but less than what our repayment mortgage would be? i am of the opinion that we have to go BR anyway and it is probably our only chance of being ale to get rid of our house. We have tried in the past to sell it with no luck and despite putting up partitions our originally two Bed house is no good for a family of Five!!! Part of me want to stay put as it is easier and less scary but I really want this to be a fresh start.

debt_doctor

Hi,

What is acceptable will vary from area to area. Is the rent average for the area?
Would it (the rent) be covered by the Local Housing Allowance (LHA) for the size of your family?

DD

Overstretched

It's less than average for a private rent four bed house. The LHA would be about £810. We have four children and ourselves. Just don't want to make a commitment that we can not continue once BR. Also concerned that if the OR did not agree, we would struggle to find somewhere else to rent once BR.

debt_doctor

This is the closest I can find about rented accommodation (but it's really meant for finding rented property when mortgage payments are excessive...............

31.7.88 Other considerations relating to the removal of the bankrupt and his/her family to alternative accommodation

In considering whether alternative rented accommodation is suitable for the reasonable domestic needs of the bankrupt and his/her family, the stage a child has reached in his/her education (for example where he/she needs to remain at the same school to complete a significant exam year) or the care needs of a dependant (e.g. day care or respite care) will need to be considered by the official receiver. These matters should be taken into account when making any decisions regarding the flexibility of the bankrupt and his/her family in moving to alternative rented accommodation. It may also be necessary to delay collections under an IPA or agree a payment holiday (for example for 3 to 6 months) to allow the bankrupt to find alternative accommodation.
Official receivers should check with their local council for guidance as to the accommodation allowances considered when calculating eligibility for council accommodation or in relation to privately rented accommodation, using the Local Housing Allowance (LHA) to work out Housing Benefit entitlement. LHA is used to work out the Housing Benefit entitlement of tenants renting private sector accommodation in England and Wales and the guidelines used by the council relevant to the area in which the bankrupt lives may be of assistance to official receivers in calculating what the minimum accommodation requirements might be for a bankrupt and his/her family within a similar area to their current accommodation.

So they use LHA as the minimum requirement benchmark, so I would suggest reasonable could stretch to the rent you are considering.

Of course I am not your OR, but I have never seen anyone forced out of their rented property by the OR.

DD

Overstretched

Thanks debt doctor.