Shared Equity threatening repossesion

dwillis1

Hi, I really need some advice and cannot seem to find any on the internet.
We purchased our home 11 years ago through "Bellway" assisted buy.
Sale price £169k and "Bellway" offered 25% assisted buy over 10 years.
Last year our 10 was over.
Bellway seem to have sold the 25% share to "Phoenix" and they want the 25%.
We have tried to raise the £42.5k through a remortgage, however our credit score is poor and our mortgage provider has declined us.
( Our mortgage is £700 P/m with 14 year left, we also have 70k equity in the home)
We have looked at bad credit remortgages and the monthly cost would almost double due to the over inflated % rate.
Our option was to ask "Phoenix" to accept monthly payments ( £300 p/m ) 
( Giving us chance to increase our credit score and then remortgage)
Phoenix said no, they want all the share in 1 sum.
We have now received a  threatening letter from a solicitor acting on behalf of "Phoenix" stating that court proceedings are to commence for repossession.
Any advice would be welcomed.
Thanks

MWT

Was this part of the 'New Supply Shared Equity with Developers scheme' in Scotland?

That scheme was based around a fixed term 10 year loan with full repayment expected at the end of the term, or earlier if the property was sold.

If this is the right scheme you must have been expecting to repay that amount on or before the end of the 10 years, so the fact they have sold it to someone else is more or less irrelevant, even if it hadn't been sold it was still due to be repaid in full at the end of the term.

Did you have any preparations in place to repay at the end of the 10 years?

More details might help someone to come up with a suggestion, but it was that scheme it would seem they are entitled to full repayment now and under no obligation to accept monthly payments.

Have you looked into the current value of the property and what you could afford to buy if you are forced to sell to repay the loan?

dwillis1

Hi, No this was based in England.
We had plans/funds in place, however unfortunate and unexpected circumstances hit us hard and fast.
We are able to afford the extra expenditure if we could remortgage at "Normal" interest rates, but the the quotes we have had for bad credit mortgages is criminal, and all the hard work and sacrifices we have endured would be for nothing.
My question is this, we are offering to pay the 25% shared equity debt, but we just are unable to pay in a lump sum at present.
Selling our home is out of the question as we would just not be able to buy something similar in our budget.
We have 2 children and our home is our castle.
My mortgage provider wants to help, however at present we do not meet the acceptable criteria.
Your advice is fully appreciated.

MWT

Talk to a mortgage broker, see if they can come up with a solution.

The credit score that you will see on the credit websites is not what a mortgage lender cares about, the specifics of exactly which negative credit events have occurred, may be of less importance to a different lender than the one you have now...

Do you currently have any early redemption penalties on your mortgage?

dwillis1

Hi, 
No we don have any early redemption fees.
We have gone through 3 remortgage in principles with main stream lenders, and had 2 quotes from sub prime.
There a small niggles on our credit report which we are trying to get resolved,however this is taking time.
The threatening letter from "Phoenix" is not giving us the breathing space we need.
I have offered and asked for 1 year, but they have declined.
Have they the legal rights to enforce repossession, (Considering that my mortgage provider are the majority interest, and we have no mortgage arrears)
I would like to think that "Phoenix" are trying the harsh treatment, however I cannot risk being wrong.
.
Thanks
 

user1977

Ultimately any secured lender can repossess, that is kinda the point of them having the security. But is an expensive and risky process (especially if they're not the first-ranking lender, as your "main" mortgage lender gets first bite of the cherry once the property is sold), so they are likely to pursue other options first if they seem at all feasible. 

Thrugelmir

dwillis1 said:

I would like to think that "Phoenix" are trying the harsh treatment, however I cannot risk being wrong.
.

 

May seem harsh bit it isn't. Just business. Phoenix are simply enforcing their rights under the legal contract that you willingly entered into. 

In simple terms the transaction would have been along the lines of. Bellway disposed of their interest to Phoenix at a discount. Phoenix borrowed money to buy this interest. Phoenix need the money from you to repay this debt and crystalise their profit. 

[Deleted User]

Phoenix are within their rights to send these letters. You have breached the contract and have no way of repaying them.  The fact you dont like the terms of a remortgage is not their problem, the fact you dont want to sell is not their problem.  The fact that you owe them money (a lump sum, not monthly repayments) and cant pay them is their problem.   They will enforce their rights using all legal avenues available.  Forcing a sale of the property is their logical next step

I suggest you find a way to make either selling or remortgaging work as you do not want to see your equity further eroded by legal costs being added to the debt. 

ACG

Could you take out a secured loan? 
Your mortgage will remain as is, you will pay a higher rate on the secured loan but it will only be on the additional borrowing rather than the full amount. 

MWT

dwillis1 said:

We have gone through 3 remortgage in principles with main stream lenders, and had 2 quotes from sub prime.
There a small niggles on our credit report which we are trying to get resolved,however this is taking time.

If you've been doing those direct and without the help of a broker I'd still suggest it is worth talking to one, as they may be able to focus on a lender that will be able to deal with whatever issues are in your credit history rather than trying random lenders.

Don't hang around though, as the others have said, Phoenix are within their rights and to be frank, you should have dealt with this in the year leading up to the maturity of the 10 year loan, not the year afterwards.

Whatever ends up happening it will be cheaper for you if you are in control, if they are pushed to the point of a repossession their costs will come out of the sale proceeds and they will be a lot less keen to wait for the best price so the net you will be left with could be a lot less than if you manage the sale yourself.

If you tell them you are selling they are more likely to give you time to do that, not unlimited time though...

... but certainly worth looking at other loan options as the total is under £50k, but if neither the broker or the alternative loans work out, sale may be the only option, so make it one you control, don't drift into a repossession. 

luckbox

You mention hard work and sacrifice, so could you take a sub prime mortgage to cover this, making the term as long as possible to lower your monthly repayment, then continue your sacrifices for a year or two more until you are acceptable to high street lenders again and then move back? 

Action is needed to stay in your home