Handing Home Back to Mortgage company

Karl_S

Hi All
I'm new to this and need advice.
My wife has an IVA due to her ex husbands debts,She has a mortgaged property which we keep up with the monthly payments,However her home has fallen into disrepair over the 17 years she has owned it,there is no equity in the property it is in fact in negative equity to the tune of £25k.

I am unable to help her as i am disabled and only receive Personal independence payment.

As previously said the house has fallen into disrepair and need a new roof,re pointing and other jobs totaling some £15.000

we are unable to remortgage.

Has anyone ever just handed the keys back to the mortgage company? and if so what happens?

EssexHebridean

I *think* that any shortfall on the sale will fall to her to cover, although I may be wrong on this.

Karl_S

The IVA company have said this can be added to her IVA,but not sure if we can just hand our house back to the mortgage company,and if the council would re house us or if we would have to private rent

EssexHebridean

OK - can you clarify - earlier you said that "she has a mortgaged property" and referred to "her house" - which I took to mean a rental property, but your most recent post suggests this is in fact the house that both of you currently live in as your family home - is that the case?

Karl_S

yes that right,it her house with her ex husband i am not named on her mortgage but it is our family home

D_M_E

Also - who is named on the mortgage?

Just her, or her and her ex?

Karl_S

she is and her ex husband,however he is not liable for the debts due to a consent order when they were divorced

WhenIam64

"Handing back" is an american option but not in the UK. If you fail to keep up with payments, the home can be repossessed, sold and any deficit added to your debt.

You have to separate out the issue of the mortgage which is a personal debt, and the asset that "insures" against non-payment. Adding a large amount to an IVA without the means to repay will be difficult. Also if you fail to keep up payments on the family home, there is a risk you could be seen to be "intentionally homeless"

Have you checked out Support for Mortgage Interest? Your wife would usually need to be in receipt of one of these benefits

https://www.gov.uk/support-for-mortgage-interest/eligibility

Go and get financial advice from a debt charity before any decisions are taken.

D_M_E

Did the consent order include the mortgage, or was it just for other debts?

Think that mortgage provider would still be able to chase him for any shortfall as he is named on mortgage, particularly if he got awarded part of the property as part of the proceedings - I'm probably wrong, though, but no harm in asking since she has an IVA.

MovingForwards

https://forums.moneysavingexpert.com/discussion/6015607/handing-home-back-to-mortgage-company

OP pick which thread you want to run and point people to it, saves different people commenting on two different threads when you provide further information.

fatbelly

WhenIam64 wrote: »

"Handing back" is an american option but not in the UK. If you fail to keep up with payments, the home can be repossessed, sold and any deficit added to your debt.

You have to separate out the issue of the mortgage which is a personal debt, and the asset that "insures" against non-payment. Adding a large amount to an IVA without the means to repay will be difficult. Also if you fail to keep up payments on the family home, there is a risk you could be seen to be "intentionally homeless"

Have you checked out Support for Mortgage Interest? Your wife would usually need to be in receipt of one of these benefits

https://www.gov.uk/support-for-mortgage-interest/eligibility

Go and get financial advice from a debt charity before any decisions are taken.

Handing back is an option - just not a very good one.

https://england.shelter.org.uk/housing_advice/repossession/voluntary_repossession_and_handing_back_the_keys

You will struggle to get help as homeless as you certainly will be classed as intentionally homeless.

Presumably when she started the IVA she intended to continue in the property, otherwise she would have gone for bankruptcy. But with the house in solid negative equity bankruptcy might have been better.

If the house was in perfect condition, would its value cover the mortgage?

Is it a repayment mortgage or interest-only?