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    • realdeal1011
    • By realdeal1011 16th May 18, 2:53 PM
    • 121Posts
    • 16Thanks
    realdeal1011
    Voluntary surrender of property
    • #1
    • 16th May 18, 2:53 PM
    Voluntary surrender of property 16th May 18 at 2:53 PM
    I am in a situation in which i am in negative equity with my property. My mortgage finished in Sept 2017 but thhey have allowed me to extended time to try and sell the property to cover the remaining balance.

    The problem is that the value of my property (50K) is much less then my outstanding balance (61K). I had purchased the property in 2007 just before the economic crash...

    Now i have a buyer will to pay 49k but the mortgage company are not letting the sale through until the outstanding balance is paid - which i cant afford.

    They mentioned that i go down the voluntary surrender route but i would like to know if it would affect my credit rating? They did say that i would be liable to pay the remaining balance once they sold the property which i explained i cant afford.

    Any advice or guidance would be greatly appreciated.

    Thanks
Page 1
    • stator
    • By stator 16th May 18, 3:25 PM
    • 6,543 Posts
    • 4,412 Thanks
    stator
    • #2
    • 16th May 18, 3:25 PM
    • #2
    • 16th May 18, 3:25 PM
    Was it an interest only mortgage then?

    If you can't pay the shortfall then you will be in debt to them and it will affect your credit history. You'll end up with CCJs against you.
    You'll need advice from one of the debt charities.
    You might also want to call the Shelter helpline
    0808 800 4444 if you need help with housing issues.
    Changing the world, one sarcastic comment at a time.
    • BoGoF
    • By BoGoF 16th May 18, 3:25 PM
    • 3,525 Posts
    • 2,865 Thanks
    BoGoF
    • #3
    • 16th May 18, 3:25 PM
    • #3
    • 16th May 18, 3:25 PM
    If you voluntarily surrender the property is likely to go to auctiion and potentially sell for less than 49k leaving you with an even bigger shortfall.
    Is there no way you can borrow the difference?
    • realdeal1011
    • By realdeal1011 16th May 18, 3:59 PM
    • 121 Posts
    • 16 Thanks
    realdeal1011
    • #4
    • 16th May 18, 3:59 PM
    • #4
    • 16th May 18, 3:59 PM
    Was it an interest only mortgage then?

    If you can't pay the shortfall then you will be in debt to them and it will affect your credit history. You'll end up with CCJs against you.
    You'll need advice from one of the debt charities.
    You might also want to call the Shelter helpline
    0808 800 4444 if you need help with housing issues.
    Originally posted by stator
    Yes it is an interest only mortgage. Even if i give up the property and agree to pay the shortfall in monthly installments that will still affect my credit rating?

    Thanks for the info, i will give them a call to gets some advice.
    • realdeal1011
    • By realdeal1011 16th May 18, 4:00 PM
    • 121 Posts
    • 16 Thanks
    realdeal1011
    • #5
    • 16th May 18, 4:00 PM
    • #5
    • 16th May 18, 4:00 PM
    If you voluntarily surrender the property is likely to go to auctiion and potentially sell for less than 49k leaving you with an even bigger shortfall.
    Is there no way you can borrow the difference?
    Originally posted by BoGoF
    I am waiting to see if i can get a loan to cover the shortfall as i was thinking the same. If it goes to auction it well almost certain go less for the 49k.
    • stator
    • By stator 16th May 18, 4:17 PM
    • 6,543 Posts
    • 4,412 Thanks
    stator
    • #6
    • 16th May 18, 4:17 PM
    • #6
    • 16th May 18, 4:17 PM
    If you came to some agreement with the lender then it might not affect your credit file. But I can't see them being very generous. Once the house is sold they will want their money.
    Changing the world, one sarcastic comment at a time.
    • ACG
    • By ACG 16th May 18, 5:20 PM
    • 17,659 Posts
    • 9,457 Thanks
    ACG
    • #7
    • 16th May 18, 5:20 PM
    • #7
    • 16th May 18, 5:20 PM
    If you hand the keys back, it will go down as a repossession.

    Are they refusing to enter a payment plan for the remaining 12k? Personally I would make an official complaint and take it to the ombudsman if that is the case. It seems very wrong that they would not allow you to get 49k on the open market as it would get significantly less at auction and in the meantime interest would be added and compounded in additions to fees getting added etc. I can see you owing closer to double the 12k if you went down that route.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • davidmcn
    • By davidmcn 16th May 18, 6:40 PM
    • 8,796 Posts
    • 9,303 Thanks
    davidmcn
    • #8
    • 16th May 18, 6:40 PM
    • #8
    • 16th May 18, 6:40 PM
    Most repossessions are sold conventionally rather than at auction, but I also don't see the purpose in them not allowing you to go ahead - even if they can achieve the same price as you, repossession involves significant extra costs (legal, marketing etc) which the lender may end up having to write off if you don't have the money.
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