Voluntary repossession - with cash savings

WetMyBeak

Hello everyone

This is my first post and hopefully the first step towards sorting out my current predicament.

I am 37, recently separated from my partner of nine years and have a son aged three who I see everyday. I work full time in a reasonably well paid but soul destroying job (car factory, 42k per year)

Three years ago I purchased a property for 133k. My outstanding mortgage balance is 117k. Because my ex partner had poor credit the house is in my name only and I pay £700 per month. I can just about cover this as I’m paying between £350 -£400 per month towards Nursery fees.

My problem is this. The house is in dire need of repairs, maintenance and refurbishment. It was bought as a doer upper (bad mistake) and we didn’t have a survey done at time of purchase (I know!). We found out the house next door (not adjoining) is leaning and I suspect my house may be too to some extent. I annoy afford to carry out the necessary repairs and refurb and will probably start accruing debts when my savings of approx 12k have run down.

I am currently extremely stressed and will be making a doctor appointment to hopefully get some help and time off work. The situation is completely taking over my life. It’s on my mind day and night. I can’t sleep, concentrate and I feel like my life is completely unraveling at a worrying speed.

I have been reading these forums over the last few weeks hoping to find some answers and possible way out and the only thing I can see that might work would be voluntary repossession and later down the line, bankruptcy. I understand that this is an extreme step but my primary concern is my son and it’s upsetting me that he has to stay in this mess of a property. Ideally I’d like to walk into the bank, hand the keys over and move into rented accommodation.

I know morally, I would be doing the wrong thing but at the moment it’s te only way out I can see that will provide a decent standard of accommodation for me and my son and stop me from having a complete breakdown.

My mortgage is with my bank and as stated earlier I have approx 12k in savings. Would I need to transfer this to a new bank account with another bank and just let my mortgage payments with my current bank go into arrears? I’ve also been holding 30k of my mums savings in my account (long story) If I do go bankrupt will they be able to try and reclaim this money? It’s beem in my account for approx 2 years.

I’m just looking for some general advice and help really. I feel absolutely sick when I think about it, I’ve never been this distresssed before and feel like a fresh start is the only thing that will solve my problems.

Any advice greatly appreciated

Chris

silvercar

Easy for me to say, but it is only money. If you need to walk away from this property then do so. The bank have contingencies against some of their lending failing.

If you decide this is for you, then you would be best doing everything in a sensible order.

First priority would be to find a rental property.
Then you stop paying the mortgage (just instruct the bank to stop the direct debit). The lender will write to you and chase this up. If they went for a repossession order it would take months generally before they actually took you to court for repossession. Alternatively, once you have moved into your new rental property, you post the keys back to the lender.

Be worth finding out what the property would be worth now in a quick sale situation. Search comparable properties online. Then you know if there is equity or not.

Placitasgirl

Do bear in mind that the £30k of your "Mum's money" that you have in your account is legally your money. Were you to consider bankruptcy the OR would definitely deal with it as your money, along with any other funds you hold in your accounts.

I'd suggest that once you've sorted your living arrangements and before you do anything else, you contact one of the debt charities or seek professional advice on how to proceed.

WetMyBeak

Thanks for the reply

My mortgage and current/savings accounts are both with NatWest so not sure I could just cancel the direct debit? That’s why I thought of transferring to a new bank for a current account and for my wages to be paid in to.

One thing I have learnt over the past year is that having some money in the bank does not make me happy in the slightest. I just want to be able to provide a warm, clean house for my son and myself and start fresh

WetMyBeak

The 30k is my mums money and bank records will show when it was paid in and that apart from a couple of transfers to my mums account it’s been pretty inactive. Would the OR not take this into account? I’m guessing by the time of repossession and subsequent bankruptcy it could be a couple of years down the line. I’m transferring her money back next week

Mahsroh

Obviously without seeing a complete picture of your monthly finances it's hard to tell, but based on your salary you should be taking home circa £2,500.00 per month, allowing for pension.... correct?


Take off that your £700 mortgage and £400 nursery fees that leaves you with £1400 a month to cover all other bills, and you have no debts (mortgage aside) and £12k savings. Others with more knowledge / experience than me may say otherwise, but talk of repossession and eventual bankruptcy seems very premature to me.


What have you done re: the house? It's in a run down state, but have you had professionals look at it? The structural problems may not be as bad as you fear....and £12k can go a long way when it comes to carrying out work on a residential property (yes, it can also disappear very quickly too). Personally, I think you're being premature in declaring that you have nowhere to go.


I'd invest that bit of money getting some professional advice on the property (starting with a structural engineer) and take it from there. But as I say, I don't know the full picture, so you may want to take my advice with a pinch of salt.

National_Debtline

Hi there WetMyBeak


Your focus should be entirely on finding and securing whatever accommodation is needed to give you and your child the comfort and security you crave. Everything else can follow from there. Have you been researching available rental properties and likely cost (both upfront things such as deposits, letting agency fees etc. and ongoing living costs such as council tax/energy etc. as these may differ from your current place)?


It's not a given that bankruptcy would be the only resolution - at this stage just having an honest dialogue with the mortgage lender and making them aware of your predicament would be a good start, as well as getting some independent advice as suggested by another poster above.


You may find our negative equity fact sheet worth a read:


https://www.nationaldebtline.org/EW/factsheets/Pages/negativeequity/mortgageadvice.aspx


Dennis
@natdebtline

WetMyBeak

Thanks for the reply

I will be putting the house on the market next month but I honestly cannot see there being much interest even at the 100k let alone the 117k outstanding

House needs

Boiler/pipes banging
Bathroom
Kitchen
Rendering (whole house)
New garage roof

These are things that definitely need doing. There’s much much more and I just don’t think it’s feasibly possible.

Mahsroh

WetMyBeak wrote: »

Thanks for the reply

I will be putting the house on the market next month but I honestly cannot see there being much interest even at the 100k let alone the 117k outstanding

House needs

Boiler/pipes banging
Bathroom
Kitchen
Rendering (whole house)
New garage roof

These are things that definitely need doing. There’s much much more and I just don’t think it’s feasibly possible.

To be fair, you could easily spend in excess of £12k getting all that done.


BUT, is all of that essential "must do now" stuff. You want to make the house more habitable for you and your son. Completely understandable. But, is the garage roof, or rendering, a major issue that must be resolved urgently. You may say yes.... both could be contributing to damp problems - I don't know. I guess I'm just playing devils advocate and trying to come up with alternatives that prevent you from losing the house.


Have you had estate agents value the house? Have they given you the £100k figure that you mention. I know you didn't get a survey done when you bought, but if you bought it in a run down state, for it to go from £133k to £100k in 3 years seems drastic to me.


Sounds like you've thought all this through already and you've clearly decided the only way out is to effectively accept that you're going to lose the house.... I'm not an expert by any stretch of the imagination.... I'm just trying to throw alternative options out there.....

WetMyBeak

I really appreciate your reply. I don’t know it won’t sell but I’ll be finding out soon I suppose. I’ve just got a horrible feeling that I’ll be stuck there with all the memories associated with it.

Placitasgirl

With regard to the £30k; as it is in a bank account in your name it is legally not your Mum's; it's yours.

Even if you transfer it to your mum, it has been yours for the time it has been sat in your accounts. It doesn't manner when it was paid in or what has happened with it since, it is legally yours.

Should you proceed to bankruptcy the OR will require bank statements for all your accounts and has the right to view all accounts held in your name as far back as they feel necessary. Just a heads up to be prepared to be challenged by the OR over this money. If you transfer it to your mum, the OR will be interested to know why you transferred £30k of your money to your Mum.