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Phoenix shared equity night mare

Hi all


Just want a rant really.


Under the advice of my parents at the age of 21, I bought a flat ten years ago through a scheme called opening doors through the builder Bellway, I paid 99500 for the flat in 2008 which has plummeted in value since, valued last year at between 75k and 80k.


I had a 75% mortage and 25% equity free loan, which has been sold on once or twice since I have bought the property, it now resides with phoenix shared equity and managed by Hamptons mortages.


Now I have never been rich or able to pay of the loan, especially with the extortionate service charge costs, but last year they advised me that the payment was due, I went through the rigmarole of having 4 valuations done for their benefit and agreed in October that for the time being I would pay 150 per month towards the loan which I have been paying.


They also put me in touch with a re mortgage expert to see if I could reportage which was a no, I already knew this but I did it to satisfy them.


I also approached my current lender who would lend up to 95% of the property value, but only if it paid the property out right.


Mortgage 64150
Loan 19999
Value of property 78k for the sake of been in the middle


now, they have emailed this week stating the below


Thank you for your email.

For the redemption of a Shared Equity Mortgage (SEM) there are 3 possible outcomes at or around the repayment date:

  • The house is sold and the proceeds used to repay both the first and second mortgages
  • The borrowers re-mortgage and uses the additional funds to repay the shared equity mortgage either
    • In full
    • Lump sum and a payment arrangement to clear off any remaining sum after payment of the lump sum
  • The borrower uses their own savings or family funds to repay the shared equity mortgage

I appreciate that the current value of your property may not cover the full amount that is owed if you wish to sell and could leave a shortfall on your Shared Equity Mortgage. If this is the case, Phoenix will consider a lump sum payment upon the sale of your property with monthly instalments thereafter.

As you now overdue for repayment, our client will not be satisfied waiting until November and will require steps to be taken towards repayment.

Please advise how you wish to proceed within 14 days.

where do I go with this, I have no savings no equity in my property, I have no extra money every month.


It also states in the contract that this non full payment can be extended in one year increments for up to 5 years.


If I sell I will be way out of pocket and will still have to pay a lot of money back to them with nothing to show for it, I cant re mortgage, so the way I see it unless I win the lottery im stuffed (fat chance of that I done play it)


Would appreciate any help or advice


sam
«134

Comments

  • G_M
    G_M Posts: 51,977 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    edited 7 February 2019 at 7:50PM
    I agree with your financial conclusion. You're stuffed. Sory.

    This was a bad investment, taken out at the worst possible time.

    Since you have no funds to make ongoing payments to maintain your investment, and no funds to pay off the shortfall if you sell, my instinct is that bankruptcy may be the only way to go.

    But I'm no financial expert.adviser, and nor am I a debt management adviser. I suggest you need the help of both.

    These websites may also help:
    https://www.gov.uk/options-for-paying-off-your-debts
    https://www.moneyadviceservice.org.uk/en/tools/debt-advice-locator
    https://nationaldebtadvice.org.uk/
    https://forums.moneysavingexpert.com/forumdisplay.php?f=136
  • It's definitely worth getting debt advice - the lenders might be prepared to negotiate rather than have you go bankrupt. You can find links to help here (or in some of GM's helpful links) https://www.moneysavingexpert.com/loans/debt-help-plan/ The lenders might just stick to what they've said, but it's worth getting getting advice and then seeing if you or your representative can negotiate a payment plan without selling the flat.

    Be aware that some for-profit companies will try to charge you for debt advice. Avoid them like the plague.
  • HampshireH
    HampshireH Posts: 4,837 Forumite
    Seventh Anniversary 1,000 Posts Name Dropper
    Did ypu hsve a plan in 2008 on how you would pay off the balance 10 years later? Did the plan go off kilter or was there not one in the 1st place?

    Could your parents assist you now?

    When was it due? Seems odd they are only writing to you now & hadnt before?

    Definitely seek debt management advice or on tbe mortgages forum here.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    Payment plan without selling the flat is the way to go IMO.
  • Hi there. I've had the exact same problem. Refused remortgage as I was made redundant and Income went down a lot. Value of the house had also dropped so barely any equity. Tried negotiating with them which took nearly a year of threats and pressure. In the end we had to take a personal loan and a payment plan but they still want another 10k. The original loan was with the builders and was sold on without my knowledge. Have you thought about a peronal loan? It's a terrible situation to be in with not a lot of options and I wish we'd never done it.
  • spamiad
    spamiad Posts: 17 Forumite
    Ninth Anniversary Combo Breaker
    Hi, Im so glad im not the only one in this boat, I cant get any more personal loans out, I need to clear what I have first, then I will most likely have too :(
  • AdrianC
    AdrianC Posts: 42,189 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper
    Just to clarify my understanding of the situation...

    You bought a £100k property 11 years ago with 100% borrowings (£75k mortgage, £25k shared equity)
    The property is now worth £78k.
    Your outstanding debt is now £64k mortgage + £20k shared equity = £84k = 107.7% LtV.
    You have £0 savings.

    You said you have a 95% mortgage available to you = £74k.

    So your basic choice is to try to raise £10k, somehow, so that you can remortgage to 95% LtV, or sell and crystallise your £6k negative equity.

    Bankruptcy over a £6k debt seems overkill, especially considering the shared equity lender are offering monthly terms for the shortfall.

    So, really, this comes down to whether you can find the additional £4k and keep your property. If at all possible, this has to be the better option.

    What is your current mortgage monthly cost? What's the £150/mo going towards? What interest rates?

    A £74k mortgage is not going to be a huge albatross of a monthly payment - even at a high 5%, it's less than £450/mo. Can we ask about your income and working hours? Is there scope to increase them? Full-time minimum wage is nearly £1,400/mo come April.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    You would have been better off renting cheaply and trying to build a cash-cushion/diversified portfolio.
  • elsien
    elsien Posts: 35,522 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    You would have been better off renting cheaply and trying to build a cash-cushion/diversified portfolio.

    And the point of offering redundant unhelpful advice when it's too late to change the decision made is?
    Maybe you should keep your pointscoring to the more discussion based threads, and not rub salt into the wounds of those who have come here for help.
    All shall be well, and all shall be well, and all manner of things shall be well.

    Pedant alert - it's could have, not could of.
  • lisyloo
    lisyloo Posts: 30,072 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    elsien wrote: »
    And the point of offering redundant unhelpful advice when it's too late to change the decision made is?

    It’s almost never that I would defend crashy, but this information might be useful to a lurker reading the thread.
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