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Mortgage shortfall?

3 replies

Housingpanic · 04/09/2012 21:28

Have name changed as I'm so embarrassed to be in this situation.

I own a house which estate agent told me we should market at £89,950 and realistically likely to get £85,000 for if sold. It's only small with 1 double bedroom and 1 single (more of a boxroom). There's me, DH and DS.

Have found out I'm pregnant again (unplanned) am excited but terrified as there's not really enough room just for the 3 of us, never mind another child!

Our mortgage outstanding is around £55,000. We bought the house on Homebuy Direct shared equity scheme and there's £28,000 outstanding on that. Our ideal is to sell up, and rent somewhere larger as we have no deposit to buy another house. If we sell for £85,000 obviously that wouldn't be a problem, however I feel the estate agent is being unrealistic with what we ate likely to get for it as similar properties are also on the market and the only one to have sold fetched £70,000.

If we sold for (as an example) £70,000 would the mortgage be repaid and I would owe the shortfall to Homebuy Direct? Or would it be a % to each?

What would happen re the balance of the shortfall? The mortgage is just in my name and I'm now a SAHM, I also have unsecured debts which are being repaid at a minimal amount £5 per month at present as (even with DH's salary) we can't afford to repay them.

I just feel so stuck, I was on the pill and no plans for a baby until we had the finances sorted Sad

OP posts:
Housingpanic · 05/09/2012 10:30

Bump please.

OP posts:
Collaborate · 05/09/2012 11:02

If in effect you are the registered proprietors of the whole, and there are 2 charges, the first being the main mortgage and the second being the Homebuy Direct loan, then you will owe homebuy direct the shortfall. I think they would have to agree to release their charge on the property and if willing they would convert the mortgage to an unsecured loan.

If however they own a percentage of the property they will be entitled to that percentage of the proceeds of sale, and you won't owe them anything else. You'll only be able to apply your percentage to the main mortgage though, and if there's any shortfall that will be converted in to an unsecured loan.

I think.

Housingpanic · 05/09/2012 11:54

Thanks collaborate we owe a percentage to Homebuy so would be the bank we owed the shortfall to. What happens to the unsecured loan as part of the debt management I currently have in place with the CCCS, will it become part of that or can they demand payment or anything? I have no income and DH's salary is taken up by bills so we (currently) have no spare income (renting will be a similar amount to our mortgage).

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