Mortgage/Endowment Advice on Selling House

fd1972uk

Hi,

I'm hoping some may be of assistance, I am not the said person who is really requiring the information it's just that someone had asked me about selling a house, and I have never done so. So the info might be a bit sketchy.

Basically a family member is in a right mess financially, some serious bad debt, to put it bluntly it involves money owed to people as opposed to loan companies etc.

It appers the only avenue would be to sell the house, however I believe the social security (housing?) is paying towards her mortgage in some way, although from what I've been told that she maybe in arrears with her own payment.

People have mentioned she will need to sell the house which is on an endowment, I have a repayment mortgage so not sure of the in's and out's of endowments, the idea I get is you pay that and at the end of it depends on what value you get, unfortunately I'm not sure if you can cash it in anytime ? She's had the house for a probably 16-17 years so must have anywhere from 4-9 years I'm guessing left.

So the thought is sells the house, at probably far less than she would like and pay off the mortgage and have some money left to pay off these 'people'.

I know this information is very sketchy and I can't guarantee the accuracy of all, but just generally can she actually sell a house if she is in this predicament i.e. arrears and such? Or could this have incurred penalties added to her final value of the house maybe nulifying any sale anyway?

The other thing about endowments is, I'm unsure if it is tied to the house, so is there that horrible chance that she may have cashed it in or can you do that?


FD

Gonzo33

The endowment will potentially be tied to the interest only mortgage but not the house. Therefore she could effectively sell the house and cash in the endowment. The only thing I would say is that she should get a figure to redeem the mortgage (just in case she is in arrears and charges have been applied) and she should also get a figure to cash in the endowment if she has not recently had an annual statement of what it is worth.

Then if she hasn't already got figures get figures from everyone that she owes to and go from there.

Where would she live if she sold the property?

Gonzo33

Forgot to add getting three Estate Agents out for valuation for quick sale would probably also be a good idea.

If she needs to negotiate figures with people she owes to speaking to CAB might be a good place to start.

It might not be impossible to get out of.

holly_hobby

Firstly, if her financial circs have changed, has she contacted her creditors to advise of this, submitted a budget planner (which isn't strictly necessary) and offered/arranged a reduced payment schedule ?

Her offered amount should be compfortably affordable from her income, after the payment and provision for essential outgoings.

If she has, and she just wants shut of the debts, she firstly needs to establish if there is any negative equity in play - as given she is in receipt of SMI there will be little be gained if she sells and has either little or no free equity as a result of the sale (given as I say that the DWP are paying her mge interest upto 200k(if wholly in relation to hse pch and any further advance for essential repair).

Has she spoken to any debt charties ?

http://www.nationaldebtline.co.uk/ have template letters/budget planners, and lots of advice that may assist.

With regards to her surrendering the endowment, if she sells the house, then yes she can do this (if assigned, the lender will need to withdraw their assignment notice with the endowment provider). Given the circs described, there shouldn't be any tax consideration on proceeds either (ie we know its a qualifying low cost endowment, and in any event is doubtful from what you say, that the proceeds would tip her annual income into 40% banding).

However, if she retains the property, I would not suggest surrendering to repay any unsecured debts (negotiate reduced payments as I say, until she is back onto a more positive financial basis), given that it may be reqd to later go towards her mge redemption, if she does manage to get back on an even keel and retain the property/mge through to the scheduled end date.

Hope this helps

Holly x

fd1972uk

Okay thanks.

Yes, a final settlement figure would have to be seeked I'm guessing, and obviously I'm assuming all necessary fees would have to be paid to whoever would sell her house (I guess she would be hoping that these are applied after the sale, instead of upfront costs).

As for the 'creditors', there won't be any 'payment plans' as such, as said this isn't Tesco Loans or Wonga she's dealing with, more big Tam round the corner and wee mad Maisy from the High Street if you get my drift - just look at the guy in my avatar and think of those kind of characters.

But thanks for the information.


FD

holly_hobby

As for the 'creditors', there won't be any 'payment plans' as such, as said this isn't Tesco Loans or Wonga she's dealing with, more big Tam round the corner and wee mad Maisy from the High Street if you get my drift - just look at the guy in my avatar and think of those kind of characters.


Silly, silly girl .....

fd1972uk

Agreed, but now need to deal with the issue and hope she can get through it.

Thanks again.


FD

holly_hobby

Indeed .... my heart goes out to her so many do this without considering their local credit union.

I wish her well and hope everything sorts itself out for her .... I'm sure she greatly values the support and help you're providing, we all need someone to lean on now and then ... :A

Holly xxx