Debt in the UK when living over seas

Dmaki666

I am originally from the UK and moved to Canada back in 2018, I had a property in the UK (sole owner) still but it was in negative equity so i rented it out with the hope that things would improve. I am now finding myself in a position where i can no  longer afford to pay the mortgage payments. I have been informed bu the estate agent that the property is still in negative equity. I asked the bank if i was able to sell the property for less and pay them what  i got for the property and they informed me that unless there was an offer on the property they would not consider this and that the best course of action was to voluntary surrender the keys.

As i do not have income in the UK i have no way of repaying the short fall and with my current situation here in Canada i would also not be able to pay very much towards this debt also the assets i have here in Canada are also joint assets.

I am not sure where i stand legally or what i can do about this situation i just know i can not make the next mortgage payment and need advise on the best course of action

Brie

First off how does the estate agent know if it's in negative equity or not?  To know about this they would need to know how much you still owe on your mortgage and the drop in price would have to have been substantial for it to still be negative after the last 5 years payments.

If you do surrender the keys to the bank (which might be the easiest thing for you to do) then they would be obliged to try to get the best price for it, rather than simply sell it at auction as some banks have done in the past.  Should there be negative equity then yes you would be responsible for that but from a practical point of view I don't know how they could collect anything if you are not living in the UK.  That said if they did register an outstanding debt, even if it wasn't being chased, there's the possibility of that affecting your immigration status in Canada, unless you have already become a Canadian citizen. 

Have you talked to the bank about covering the interest at least while seeing if a sale is possible?  

Dmaki666

Thanks for the reply.

I actually told the estate agent what was owed on the property this was when we were discussing pricing for the property. The reason the price has been affected is not only did the tenant not leave when she was supposed to she also left the property in a terrible condition.

I had already dropped the mortgage to an interest only several years back, but even then with the increased interest rate it is still greater than what i can currently get renting the property.

 

sourcrates

Although the mechanisms exist in some cases, to chase UK debts abroad, in reality it rarely happens.

Debt is a civil matter here, so won`t affect you all that much, the cost and issues concerning tracing the debtor and enforcing the debt in your local jurisdiction, are all factors why this is the case.

Mortgage shortfall debts can be chased for 12 years, something to keep in mind if you intend returning to the UK.

If you don`t, then there will be few repercussions.

fatbelly

What's the advantage of voluntary surrender over just walking away?

I'm asking the question, interested in people's answers

You would hope this is an appreciating asset, albeit slowly.

Hoenir

fatbelly said:

What's the advantage of voluntary surrender over just walking away?

Speeds the process up and reduces the shortfall. Walking away requires the lender to seek court approval. 

fatbelly

Does it reduce the shortfall though? 

molerat

fatbelly said:

Does it reduce the shortfall though? 

It would probably decrease the lender's repossession costs, which will make up part of the shortfall, so most likely yes.