Parents bought house for £12K hav paid bac £140,000 still owe £150,000 House worth apx £100,000 HELP

MWT

billy2shots said:

- Now things turn murky. How does £60k of part part debt turn into £150k.

I suspect the initial mortgage was for rather more than £60k based on this earlier comment...

DancingMan said:

They did subsume about £60K worth of debt into the mortgage, the primary reason for the significant amount of money still owed is due to the amount of interest they have been charged/paid. 

... but I agree it is hard to see how they have got to £150k even if they started with, say, a £100k mortgage...

If the OP can get the whole story there may be something actionable in there, but frankly, I'm not hopeful...

Keep_pedalling

It is difficult to see how much secured debt could be run up against such a low value property. They ar3 going to be utterly stuffed when the IO mortgage comes to the end of its term. Unless they have have significant amounts tied up in pensions to use to clear the debt then they well be looking at bankruptcy as the only way forward.

Might be worth speaking to one of the debt charities such as Stepchange.

Strummer22

DancingMan said:

 elsien said:

In what way do you feel they have been exploited? How many loans have they taken out against the house over the years?
When was the last loan/remortgage that they took out? 

The last remortgage was in 2012 the last loan against it was, I believe, in 2007. As I have mentioned above it is my understanding they borrowed 60K however I am still working through figures, as this has come to light recently. 

I feel they have been exploited because they have paid back a significant amount of money to all of the lending agencies (and yes they borrowed a significant amount but not nearly as much as they will have to pay back) but at no point has anyone said to them.. .this is the situation you are going to be in and indeed are in now lets look to how we resolve this. 

They have been happy to take the money and then they will be happy, it seems to me, to take the asset and leave my parents  with nothing despite having paid almost the full amount back in interest. 

The primary exploration issue I believe is that the debt taken on with the current lender in 2012 was £150,000, they have paid this organisation around £140,000 and in 2 years they will be called upon to pay £155,000 to complete the mortgage. Maybe I am wrong but that feels to me to be exploitation. 

I am not sure yet if anyone has explicitly picked up on the bit in bold.

If their house is currently worth £100,000, presumably (barring some reason that you haven't disclosed) it was worth a bit less than this in 2012.

There are NO lenders who would lend £150,000+ against a property worth less than £100,000. Especially not in the tightly regulated post-financial crash world of 2012. 

If, in 2012, your parents somehow already had a mortgage of £150,000 against their £100,000 property, there's no way they would have been able to remortgage with a new lender (your post implies they remortgaged). They would have been mortgage prisoners.

Either this is a wind-up or something very different to what you've actually told us has happened here.

MWT

Strummer22 said:

Either this is a wind-up or something very different to what you've actually told us has happened here.

Not regarding this post as a 'wind-up' but didn't address the bit in bold directly as it makes more sense to ask for a properly detailed time-line of how they got from the first loan to £150k as it doesn't seem likely it is as simple as was set out in the first post...

[Deleted User]

I can't help with any advice, but have a question you might want to ask your parents as I knew someone in a slightly similar position. 

When they took out the original mortgage, interest only, did they also take out a 'home improvement loan' added to it? That might account for some of the 'extra' debt? Plus the charges on missed payments or lowered payment when in hospital. 

dander

Hello - question based on your original post, but I don't think has been cleared up yet. You say the mortgage has passed through several lenders and debt management companies. Do you know what's actually happened here? Have they defaulted on their mortgage at any stage? Have they taken any additional loans that were secured on the property? 

If debt management companies have been involved, this sounds way more complicated than just a question of whether they were mis-sold a mortgage.  It also sounds very likely that they may have a sub-prime deal which would be way outside the bounds of the typical mortgage market. Have you got the paperwork to say they have really only borrowed 60k against the house? Do you think it's possible there is more here than they have admitted to you? I'm wondering if they've ever been in any kind of IVA or similar and had debts secured against the house?

DancingMan

Thank you everyone one for taking the time to respond. I am sorry for the delay in responding life and work got in the way of me following this up on the forum however I am seeking to do so now and will review the responses. I just wanted first to acknowledge the time taken to reply to my initial message. Will follow up on any points/questions shortly.  

dwsjarcmcd

Having worked for a Specialist Lender in the past, I've seen a few similar situations. Assuming they didn't borrow more than the £60k the OP mentioned but factoring in the 'short' period where one of the borrowers was in hospital and they were making reduced payments would mean they were in arrears.  Being in arrears brings with it additional charges/fees.

If, as I suspect, the account was not later brought up-to-date but they reverted to their normal, contracted monthly payment, then the account would still be in arrears and those monthly charges/fees would continue to be applied, over what appears to be many years.  Add interest on top of all this lot and you have a spiraling debt, although the lender should have been in discussions with your parent regularly over the period.

If I was you, I'd get every single mortgage statement your parents have to identify all these charges but it will also give you solid evidence as to what your parents were actually paying, how much they are in arrears etc. I would also get every other piece of correspondence from this (and previous) lenders they have and take it from there.

Before you find a solution, you need to establish the cause of the mortgage debt, and in my experience, past arrears tends to be the reason.

AMILLIONDOLLARS

I would advise that you get the property independently valued by three estate agents.  As Lenders would do the same when a person wishes to re-mortgage.  Have a look on Rightmove and see what similar properties are selling for in the area.  £100k seems a round figure? But as already stated reputable lenders are careful not to loan out money above a property's worth. 

If they borrowed the money from FirstPlus Loans (scandalous), they would have been too late for some form of address, as I believe claims against this and other companies like them have now closed, these companies having gone bust.  Maybe a claim against the Companies that have taken over their loan books maybe possible?

I believe that a company called  "Elderbridge" in now in charge of the FirstPlus portfolio.  Someone on another thread has reported that after borrowing £18k (good ole Carol Vorderman)  asked for a redemption statement this year, to be told that they still owed £32K.  I suspect this is where the seed of the problem begins. 

MWT

DancingMan said:

Thank you everyone one for taking the time to respond. I am sorry for the delay in responding life and work got in the way of me following this up on the forum however I am seeking to do so now and will review the responses. I just wanted first to acknowledge the time taken to reply to my initial message. Will follow up on any points/questions shortly.  

Thanks for updating us, hopefully once you've been able to get clarity on how things reached the current position it will be easier to see if there is anything actionable...