2 mortgages, defaulting on first

CloserToFreedom

Hello everyone.

A Hypothetical question after a conversation I overheard on a bus today.

If you get a second home and therefore a second mortgage, and then stop paying the first mortgage, what would happen?

The chap was clearly under the impression that the houses are treated separately and that would be an easy way to move when your house isn't selling...

In my mind they would go after your new house, surely?

Thanks!

ACG

Assuming different lenders, the house with defaults would be repossessed. If there is a shortfall the lender would go after him for the difference. If there isnt they would send him a cheque for the difference.

He will struggle to get another mortgage for a long long time though

densol_2

By going after him for the difference the first mortgage company could seek a bankruptcy order -get possible sale of second house - after second house mortgagee paid back their " first charge" monies from proceeds - mortgagee for first house gets in line ( after any other secured creditors and HMRC ) to get any proceeds to pay off shortfall of first mortgage - so yes can go after second house but not a case of directly

CloserToFreedom

That's exactly what I thought...

I don't think there's any real way of ducking out of the responsibility other than waiting for it to sell... Otherwise everyone would be doing it!

I hope they put down a huge deposit on the 2nd house, or someone talks some sense into them

Senior_Paper_Monitor

The condition of release of the 2nd mortgage funds will be the repayment of the 1st (unless affordability for both has been demonstrated and agreed) - in short not going to happen.