I don’t know what to do

Scotsgirl74 · 19 January 2020 at 12:36PM

The majority of income is my husbands. I have a very poor credit rating as I defaulted with all my creditors. We tried to remortgage our house but the bank said no. My flat is an interest only mortgage. I looked to see about changing it to a repayment mortgage but the payments were another £150 a month being the mortgage payments to over £500. I can’t move my mortgage to another lender due to my credit rating.

Gstrang81 · 20 January 2020 at 5:38PM

I'm also in Scotland and used to manage a mortgage repossessions department a few years ago. While I'm aware the legislation may have changed while I've been away from that business, sending the keys back sadly doesn't make the debt go away. As others have said, you could potentially get a better price selling the flat privately than the mortgage company selling it as the aim of most companies is to recoup what they can and the best possible price isn't always their agenda.

The company I worked for had lots of cases with the DSS paying the mortgage for tenants so this could be an option for you. Explore this with your LA but please don't just send your keys back. I saw this in many cases and it was always the saddest thing we could open as most people could be helped before it got to this.

WhenIam64 · 20 January 2020 at 6:38PM

"Sending the keys back" is a US option but not here. As Gstrang81 has pointed out, there will be a debt which may lead to you having to consider sequestration.

https://www.citizensadvice.org.uk/scotland/debt-and-money/mortgage-problems/how-to-sort-out-your-mortgage-problems-s/selling-the-property-or-handing-back-the-keys-s/

Do you need to avoid sequestration?

Scotsgirl74 · 20 January 2020 at 10:12PM

I know the debt won’t go away. I’m quite prepared to pay it for as long as they’ll let me. My previous tenants were DSS. They were unable to afford a deposit so stupidly Agee’s. They left after 3 months with no notice and not paying the final months rent. My issue is I can’t afford the flat when it becomes vacant. I have bad credit so I’m on a high interest only mortgage so it’s never decreasing and I can’t change companies. The situation is never going to change. I bought the flat in 2007. Prices are going up slightly but not enough to cover what I owe. I had it values today and if I sell privately there should be approximately 14k shortfall. I’m not looking for bankruptcy. I want to pay back what I owe

fatbelly · 20 January 2020 at 10:15PM

Got the property dealt with and then look at your options. Don't rule anything in or out at this stage

tlc678910 · 20 January 2020 at 10:38PM

I just wanted to say that your situation isn't all your own fault as you have said. You were unfortunate to buy just before a world recession, and your area has been slower to recover than most areas. Most home buyers have been luckier not cleverer.

You have shown a lot of resilience to keep finding tenants and letting out in difficult circumstances. Your approach to work with the bank to sell and repay the shortfall over time sounds sensible if you can't see the property's value increasing any time soon. Don't be pressured to sell a home you want to stay in to repay the debt- you should be able to avoid this.

Scotsgirl74 · 20 January 2020 at 10:49PM

Thank you. I’m just doing my SOA at the minute before I speak to the bank tomorrow. I’m hoping they will be okay with my proposals. My financial circumstances will change in 2 years time and again in another 2 years when things are paid off. As you say I have really tried to keep it going but in a world where you have a bad credit rating your options are very limited. I took out an interest only mortgage when I was a single mum hoping that I could eventually change to a repayment mortgage but they wanted another £160 a month to do this and I could never afford that.

I don’t know what to do

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