adding service charge debt to a mortage

ET22

Hi, 
I own  a leasehold flat with a small mortgage

Basically  i owe service charge payments and the property management solicitors have asked me to sign a letter of admission from them to go to  the mortgage lender to apply the debt to my mortgage which wont exceed the original amount borrowed but will avoid the solicitors issuing court proceedings. The mortgage does have "space" on it to take the service charge debt.  

However, can the bank refuse to pay it? Will it put my mortgage at risk even though the mortgage is for 30,000 and my balance is less than 26,000 owed and the service sharge debt is less than 4000. 

Do banks then ask for more details from me regarding any outstanding debts and my current credit rating?

The bank is Natwest and i have just taken a new mortgage deal with them  


  
   

silvercar

It will be a condition of the mortgage that you keep up with service charge payments. In the above scenario I would think the lender would write to you reminding you of this. You’d have to discuss with them whether they would increase your mortgage to cover this payment. They could refuse as repayment mortgages are expected to decrease over time, it doesn’t necessarily mean they would lend you the money again.

Hoenir

ET22 said:

Do banks then ask for more details from me regarding any outstanding debts and my current credit rating?




  
   

Highly probable that they will. Not only are you in breach of the lease but also your mortgage agreement. The mortgage lender will therefore need to consider their options carefully. 

ET22

@silvercar thankyou for responding. Due to my current circumstances i am applying to breathing space organisatio tomorrow morning with a signed letter from an amph to stop any further action from the solicitor from what i understand they can put  a "stop"  on them within 24 hours I only found out about them today and so im hoping they could do it quickly because the 7 day period to send a signed response to the solicitor is up tomorrow 

ET22

The solicitors are horrendous. I only owe 1200 pounds because i lost my job last year but they have added their costs on to take it to 3667
Im going to report them to the law society I think its called. The rogue management company took over and added ridiculous amounts to the service charges. Its been an absolute nightmare and I would never ever buy a lease again because these nregulated property management companies come in and affect peoples lives so much. It really has been a nigtmare for everyone in the building. The service charges nearly trebled when they took over.       

Hoenir

They may well notify your lenders of the arrears in any event. 

ET22

My plan is to sell the flat anyway in a few weeks because cut a long story short, the residents are buying the freehold which should be completed in the next few weeks. 

In the event the bank decide to withdraw the mortage or repossess the property/lease, would i lose all of my capital do you know?

silvercar

ET22 said:

My plan is to sell the flat anyway in a few weeks because cut a long story short, the residents are buying the freehold which should be completed in the next few weeks. 

In the event the bank decide to withdraw the mortage or repossess the property/lease, would i lose all of my capital do you know?

They won’t withdraw the mortgage or repossess , the most likely outcome is they write to you and tell you to pay the lease charge. As a last resort they will add it to the mortgage, but that could be at a higher rate than your current mortgage rate.

if a home is repossessed, the lender has a duty to get the best price for it. They then tot up the outstanding mortgage, arrears, repossession charges and selling charges. Anything left over they give to you.

ET22

@silvercar, thankyou.

The solicitors have given me an admission  form to sign  for  the debt of 3667( more than 2000 of which is legal fees) tfor them to send to the bank but if the bank just tell me to pay them, would it mean the solicitors for the property management company would automatically take me to court anyway because they want the payment and are refusing an arrangement to pay? 

I had a Breathing Space document signed today and the time left on my 30 days will be in place until 17.02.25 just so i have moe time for  advic so thankyou .

 The solicitors sent me a document to sign to make an offer ie the expenses and expenditure form, i admitted full liability in stead of arguing about the unreasonable solicitors fee, but they then refused the offer i made which to be fair to them was not a reasonable amount but someone with no experience of dealing with such things told me to do it.
 
The solicitors were also sending me letters during the time i was legally entitled to a 30 day breathing space but they conveniently ignored that. 

I hope the above makes sense x

silvercar

I suspect that a management company don’t know much about ‘breathing space’ as they are not a lender. No harm in writing to them with a print out of the .gov.uk page reminding them of their obligations. Same for the solicitors.

As for the actual management fees owed, eventually the lender will make the payment and add it to your mortgage, the solicitors are trying to get you to pay direct, but if you don’t have the money then they can’t get blood out of a stone! It’s for you to decide if you can manage to make the payment or not.

ET22

@silvercar, thankyou again. I will just sign the form then for them to send to the bank because I definitely cant afford to pay it direct and its been worrying me sick