Power of sale scheme

ronda_2

This is the first time i have written so hope its okay. Has anyone been involved in a "power of sale" scheme with a building society? Maybe under a different title, but basically it is a scheme whereby a building society take over the sale of a property that has a shortfall in the mortgage. (negative equity)
I was forced to put my property up for sale as i can no longer afford my mortgage repayments.The asking price was enough to clear my mortgage, but after being on the market for several months, i was becoming pretty desperate and decided to accept an offer of less than my mortgage.i was led to believe that i would be around 1000 pounds short. Because of this, i had to contact the shortfall dept. of my lender and they advised me that i would need to agree to the "power of sale" scheme.
I am now several weeks down the road, almost at completion stage,(although there is nothing for me to do as the lender will sign all relevent paperwork) and starting to feel releived that my "millstone" was going to lift, i was horrified when i received notification by the lender of the amount left outstanding to them.After the sale has completed, i will owe the lender approx 10.000 pounds!!
This figure is made up as follows: (outstanding amount of mortgage as of 31/05/97was 141,952 pounds. sale price was 142.000, so i thought mortgae would be cleared and i would only have legal and estate agent costs to pay )

2,900 pounds estate agents fees,
500 pounds legal costs,
1,400 pounds repayment fee,
4,782 early repayment penalty
100 pounds mortgage discharge fee
and 70 pounds survey fee (although i alredy had one done, the Lender wanted their own)
I will have to come to an arrangement with the lender to pay off the shortfall, but am not in a position to do so.It is beyond me why so many charges and extras are heaped on top of an already bad situation, i am sure that if my house had been repossessed and auctioned, the selling price would have been far below the market price that i was offerred for it, and if i had the kind of money that they are asking for, i would not have needeed to sell my home in the first place!
I really dont know how i will pay this, i am considering going bankrupt.
I guess you cant get blood out a stone.

nobblyned

Don't think it's anything to do with the power of sale 'scheme'.

You would have always had to pay these costs when selling your house - whether at an estate agent, auction, whatever.

I'm guessing by the fact you have an early repayment fee that you must have been within a fixed rate term on the mortgage.

You'll need to carefully consider your options from here. A wander over on the Debt-Free-Wannabees and Bankruptcy boards might help.

silvercar

2,900 pounds estate agents fees,
500 pounds legal costs,
1,400 pounds repayment fee,
4,782 early repayment penalty
100 pounds mortgage discharge fee
and 70 pounds survey fee

The estate agent, legal fee and mortgage discharge fee are amounts you would have had to pay whenever you sold the house.

The early repayment fee is because you are repaying your mortgage earlier than you had agreed, probably while you are still in some kind of deal. Check when this fee would go; sometimes it could be worth delaying by a matter of weeks to save having to pay this amount.

Not sure about the other 1400 repayment fee. Is it because of some cashback deal , or free legals/ valuation you had when you bought? Again check for how long this fee would be in place.

The 70 pound survey fee is the only cost I can see incurred because you are selling without repaying all the mortgage. The lender wants to make sure you are getting market value for the house.

You may not appreciate it, but your lender is being reasonable in allowing the sale to proceed. Some don't and would end up repossessing the property.

The lender will be eager to come to some sort of arrangement with you to repay the amount owing. Similar to an unsecured loan. Make sure you agree a schedule that you can manage.

Although you should only consider bankruptcy as a last resort. By selling your home, the debt does become unsecured and would therefore be included in your bankruptcy.

SquatNow

Sounds about normal for someone ending a mortgage early. You are lucky it wasn't officially repossessed as well as the fees they add on then are just a joke.

There best trick is if you have equity in your house they will add on lots of fees then sell the house for just enought to cover the mortgage and all their fees.

Bankrupcy isn't the death-sentance it used to be... you generally free and clear after 12 months now although it'll be another year or so before you can get a credit card in the current market.