Pay the Morgage or debits

peterm41

My mortgage provider has reduced my mortgage facility from £90k to £80k. This was meant to be an offset mortgage and has been in place for the last 12 years. For the last 10 years I have paid interest only....yes I know that is not the way this type of mortgage works. The mortgage provider never complained and so I carried on using the extra money from not paying the capital to raise my family and try and pay off historic debits, however, this year they have reduced the facility with my mortgage balance being around £88k so this has effectively put the account in arrears and they are now starting on the mortgage protocol recovery process. The facility will reduce every year to £0 at the end of the 20 year term. They are now anting a monthly payment of £1200 from what I have been paying which was £300 month. I can't afford this the way things stand but I have a couple of options:


1. Pay what they are asking but to afford this I would have to stop paying non secured(there are no other loans secured on the property) and non priory debits
2. Follow them down the repossession route
3. Sell the property under my own cognizance
4. Assisted Voluntary Sale - the mortgage provider has offered this
5. IVA - I do not want to do this!
6. DMP - maybe
7. Bankruptcy - I do not want to do this!


My long term plan was to sell the house at the end of the term however, I don't think I will be able to see that through. It is my full intention to repay all my debits.


I have spoken to CAB, Step Change and the Financial Ombudsman and I will also speak to Shelter and my own Solicitor.


My question is ....What would you do in my situation? (and I realise I am partly to blame)


Thanks

Annisele

What is the property worth?

If I had £300k equity, then I'd sell and use my equity to buy somewhere smaller outright.

If I was in negative equity and couldn't afford to rent elsewhere, I'd do everything I could to hang on to the house.

peterm41

Equity is around £30k

ACG

Did they give you any warning they were going to do this?
Is it actually showing as arrears on your crdit report?

If you can ask them to give you a month or 2 without putting black marks on your credit report you may be able to remortgage to a different lender.

Alternatively, can you switch to a repayment mortgage for the £88k - this should help to avoid the negative markers on your credit report.

If they have just decided this overnight and not given you any chance to prepare (ie wait for pay day etc) I would be putting a complaint in as they have put you in a position which means you have no option but to get bad credit markers on your report. OK it is your fault but they should be giving you atleast some warning that they are going to enforce this.

Angry_Bear

ACG is right as far as the mortgage is concerned, but if remortgaging elsewhere isn't a possibility, your financial priorities should be:

• Mortgage/Rent
• Council/Tax
• Secured debt
• Food
• Utilities (you can generally control how much these will be)
• Essential living costs (e.g. travel to work)
• Unsecured debts

If you go to the debt-free wannabe area and post up a statement of affairs url=http://www.stoozing.com/calculator/soa.php]link[/url people will be able to advise you how to cut back and hopefully balance the books.

peterm41

In fairness they told me that they were going to do this a year ago. ..I spoke to the financial ombudsman and he wrote to them and complained but they ignored him and I was taken ill during last year and although I tried to fight their decision during last year, mainly with phone calls , I really didn't have the energy to persue it properly. No one else will be affected by this situation ie family

ACG

As unfortunate as your situation is, I dont think you have a complaint or a hope of getting anywhere with this.
You took out a mortgage which was offset but needed repaying, they have given you a years warning... not a month or 2.

You should never assume your going to get what you want until you get it. You should have been preparing for this.

Going forward, I think you need to get on the phone to your creditors. Let them know your going to miss payments unless they arrange payment plans with you - they will tell you that they will not arrange payment plans until you are in arrears (no idea why this is the case but it is more often than not).

peterm41

ACG wrote: »

As unfortunate as your situation is, I dont think you have a complaint or a hope of getting anywhere with this.
You took out a mortgage which was offset but needed repaying, they have given you a years warning... not a month or 2.

You should never assume your going to get what you want until you get it. You should have been preparing for this.

Going forward, I think you need to get on the phone to your creditors. Let them know your going to miss payments unless they arrange payment plans with you - they will tell you that they will not arrange payment plans until you are in arrears (no idea why this is the case but it is more often than not).

Yep quite agree had a years notice ... complained to them from the beginning of the situation and its obvious that they will fight if I take them on. Paying my debits is my intention and possibly selling the house and renting may be the best option. This will take me off the property ladder. What does everyone think of the voluntary assisted sale option?

Thrugelmir

Sell up. As appears it's highly unlikely you'll ever be in a position to repay the debt owed.

peterm41

Thrugelmir wrote: »

Sell up. As appears it's highly unlikely you'll ever be in a position to repay the debt owed.

Not quite true but I appreciate your feedback
....Thanks

ethank

Based on the fact that you have not paid repayments (other than interest) over the last 10 years - I also would come to the assertion that you do probably will never be able to afford it. The best indicator of future performance is your past performance.

Just because the mortgage provider never challenged what you are doing, it does not mean that it consented to what you were doing. Lending is not a right, and if you are in breach of your agreement with the lender they can call in the loan at any time.

You suggest that you were going to sell at the end of the term. Why should a lender wait that long because that is more convenient for you. I think the best option for you is the voluntary assisted sale option.