Secured Loans and selling Property

LouBlue

Sorry if this is an obvious question but it has only just occurred to me. We are putting our property on the market in a couple of weeks and going into rented for a while.

We have 3 loans, all secured. We have never missed a payment on any of them. One finishes later this year, one next year, and the last one, a year later. We won't have a property obviously when we sell. The loans are secured. We are just going to carry on paying them but how does that affect our agreement with the loan companies?

jonesMUFCforever

If there is not enough equity in the property to pay off all of the loans and mortgage they are entitled to stop the sale.

LouBlue

ejones999 wrote: »

If there is not enough equity in the property to pay off all of the loans and mortgage they are entitled to stop the sale.

How would they know though if we continued to make the payments when we rent. Are you saying its a legal requirement to tell them then?

CannyJock

LouBlue wrote: »

How would they know though if we continued to make the payments when we rent. Are you saying its a legal requirement to tell them then?

It'll be a condition of the loan agreement since they've secured the loan on the property, otherwise you'd be able to turn a secured loan into an unsecured loan by taking out a massive secured loan and selling the property right away but offering to keep repaying the loan even though you've no security on it. Be nice, but don't work like that Still got the paperwork on the loans to confirm?

LouBlue

CannyJock wrote: »

It'll be a condition of the loan agreement since they've secured the loan on the property, otherwise you'd be able to turn a secured loan into an unsecured loan by taking out a massive secured loan and selling the property right away but offering to keep repaying the loan even though you've no security on it. Be nice, but don't work like that Still got the paperwork on the loans to confirm?

I still have the loan agreements somewhere. I shall have a look. I would definitely not do anything illegal, I never even thought about it as been paying off these loans for quite a while and saw an advert today for a secured loan and it just popped into my head that we were selling the property and had secured loans! My dilemma is that we are selling the flat to clear a lot of debt, we are going into rented as we will have a lot more money coming in, due to clearing some debts, so will save up for a deposit on a house and keep paying off the loans. We will be keeping an eye on the property market whilst renting. I CAN pay off the loans with the equity, but wanted to pay off our credit cards instead, which is costing us a lot more, even though I card tart quite regularly. I really want to get rid of the credit cards first.

Savvy_Sue

I think you may find that it is a legal requirement to tell your lenders: the fact that it is 'secured' means that the lender has details of your property on their file as security against non-payment. If you've appointed a solicitor to deal with the sale, I would ask them, quick ... If not, could you pose a hypothetical question to your lenders? "We were considering selling the house and renting, would that affect this loan?"

Sorry, cross-posted, and this clearly is something you need to look into carefully before going any further. Have you looked at the article on the resources bar about Secured Loans? I don't know if it will tell you much you don't know.

LouBlue

Savvy_Sue wrote: »

I think you may find that it is: the fact that it is 'secured' means that the lender has details of your property on their file as security against non-payment. If you've appointed a solicitor to deal with the sale, I would ask them, quick ... If not, could you pose a hypothetical question to your lenders? "We were considering selling the house and renting, would that affect this loan?"

I have had a quick look at the paperwork. We have 2 loans with Northern Rock and one with Morgan Stanley. Cannot see anything specific to, 'if you sell your property' but did see, 'you must notify us if you change your address.'

I was thinking that actually,giving them a ring, and saying we might be thinking of selling in a few months, see what they say? As I said, I do not want to do anything illegal, just really wanted to pay the credit cards off straightaway and not the loans.

CannyJock

Any chance of getting a 0% balance transfer or low life of balance cc to shuffle the credit cards onto or your maxed out on the cards?

Think you'll be stuck having to clear these loans one way or another, and I'm guessing if you're moving out of owned and into rented then it'll be harder for you to get lower-rate credit after the move.

Think you're needing settlement figures on the secured loans and maybe need to think about taking an unsecured loan to clear the other debts.

I'm trying to help a friend find a low-interest unsecured loan that allows overpayments, interest calculated daily and applied monthly so it's not front loaded and puts a huge mark on his credit report, and no early repayment penalties. If I find one, I'll post back. If anyone else knows of one, lemme know.

LouBlue

CannyJock wrote: »

Any chance of getting a 0% balance transfer or low life of balance cc to shuffle the credit cards onto or your maxed out on the cards?

They are spread out over 5 cards, a couple are on 0% at the mo, but its a constant battle juggling the interest rates. They are not maxed out but I regularly ring the cc companies up, but its still costing me a lot more than the loans.

Think you'll be stuck having to clear these loans one way or another, and I'm guessing if you're moving out of owned and into rented then it'll be harder for you to get lower-rate credit after the move.

Hadn't thought of that, never rented before, always owned - never had a problem getting a loan before. Food for thought.

Think you're needing settlement figures on the secured loans and maybe need to think about taking an unsecured loan to clear the other debts.

I got settlement figures a few months back, but definitely need to get them again. I will also look into an unsecured loan to cover the credit cards if thats the route I have to take.

I'm trying to help a friend find a low-interest unsecured loan that allows overpayments, interest calculated daily and applied monthly so it's not front loaded and puts a huge mark on his credit report, and no early repayment penalties. If I find one, I'll post back. If anyone else knows of one, lemme know


Thanks for that, much appreciated..

Jeez, I have enough on my plate, cleaning the flat in preparation for viewings, haven't even gone through the hassle of finding a buyer, or finding a place to rent yet, and I have to sort this loan mess out as well. Life's never dull.

southernscouser

Have you got settlement figures for these loans Lou? It can be quite a shock! You should be OK as your's are nearing the end of your terms but it's not uncommon for people 5 years down the line to owe considerably more than they borrowed! :eek:

You don't need me to tell you that secured debt is the worst of all!

LouBlue

southernscouser wrote: »

Have you got settlement figures for these loans Lou? It can be quite a shock! You should be OK as your's are nearing the end of your terms but it's not uncommon for people 5 years down the line to owe considerably more than they borrowed! :eek:

You don't need me to tell you that secured debt is the worst of all!

Well I hadn't found this place when I took out the loans and was extremely [STRIKE]stupid[/STRIKE] naive back then about finances, I can tell you. Hence all the debt. I got settlement figures back in September, the figures were fine, what I expected really. As I said, I can repay the loans with the equity in the flat, but just really wanted to pay off the credit cards first, but may have to get an unsecured loan for them if I have to pay the loans off first.