Mortgage term ended in 2017 - help!!

Fghilskbxh____

My parents got an interest only mortgage back in 2004 with Northern Rock which was then sold to Heliodor mortgages with a ridiculous interest rate. The mortgage term ended in around 2019.

Due to job loss and terrible financial advice, my parents have not paid the mortgage for a number of years now and the arrears are in excess of £106,000 now. We are trying to sell the property via a quick sale in order to pay the mortgage company back, however we are worried that the lenders will not give us time to make the sale. (We have previously told them we were selling due to this bad financial advice and did not sell). 

We are wondering if my parents use money from their pensions to pay off the arrears of £106,000 plus a few extra months whether this would buy us time to make the sale without risk of repossession. If we went to court, would the payment of £106,000 show that we are serious about making good the debt and allow us the time to sell, or is there a risk we would use pensions and savings to pay the arrears and then the property would be repossessed anyway, leaving us with little to nothing out of the house? 

Any advice would be appreciated, we are desperate to try and get some money out of the house to allow my parents to find a new place to live and not be left homeless! 

silvercar

It would be helpful to know the property value and the size of the mortgage. Is there a chance your parents could get a new mortgage now that would clear the arrears and capital borrowed.

Fghilskbxh____

We have just had the properly valued at around £750-800k. The mortgage was originally £390k and plus the arrears is now around £495k in total. 

Given their credit scores, ages (69 and 62) and income, remortgaging isn't possible. We have also considered a bridging loan however have been advised that given the interest associated with this it would not be worth doing as we wouldn't be left with much. 

Thanks! 

MWT

What stage is the lender at right now?

Generally they would have been writing and escalating their demands for repayment and keeping your parents advised of the legal costs that were building up as well as any attempts to repossess...

If they have not actually started the repossession process then you still have time, and if you combine that with a lot of detail to them regarding how you are progressing with selling the property it should help.

The lenders do not want to repossess a property but will if they lose faith in the sincerity of your parents efforts to sell...

lfc321

What have the lenders said about repossession? 
Even if the lenders are on board, clearing the arrears in the way you suggest would only bring temporary relief:  it wouldn't make the capital go away, so arrears would start to build up again very quickly. And in any case, can your parents really take £106K out of their pensions and still have enough money to survive in future??
It sounds to me like pricing it competitively for a quick sale is the only viable option here. If they can indeed sell it for something close to £750K they may be able to pay off the debt and be left with around £250K to find somewhere else to live. 

Fghilskbxh____

MWT said:

What stage is the lender at right now?

Generally they would have been writing and escalating their demands for repayment and keeping your parents advised of the legal costs that were building up as well as any attempts to repossess...

If they have not actually started the repossession process then you still have time, and if you combine that with a lot of detail to them regarding how you are progressing with selling the property it should help.

The lenders do not want to repossess a property but will if they lose faith in the sincerity of your parents efforts to sell...

As far as I'm aware they have never told us about any legal costs building up. They have been to court twice, the last time being over a year ago now. The first time they went to court this was rescheduled due to my dad not speaking good English and the second time was put on hold due to saying that the house would be sold. 

The last time we spoke to them was over 2 months ago and they stated over the phone that they would not give us time to sell if we pay the arrears and they said they are waiting to hear from the courts in order to repossess, but again this was a while ago now. We have since had a statement from them in the post (dated 1st November) asking us to pay the arrears and with bank details attached. This is why we are wondering if it would be worth paying, as this goes against what they have said on the phone. 

Essentially, we are unsure where they are in the repossession process as this statement of arrears is the last we have heard from them. We are aware that the situation should have been resolved a long time ago, but again due to bad financial advice this is the situation we are in and we're just trying to avoid becoming homeless! 

Fghilskbxh____

lfc321 said:

What have the lenders said about repossession? 
Even if the lenders are on board, clearing the arrears in the way you suggest would only bring temporary relief:  it wouldn't make the capital go away, so arrears would start to build up again very quickly. And in any case, can your parents really take £106K out of their pensions and still have enough money to survive in future??
It sounds to me like pricing it competitively for a quick sale is the only viable option here. If they can indeed sell it for something close to £750K they may be able to pay off the debt and be left with around £250K to find somewhere else to live. 

The idea to clear the arrears is to get this temporary relief just to give us time to sell to pay off the capital. The idea being that my parents would get this money back once the house is sold. The risk is that we pay and the house gets repossessed anyway and this is lost, which brings me back to my question of whether it is worth even trying to do this, or we just continue to try and sell and hope that this can be done in a matter of weeks before another threat to repossess arrives! 

We are just looking for a month or two of time to get them off of our backs while we sell the house, and Heliodor do not have a reputation for being understanding as they they are not actually a mortgage company. 

Thank you for your help! 

MWT

Fghilskbxh____ said:

The last time we spoke to them was over 2 months ago and they stated over the phone that they would not give us time to sell if we pay the arrears and they said they are waiting to hear from the courts in order to repossess, but again this was a while ago now. We have since had a statement from them in the post (dated 1st November) asking us to pay the arrears and with bank details attached. This is why we are wondering if it would be worth paying, as this goes against what they have said on the phone. 

Unless there is something in that recent statement that explicitly states that they will give you more time after paying the arrears, I would not assume that to be the case.

There is nothing inconsistent between reminding your parents that the arrears are outstanding and should be paid, while at the same time pursuing a repossession order as the principle is still owed and way past the original contracted date.

Do keep in mind that even if they do repossess it doesn't leave your parents with nothing, as they are still due to get whatever is left after the amount owed to the lender and all legal and sales costs have been met, but it is usually possible to get a better price by selling it before it is repossessed so that should still be the main aim.

I would be reluctant to be drawing amounts of that size out of a pension scheme, especially if it is going to trigger an income tax event, but if the lender will confirm that they will back-off for a reasonable period of time if the arrears are paid then it may be worth doing...

May be worth talking to Shelter to see if they can offer any advice...