Is our mortgagee obliged to help us out/stop being such gits?

[DitaVonCheese]

Will try to keep this brief. I co-own a flat in London which I bought a few years ago with a friend. When I was heavily pg, DH and I moved out of London and settled close to my family up north(ish). A few months ago my parents lent us money for a deposit and we bought a house in DH's name on an interest-only mortgage because that's all we can afford (obviously will switch when things improve).

Meanwhile co-owning friend continued to live in London flat for a while but then got made redundant and the only job she could find was up north so she has also moved out and is renting with her DP.

London flat has been on the market forever and has had two buyers who have made offers and progressed a fair way before pulling out. Unfortunately it needs some minor-ish building work doing to it (underpinning a small extension at the back) and in the present climate mortgagees are wary of lending on it so making a sale difficult.

We are currently in the process of seeing if the insurance will pay for the repairs; if not then I think we're going to have to bite the bullet and pay for them ourselves because it just isn't selling without the work being done. I can't afford to just sell for cash and walk away because I put in £20k for the deposit and another £10k for the freehold and even if I don't get the mortgage we've paid off back (which we probably won't) then I can't afford to lose that money, largely because the house we're in now literally has no kitchen and we need to extend to build one (we'd just accepted an offer on the London flat when we bought this house).

Renting the London flat out does not appear to be an option currently due to the need for repairs.

So we're in a position where we're paying two mortgages on DH's not particularly high salary and my piddly small one. Santander/Abbey are the mortgagee on the London flat and they get all pissy if we mention we've moved out so we are currently pretending to still live there so can't really mention the two mortgage thing - I've just told them that we are really struggling on depleted wages since having DD and saving up to have the work done. For the past three months they've let us pay a reduced amount but now apparently there is absolutely nothing they can do and we have to revert to paying the full amount. This will absolutely cripple us this month - I think we're just going to keep on paying the reduced amount, for this month at least, and just hope we don't get into too much trouble :(

They did say we could spread the remaining amount we had to pay off over the max possible term, which was supposed to be sorted out earlier this month, but instead they sent us a baffling letter saying we would need authorisation from the Official Receiver. Friend is going to phone them to see what that is about.

I thought they had some sort of obligation to be a bit more helpful or accept a lesser amount as long as we are paying something but the woman on the phone told me there would be all sorts of dire consequences if we failed to pay the full amount and said there was nothing else she could do. Have I got completely the wrong end of the stick here or can they just shaft us?

That wasn't very brief, sorry

don't phone abbey/santander - write to them always and always get the mail signed for when it gets to their end and possible mention this in the letters i.e. we write to you and get mail signed for so we can keep copy of letters incase you ever decide to take us to court.

I would pay what you can afford and let them try to take you to court -as with written evidence it will be really hard for them to do you over - or certainly a lot harder

Phone calls can be lost letters can be lost - but at least you have a copy and they know you do and they know that you paying what you can afford is better than nothing and a court would not take kindly to them taking further action on your "home"

Ah right. Okay - Santander are suggesting you go for an individual voluntary agreement wherein your debts would be consolidated - it's a step less than bankruptcy.

What is the situation of the other party who owns the flat, can they afford half of the repairs or not?

You need to make sure the insurers think you are living there or you may well invalidate your insurance. Subsidence claims are tricky but insurers are normally pretty reasonable. Encourage them by pointing out the problem is worsening and making the property unliveable.

In answer to the 'can they shaft us' oh yes they can but only if you are not making payments. So long as you keep making the payments they generally will not do so - it is possible but highly unlikely.

if you are on a repayment mortgage then they should be reasonable and allow you to move onto an interest only mortgage. If you fall into arrears they can and will seek repossession if you don't agree something they are happy with and that will be at least the interest payments and either something towards the arrears or a capitalisation of arrears (ie they get added to the sum originally borrowed and your interest is charged on that.
They will only consider capitalisation if there is a good chunk of equity in the flat.

If they take possession proceedings and they can show the court that they have complied with the mortgage possession protocol (google it) and you have arrears then they will get possession if you can't show the judge that you can meet the monthly repayments PLUS an amount per month towards the arrears to pay them off within a reasonable time. If you have an offer on the property that may convince the judge that you can pay the whole lot off in a reasonable time, but if it has been languishing on the market without a sale then that is unlikely to do it.

So you need to talk to them and ideally agree a reduced payment and above all keep making regular repayments to the mortgage or you will risk repossession.

Wow, that was quick, thanks! Really appreciate the replies :)

Okay, I'll write and let them know we're going to pay the lesser amount.

Friend has just come out of an IVA! AFAIK she's now on a good salary though I think she's unlikely to have savings. If the worst comes to the worst then we will probably be able to borrow the cost of repairs from family (eep) - I think it will sell reasonably fast once the work has been done as there was a lot of interest before.

I don't really have any other debt apart from this mortgage - oh, few hundred pounds on a credit card and an overdraft, both of which I was in the process of paying off but just gone wrong the last couple of months. New mortgage is in DH's name (for now).

Insurers are supposed to be visiting soon and it will be fairly obvious we aren't there - no furniture! Will check with friend who has been dealing with this whether this is going to cause problems. I think we're claiming on an old policy though (?).

Thank you again, it helps so much to get advice :)

And I wouldn't be too quick to call them gist - after all you are not paying the interest you should be (since you are renting it out it should be on a buy to let rate which is higher) so actually you have been committing a fraud on the mortgagor. As you may be about to do on your insurers.

You need to go into the discussions asking for a forbearance from them, not accusing them of being gist really

gits, not gist

Cross-post. freshmint they are adamant that changing to an interest-only mortgage isn't possible - been trying to sort that out for almost a year and they are having none of it :(

When you say "keep making regular payments" do you mean the full amount we're supposed to pay or what we can afford?

Re good chunk of equity - if it sold for what I hope it realistically might once the work is done then there should be about £60k of equity in it ... If we sold to a cash buyer today then maybe £10-30k. Not sure whether that is good or not.

We're not renting it out!

And I am always perfectly polite on the phone :) but for a year now they've been dicking us about, telling me people would phone when they don't, saying they'll send forms to sort out this respreading the loan thing (that should have been done in May last year) and then not doing it, and being about as singularly unhelpful as it's possible to be. So gits I think they are. Plus they are royally fucking me over on a current account I have with Alliance/Santander. Meh.

I sat in the back of local court once with friend -the judge was not at all happy with the mortgage company for not giving the friend more leeway and refused to let the house be repossessed as half the mortgage was being paid each month. My friend actually wanted the place gone as she was paying half the mortgage and living in a rented flat as her ex was living in the house - so rather bizare but she was praying for the place to be repossessed... and the judge wasn't happy at all with the mortgage lender and my friend had a lot of letters I had dictated for her to mortgage lender which stood up in court regardless of whether the mortgage lender has copies of the letters - we had her copies with us.

So santander will have a struggle if you are paying part of the repayments, even if it gets as far as court

Freshmint your post is so rude!

OP is NOT renting it out as she clearly stated in her first post, and how do you make out they are committing fraud on their insurers?! They are trying to find out if the repairs are covered - that's hardly fraud

Thanks Ivy :) - the courts generally are pretty reasonable ime (professional not personal, though not this area sadly), though hopefully it won't get that far anyway.

And thanks visiter :)

When you say it's underpinning work - is it for subsidence? If so, do not claim on your insurance. When you sell you'll have to sign a form asking if you've ever made a subsidence claim. If you have, your potential purchaser won't be able to get a mortgage on it.

I think it is for subsidence yes - London clay so it's a problem most of the houses in the area suffer from. AFAIK the main part of the house (Victorian terrace converted into three flats) is fine - it's just that the second bedroom has been extended to make it into a double and the extension is coming off.

Internet seems to think that it isn't an insurmountable problem if the underpinning has been done and that buyers might be able to transfer our current insurance policy - is this not right? It had some problems when we bought it and we managed to get insurance/mortgage okay

"When we bought the property (almost six years ago now), there was cracking evident and the survey suspected differential movement due to the London clay and the differing ages/ depths of the foundations. The building society lent on the property in any case (though at a reduced value).

When we attempted to market the property last year, renewed attention was brought to the crack by the estate agents. On their advice, we got a building surveyor to prepare a report. The surveyor reported that the extension was indeed subject to what seems to be subsidence, as does the neighbouring property at the same point. His advice was that the extension could be either a) left alone, as it's not structurally dangerous, and monitored, b) underpinned or c) knocked down and rebuilt as the foundations are not adequately deep, and the extension isn't correctly tied on, to withstand the effect of time and big trees (now gone) on London clay.

We then got a quote from a builder who said that to underpin would actually be more difficult and expensive than to knock down and rebuild."

This is the info that my friend sent to the EA about the history of the problem, so is subsidence but not underpinning.

LTJ - that's not necessarily true. I know several people who had their houses underpinned and sold without problem, and others who've bought underpinned houses. Like anything else, it hinges on the survey and whether it's likely to recur. Anyway, you still have to declare whether the house has a history of subsidence and/or has been underpinned whether or not you get it on insurance or not.

What's true is that you may have difficulty getting insurance - but if it's a flat with a shared freehold then that's not usually such a problem because the buildings insurance stays with the freehold and the new owner just takes it on.

Thanks again visiter - I have been shitting myself fretting :(

you would easily be able to sell flat at auction yourselves despite subsidence issue etc.

just google auctioneers local to your flat orcentral london auction houses such as Allsops, Savills, Barnard Marcus. and there are many more.

they can advise you on the process etc. and an auction buyer does not necessarily mean a cash buyer. its just a way of speeding up the process of your sale.

you could pay to under pin or get the buildings insurance to pay.

dont worry about the insurers paying. others can still get insurance as long as the problem as been fixed and there is no longer movement.

paying yourself is daft if you are insured. and the poster who said purchasers could then not get insurance is incorrect.

also if you were you pay yourselves, you will still need the works to be signed off by local Building Control as its classed as major structural work/alteration which means when you sell you would still have to declare it to a purchaser as part of the contract.

anyway you have several options to persue and under pinning isnt as scary as it sounds.

wish you best

Thanks Skandi, that's really helpful.

Wouldn't selling at auction mean it going really cheap? Though we're willing to accept fairly low offers tbh