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Original poster

WWYD? Is repossession our only option?

47 replies

KneeDeepInLaundry · 20/03/2009 08:09

We brought at the end of 2006 - paid a lot. The house was revalued last september and had dropped £15k.

We are now on SVR after coming off our fixed rate, due to a drop in DH hours we cannot afford the increase and are paying intrest only. No other bank willtouch us due to lack of equity in the house.

We hate where we live.

If we sell we will probably not make enough to pay estate agents fees, solicitors and clear the mortgage.

We owe about £6000 on a credit card and have a £400 loan and about £500 o/d.

We are stressed, unhappy and its slowly destroying our relationship if I'm complelty honest.

Is repossesion the answer, how awful is it?What does it mean for our future? Can we rent if we get repossed?

WWYD?

OP posts:
Original poster
KneeDeepInLaundry · 20/03/2009 08:13

Anyone?

OP posts:
LauriefairycakeeatsCupid · 20/03/2009 08:16

You have a lot of options

  1. stay where you are and pay interest only until you/your dh's hours pick up and you can afford more
  1. rent your house out and move somewhere you like better
  1. go bankrupt and you will still keep your house as you can afford the interest payments but you will get rid of all of your debts (and screw your credit rating for 6 years plus)

If your debts are a problem (you don't say if they are) you can stop paying them and prioritise them (pay minimum payments on the credit card only). Does this free up more money to go out and make your life more bearable (out of the area)

It sounds like you're saying that you feel you made a big mistake buying this house? Maybe if you stopped beating yourself up for that you feel better about living there? Iyswim

Decide how much you hate actally living there before you think about what to do. Can it be made more bearable in other ways - coming to terms with the 'mistake', spending money by going out away from the area more, being happy with paying interest only.

In a few years you may have your other debts paid off and you can move - if you can bear it in the meantime.

and sorry you're feeling so bad

Have to go and take dd to school but I will check in later and see how you are

Original poster
KneeDeepInLaundry · 20/03/2009 08:20

We do hate it, we have the neighbours from hell andd they have damaged our property more than once.

OP posts:
Original poster
KneeDeepInLaundry · 20/03/2009 08:31

If we went bankcrupt, would we both have to go to bankcrupt?

Claearing our debts would enable to us pay the full amount of the mortgage - repayment - and that would make us feel better about living here.

Its the thought of staying here but not paying anything off (intrest only), it feels like were are as good as renting and that if thats the case we could at least rent somewhere we like in a good area.

Intrest only mortgage also prolongs the amount of time we have to stay here which is very depressing

But by going bankcrupt would we ever be able to get a mortgage if we were to sell? We would never be able to switch lender would we?

OP posts:
Original poster
KneeDeepInLaundry · 20/03/2009 08:44

.

OP posts:
expatinscotland · 20/03/2009 08:48

How about renting your home out and buying elsewhere? Or even renting elsewhere.

Owls · 20/03/2009 08:51

If the house is repossessed (whether voluntarily or forced) your chances of getting a mortgage in the future are fairly grim. Also, if the bank sell the house and there is a shortfall in what you owe they can still come after you for the outstanding balance.

I know you say you hate living there but honestly you would be far better just to sit it out for the next few years if you possibly can. As Laurie says, could you rent it out and rent somewhere else? You would probably need permission from the bank before you did this though, depending on the mortgage terms and conditions.

Sorry for you. What a horrible position to be in.

Original poster
KneeDeepInLaundry · 20/03/2009 08:54

How much does it cost to sell your house? At the most we have £6000 equity.

We couldnt buy elsewhere as we have no deposit.

If we rent this out and rent elsewhere, we run the risk of not having a tennant and then having to pay rent and a mortgage

OP posts:
noddyholder · 20/03/2009 08:55

Let the house at a realistic price so that it goes quick.Rent somewhere else smaller perhaps Then work at paying off the credit cards asap.bankrupcy only as a last resort as a lot can happen in 6 yrs.Do you work or can either of you get a couple of evening hours somewhere like a pub or supermarket

Original poster
KneeDeepInLaundry · 20/03/2009 08:56

I work PT in the evenings Mon-Fri.

What if we end up with no tennant though? We would not be able to afford both

OP posts:
noddyholder · 20/03/2009 09:12

You could sell up and at the end see what you are left with if anything and then enter into an IVA and rent somewhere modest and start again.There is no shame in it and one day you may be able to buy again.Think about now and don't look too far ahead.Property buyers of the last 2 yrs are all on shaky ground and interest only is not good.Let it all go maybe and sleep better at night for a few years and then think again?

Original poster
KneeDeepInLaundry · 20/03/2009 09:17

Noddy that is exactly what I'm thinking. The rent on a 2 bedroomed house in a better area would be more than our intrest only repayments but at least we would be living ina better area.
I dont think we would ever be able to buy again and the thought of letting our £18,000 deposit on this property go is hearbreaking, but I think peace of mind is worth more.

What is an IVA?

OP posts:
Owls · 20/03/2009 09:20

If you've got only £6k equity then the chances are in this market you are not going to cover the mortgage redemption. Which means you would have to take out an unsecured loan at god only knows what rate to pay them off.

Rock and a hard place I think.

First off, get an agent round to give you a valuation then at least you will know what you are starting from.

Original poster
KneeDeepInLaundry · 20/03/2009 09:30

Do you have pay mortgage redemption if you are SVR?

OP posts:
noddyholder · 20/03/2009 09:35

No if you reverted to the SVR from an offer or introductory rate then it is over if you have gone on to the svr so no redemption fee.A lot of people will sell soon for this very reason so you will be in good company .The market has a long way to fall so you will be in a better position in a few yrs and prices will be lower

titchy · 20/03/2009 09:56

Renting might be the way to go. Do any agencies guarantee rental? Or perhaps you could rent to the council or a housing association?

In the meantime write to the credit card company and say you are curretnly considering being made bankrupt and to have the interest frozen so at least what you pay will pay off the balance. CAB can help with letters like this I think.

Owls · 20/03/2009 10:24

Sorry bit of confusion, when I referred to redemption I wasn't talking penalties. I though from your lack of equity and the drop in value you wouldn't have enough to clear the mortgage. In which case they won't discharge the loan and you would have to find somne way of paying the balance.

Get some agents round asap and then you will have a better idea of where you're starting from.

Original poster
KneeDeepInLaundry · 20/03/2009 14:13

I phoned the agents who valued it last year for 15k less than what we paid. They now say due to a slight increase in the market they could sell it for £5k less than what we paid - I dont believe them though, DH is keen to give it a go

OP posts:
brettgirl2 · 20/03/2009 14:32

If the problem is that your DP's hours have been cut then could he get a second job?

Original poster
KneeDeepInLaundry · 20/03/2009 14:41

He works 40 hours a week but he used to be guaranteed a certain amount of overtime which has now stopped. This has cost us about £400 a month

Getting another job would be difficult as he would have to work around his hours, my hours and also the need for sleep

OP posts:
CarGirl · 20/03/2009 14:44

CAP (Christians Against Poverty) will help you go through your options and if you need to go bankrupt will help you through that too.

www.capuk.org/help/needhelp.php

There are a couple of other organisations out there that will help you without charging you for the help IYSWIM

Original poster
KneeDeepInLaundry · 20/03/2009 14:45

Thanks cargirl

OP posts:
CarGirl · 20/03/2009 14:48

If you're not happy with where you live I'd honestly say try and sell it and just be free from the stress of it all! Presumably if you rented you may be eligible for some housing benefit and if you do get some money from the house the people you owe loans too may accept a low settlement figure from you.

It's worth looking at all your options.

lalalonglegs · 20/03/2009 15:54

Sell and move to whatever you can afford to rent - life is too short to be stuck somewhere that makes you miserable. Your debts don't sound huge, I am sure a good debt counselling organisation could negotiate for you to reduce your payments and give you some breathing space. At this stage, I really don't think that bankruptcy needs to be considered but I do think the sooner you put the house on the market, the better.

WantManualForKids · 20/03/2009 16:21

The Citizens Advice Bureau is also a good place to discuss your position. They can help you drafting letters and preparing for phone calls or meetings with your mortgage lender and credit card company -

The point here is that your mortgage lender will not want to repossess if it can avoid it. By contacting them directly and asking them what options they can suggest, perhaps a year or two on reduced payments, it could allow you to stay where you are (I know you're unhappy there, but waiting it out for 2-3 years before selling could sort your situation out). You could also contact you card company and agree on a repayment schedule that is affordable.

In both cases you will slightly damage your credit rating, but not nearly so much as bancruptcy or repossession.

The rental market is flooded with properties that owners do not want to sell yet, but don't let that dissuade you. If a realistic rental value of your property will cover your mortgage plus at least 10% more (remember you'll need to buy landlords insurance, plus commission or finders fees to the letting agent) it could also be a good route.

Please don't be despondent. I know it looks grim, but from what you say it sounds like your best bet is to communicate with mortgage lender. CAB can guide you through the best approach.

Hope this helps and good luck.