Remortgaging and Repossession Question

denisekingston

Hi all,

Hope someone can help me with remortgaging-repossession questions here.

I have an aunt who owns a house (worth around £500K now) which mortgage had been completely paid off almost two decades ago. However, she remortgaged this house a few years ago to get a loan of £20K. Unable to keep up with payments recently, now she's running into arrears of £1500 on this loan (with £6000 more left to pay). According to her, the bank is now going to repossess her house unless she chalks up the £1500 in 3 weeks.

So today she came to me asking me to lend her £1500 for this purpose, or she will lose her house very soon. Of course this is all according to her. I am never a home owner hence not exactly experienced when it comes to mortgage and repossession. Worrying about her aside, a part of me can't help but wonder how true the story is, which hesitates me from helping her out.

I guess my questions are:

1) How plausible and reliable are these scenarios described by my aunt?
2) Can the bank really repossess a £500K house because of this £1500 arrears?
3) Can she still sell the house with this outstanding loan due?
4) Neither she nor me can come up with the money in such short time. What are the options she has and is there any way she can negotiate with the bank?
5) Any other way out of this mess?

Thank you, hope someone can give me a better understanding of this whole thing as I am quite concerned about my aunt. Thanks.

Denise

amnblog

Possible and yes they can technically repossess, but might be tricky to get past the court.

Two things to get her to check out.

1. Get some advice from citizens advice
2. Talk to a mortgage in retirement specialist lender like Key Retirement who may be able to help her find a solution.

Thrugelmir

What are your Aunt's full financial circumstances. What's changed to make the debt unaffordable?

denisekingston

Thrugelmir wrote: »

What are your Aunt's full financial circumstances. What's changed to make the debt unaffordable?

She is always a free-lancer and now her jobs have significantly reduced, hence the financial difficulty..

holly_hobby

Is the loan secured ?

Has she advised the bank of her reduced financial circs, submitted a budget planner and tried to negotiate a reduced payment plan ?

If she has bascially just stopped paying and stuck her head in the sand, the bank are threating a possession order or order of sale (if the loan is secured) or a charging order (if it isn't) and can now be made without the prequel of a CCJ being in place.

Now all this doesn't mean a judge will award it, if Aunt can demonstrate that she has acknowledged her financial issues and tried to mediate with the bank in negotiating an reduced and extended repayment plan - but if she is simply sticking her head in the sand, the judge won't have much to play with !

Bit more info on the background etc, will help with what guidance can be given.

Hope this helps

Holly

denisekingston

She is quite reticent about the whole thing, which is why I'm not entirely sure the whole depth of her situation.

I assume it's a secured loan as she said she remortgaged her already-paid-off house for that loan of £20K? I think she just keeps delaying the monthly payment and stuck her head in the sand as you said.

One thing I don't understand pardon my utter ignorance on the whole remortgage, repossession business - if the bank indeed repossess the house one day and sell the house, will my aunt get literally nothing from the sale? It seems extremely bad deal, to lose a £500k house because of a £20K loan?

holly_hobby

Yes, you did mention the remortgage - thats my error, sorry.

So its actually mortgage of 20k.

If the lender sells the property (although you can petition the judge to allow aunt to sell), the lender has a duty to obtain the best price for the dwelling.

Having said that, they will price the property competitively to ensure that it is sold asap, once it has been sold they will take from the sale proceeds the original debt, arrears, interest, admin and sale fees - which can rack up, the residue they will forward to your aunt/her solicitor.

Have a read of the shelter charity site - brillant help for those facing such issues - http://england.shelter.org.uk/get_advice/repossession

Contact CAB and get some advice for their duty solicitor - if this does get to court, please dont' attend as a LIP (litigant in person) engage a solicitor, whom will be best place to achieve the best possible solution given the circs (including requesting a suspension of order IF aunt can demonstrate how she will be repay the loan without selling her home).

There are of course other solutions (if she is older than 55 yrs) that her lack of income won't affect, such as a lifetime equity release mge - but this is really a last ditch solution , IF she is adamant not to move, and that she and her beneficiaries are happy to absorb the effect on the property's free equity - but not high on my list of recommendations TBH given the other possible solutions.

Hope this helps

Holly x