mortage shortfall

[alfiemama]

Hi I wonder if anyone can help
We are desperate to sell up and rent a cheaper property
my question is would we be able to sell the house cheaper than the mortgage and then pay off the shortfall to the mortage company, hope this makes sense thanks

[bednobs]

if you were to sell for less than the mortgage you have, you would have to have the money from somewhere to pay the rest to the m/c but if you have that money, then yes, its perfectly possible. You would have to pay it all off in one go though, you cant just carry on paying mortgage payments

[alfiemama]

Hi Bednobs thanks for the advice
Can I just ask so do you not think I would be able to make an arrangement to pay them each month and for them to treat is an an unsecured loan, I would not be having a mortgage from them as I would be renting.
Basically I have contacted them and advised we are struggling, we dont want them to repossess the house but also dont want to stay in the house. They have said that until we go into arrears there is nothing they can do, but to be repossesed scares the living daylights out of me, would love to hand the keys back but we are thinking if we can sell maybe be better than the mortgage company selling it at auction

[123everton]

There was a court case several years ago that ascerted you could sell a house in negative equity, but I don't know the details of the ruling, sorry.
You need a settlement figure for the capital loan and a reasonable guess as to the sale price.then you'd have to shop around for an unsecured loan with which to pay the mortgage people off with.
In the meantime proritise your bills and cut back on expenditure where you can. There are 2 bills you should always pay before everything else your mortgage and your council tax.
If you're 3 months (or more) in arrears with your mortgage they can file for possession (I think) it's bizarre you can owe more on a credit card than you can on a mortgage and be in bigger trouble although it's often the add on charges/penalties that bump the debt up.
I'm amazed noone's contested the validity of those charges yet...

[alfiemama]

Hi 1213everton
Thanks for the info, I will have a look into this, wouldnt you think though that with the economy being the way it is the mortgage companies would rather people did this rather than them having to repossess you then take the property to auction and not make hardly any money on it.

We are not behind yet on the payments but feel that in 2 years when the rate goes that we will be owners of a house in neg equity and dont they say if its not an assett anymore to get rid, but how do you do this when property just wont sell.

[bednobs]

no, i dont think they would do that because a mortgage has to be secured against a house. if the mortgage is with a bank, they may consider selling you an unsecured product, but from their point of view it is very riskyespecially if you have already defaulted - also how will you afford rent AND repayments on a loan? if you already cant afford the mortgage.

[Eve]

Check your figures.

Ask your mortgage lendre to give you a settlement figure as at a particular date and make sure you are aware of any early repayment penalty as this can increase any settlement figure sharply.

Get a market valuation for the property and realistic sale figure and see how much you would need to sell it for and what the difference would be to give you an idea of the current equity situation.

everton - there are challenges going on but it's been kept very quiet at the moment, a company has been having quite a bit of success and rumour is they may go on a more publicl evel soon so watch this space.

[alfiemama]

Hi Jenna1978

I will do thanks very much everyone

[cassa333]

Could you rent out your house to cover the morgage etc and then just rent somewhere else yourself anyway?

[carron81]

hi

i was in a similar situation to you, selling and not buying again. our house was valued at less than what we needed and we also had an unsecured loan on the mortgage.

luckily the person that bought it covered the mortgage payment but we were left with the unsecured loan to pay off.

also, as we were coming out of a fixed rate mortgage we had a redemption fee to pay. it was with northern rock and i just phoned them up and they posted a statment out with all the redemption figures on it.

once the house was sold northern rock just continued taking the minimum payment for the unsecured loan, however we've just discovered the interest is more than the minimum payment so its worth getting everything sent out to you as we've not had any letters updating us since our mortgage stopped and the unsecured payments started.

[alfiemama]

Hi carron81

Can I ask as personal question.

How did you feel once you had moved out, was it relief or are you still worrying about the debt.

Hubby says we should just ride it out and that there will be a lot of others in 2 years time in same boat so the mortgage companies etc will have to change, me, I am not so sure