Voluntary surrender of property

realdeal1011 · 16 May 2018 at 2:53PM

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

stator · 16 May 2018 at 3:25PM

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.

BoGoF · 16 May 2018 at 3:25PM

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 · 16 May 2018 at 3:59PM

stator wrote: »

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.

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 · 16 May 2018 at 4:00PM

BoGoF wrote: »

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?

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 · 16 May 2018 at 4:17PM

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.

ACG · 16 May 2018 at 5:20PM

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.

davidmcn · 16 May 2018 at 6:40PM

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.

Voluntary surrender of property

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