To let house be repossessed?!

[Bloodynorthernrock]

I have NC for this as could be outing. If anyone has any advice at all I'd really appreciate it...

I could have repossession started next month and I'm not sure what to do or where I stand. Long story but here are the main factors, trying to be brief!!

-"bought" house in 2007 before the financial crash. Naively took financial advice and got 100% finance, 90% mortgage and 10% unsecured loan with Northern Rock fixed for 5 years. Shortly after they folded...

• relocated in 2011 for work reasons and house had dropped significantly in value, about £20k so decided to rent it out
• Northern Rock gone so debt with NRAM at that point, had to apply for consent to let annually at a fee that went from about £200 to £385 per year over 6 years and the debt now with Whistletree. I wasn't usually in a position to pay the fee outright so it got added on to the mortgage, which I didn't realise until speaking to one of their advisers a couple of years ago meant that after interest, in real cost it was over £600! I complained at that point but they said I had no grounds.
• looked into remortgaging a few times over the years but trapped by negative equity and even now house valued at least £15k below what I paid
• Comms from Whistletree regarding consent to let have always implied I should move back in or sell. We will never live back in that town and are nowhere near it.

-Decided in February to try to sell. They we positive about it and helping me to manage the outcome. Estate Agents put it on the market and I had to serve 2 months notice to my tenants. As a result, I had a concession agreed for May-July for reduced payments as without the rental income I couldn't maintain the full repayments -Fast forward to now, Estate Agents, having spoken directly to Whistletree have said they can't sell the house. It won't get an offer that will cover the full amount of the outstanding mortgage so it will take 8-12 weeks for a decision on an offer, which Estate Agents say no buyer will wait out. I can totally appreciate that as I wouldn't be impressed! -in the meantime, Whistletree had denied any further period of reduced payments. I spoke to them about the Estate Agents decisions and they won't budge. I said that I still can't meet full repayments and they said in that case, after 2nd August I'll be in arrears to the amount that they will start repossession.

So if you made it this far then thanks for reading and if you have legal/financial knowledge or have been through something similar, please advise?! Should I let them go ahead and if they do, what happens and would they sell it for half nothing and I'd still be responsible for the outstanding debt? Or should I rent it out again and continue to pay their ridiculous annual fee? I would really rather be rid of it as it's been a thorn in my side for nearly 10 years. Please help?!?!

Wow, that's a tricky one.

Does the rental income cover all the costs, including the exorbitant fee and insurance? If so, keeping it tenanted would be the best option financially and hopefully one day it will be worth more than you owe on it.

Repossession ruins your credit and it will be hard for you to buy another property for a good while. You also need to bear in mind that you could well still owe them money afterwards, as it sounds unlikely that it will sell for more than you owe on it.

A friend went through similar in the recession in the early 90s. The debt was still accruing interest years afterwards, as the sale price didn't cover the whole of the mortgage debt, fees etc.

It's a really tough call. Negative equity is a bitch.

As a rule of thumb I'd avoid repossession at all costs - you'll almost certainly be worse off I believe how it works is the house will be sold at auction as quickly as possible, and wont get as much as a regular sale, which will leave you with the difference outstanding.

If I were you I'd continue letting it out until you can clear the remaining debt.

I would seriously suggest talking to an insolvency practitioner about going bankrupt. A proper one, not a debt consolidator IVA factory. They may be able to negotiate with Whistletree so that you don’t end up paying off the balance of the mortgage once the house is sold.

How much short are you after selling the house (include fees)? Can you take out a loan to cover this difference, use it to pay some mortgage off then get permission to sell it quickly?

You will be liable for the shortfall. This debt will increase if you have it repossessed due to fees whistletree will add on and the lack of effort they will put into achieving highest sale price.

If you proceed to let without consent, be aware they can call in the mortgage at any time if they find out as you are in breach of terms. Also be very careful that your insurance policies are valid and be aware many letting agents will refuse to let it out without a CTL document.

Research expected impact of Brexit on property prices in the area. Holding on could make things worse.

The way northern rock fiasco was dealt with by this government was horrendous and im pretty sure there were support groups set up for people in similar position to you. Best of luck

You will have to pay the balance not covered by what they can get for it.

I think if I were you I would rent it out again. It is an asset, and if the rent covers everything then you can wait until it is worth what you paid for it. You don't say why you want to sell it.

I would have a look on Money Saving Expert. The debt forums on there are excellent and SO helpful.

You don't need an insolvency practitioner yet! They are very expensive, thousands.

For debt, your first port of call should be Stepchange who are amazing and totally free. They are funded by the banks.

There is also Christians Against Poverty who also provide advice. You don't have to be religious.

I would also advise that you don't go to Citizens Advice. It depends who you get and their knowledge base as to what advise you are given. We were given terrible advise from a lovely person there who knew nothing about debt.

So, ring Stepchange asap. They are great.

I'd say you were lucky to be able to rent it out for so long on a residential mortgage! Usually you'd need a commercial one (which would be difficult if you can't remortgage) which would be more expensive.

If the house is repossessed and sold for a lower amount, you'll be liable for the difference so I would avoid this if at all possible. It's not a case of handing the keys back and walking away.

If you can continue to get permission to rent it out, that looks the best option.

I'm assuming the house you live in now is rented, it could mean renting for the rest of your life because you probably won't get another mortgage easily. How old are you? The younger you are, the more i'd be inclined to let it be repossessed.

Do not let them repossess at all costs. You will still be liable for all the interest/fees until the property is eventually sold AND you wil have to pay all the costs associated with the repossession (and they are hefty) so you will gain nothing but actually accrue additional debt.

I know someone who was in a similar position. They went to court eventually and it turns out their new creditor couldn't or wouldn't prove that they had acquired the debt legally. The house will still be repossessed eventually but they have dragged it out for several years. In your place I would advise selling at the market rate and taking out a loan to pay off the negative equity. At least that way you are only paying interest on the smaller sum.

As Whistletree seem to have you in an impossible situation with their administration around selling. How about levelling the playing field by getting someone powerful on your side? Would you be willing to contact a consumer affairs program about your situation? I listen to radio 4 and ‘You and Yours’ regularly gets involved in this sort of stuff and gets brilliant results. It may be worth a try.
www.bbc.co.uk/programmes/b006qps9/contact

Hi OP, I’ve pm’d you.

My exH's partner did this.
10 years later when he died she was unable to take on the relatively small mortgage on the house that he left her because of her credit rating, in spite of the fact she had a good income and a blameless history afterwards. There are long reaching ramifications to a repossession. Think twice and take professional advice.

OP- go the financial ombudsman regarding your complaint that was denied. If you did not understand the charges or they were not explained to you properly then you do have grounds for complaint. Particularly if this is partly responsible for putting you in a negative equity situation. Also - you have nothing to lose.

DO NOT let your house be repossessed if you can possibly avoid it. It will provide you with difficulties obtaining mortgages in the future for a long time, beyond when there is any trace of it on your credit reports and it will be sold cheaply. You will end up with further fees and charges to pay including any difference between what they sell the house for and what you owe. It is something you should try to avoid at all costs.

I understand that renting the property was not ideal but this to me seems like a good solution, forget the difficulty regarding the language surrounding the consent to lease, if they will allow it plough on. If they deny it, in your current circumstances they really aren’t treating you fairly and they would have difficulty proving otherwise.

Good luck!

@bloodynorthernrock

I would defo consider bankruptcy. You will never recover from this unless you win the lottery.

As someone said earlier, if you get the house repossessed and your mortgage/debt (for example) is £177K and they raise £133K from the sale of the house (in an auction or whatever,) you will be continually chased for the £44K difference.

You probably won't be able to afford to make the payments, you will have debt collectors at your door, and your credit rating will just turn to shit anyway.

Someone I know went bankrupt 2 years ago after fighting a losing battle with debt for approximately 15 years, (which has accrued through job loss and illness,) and they said it was the best thing they ever did. They even bankrupted £4.5K tax credits which pissed off the tax credit department immensely! They said after 15-16 years of constantly chasing their tail, having ZERO debt was a breath of fresh air, and they were able to start over.

But if you put charges on a mortgage, you're obviously paying the same interest rate as the rest of the balance - in fact, you are increasing the amount owed. I can't see a complaint about that being successful tbh.

Even if the OP manages to sell the property, she will still be liable for the shortfall (which could be paid off by another loan, but this would have to be arranged before the property was sold so the mortgage company are repaid in full on the day of completion).

I'm not sure I fully understand, why are you in such significant arrears they are about to repossess, if the property was rented out and you got the reduced payment for two months whilst no tenants. You must have been not paying for some considerable time before this?

I'm also a bit confused as to how it has got to a repossession stage if it was rented out. Was the rent not covering the monthly payments?

The op explains in opening post. Rent required to pay mortgage, Tenants given notice prior to sale on 2m standard AST terms. Whistle agrees reduced payment during that period then refuses to allow sale, jack's payment amount back up to original level and also refuses consent to let. That's how I understood it.

With ppi any policy where the premiums were added to the policy were automatically deemed to have been missile. I agree about going to the ombudsman,as long as it was under 6 years ago.

Not policy , mortgage or loan

They start sending letters threatening repossession fairly quick when you are in arrears, but that's all they are, letters to lean on you to start paying. My marriage ended & my ex husband refused to move out of the house I owned, I stopped paying the mortgage as I couldn't afford to pay a mortgage & rent on a new home as well, when he finally moved out I put the house up for sale & told building society it was up for sale, they left me alone then even though it took a year to sell it. Every month's missed payment caused a charge for missed payments but they didn't go to court for repossession. I've recently been sent a cheque for the missed payment charges as there is some kind of PPI type case with them.

There is some great information on this thread. I would just like to add that if circumstances dictate that you do need to go bankrupt that the information relating to that debt does come off your credit search history after seven years and your score does recover. It is survivable although at times emotionally trying. The best advice I can give is to try and make sure you can get some good emotional support whilst you sort this out as it can have a massive impact on the other areas of your life. Here is a great place to get some of that. Best wishes and I hope you keep posting.

Are you able to get permission to let?

There is some really useful info on bankruptcy here:

www.experian.co.uk/consumer/guides/bankruptcy.html

I know what you mean about it being a thorn in your side. I've just sold a flat that's been empty for a year and left me well out of pocket. Luckily I got enough out of it to pay off the mortgage and fees and got a tiny profit.

Best idea is to keep on renting it out. If they repossess, they add on all sorts of fees - admin fees etc. amounting to huge sums. Plus the shortfall in the mortgage and the sale price. Or go bankrupt, as someone else has said. Not as scary as it sounds but you'll need proper legal advice.