House Repossessed
can my house be repossessed if i cant pay the mortgage on another property?
i have a mortgage on a house in which i live. i pay the payments on time and have no problems. however i have a second flat which i rent out. the tenant is looking to move and i cant find anyone else to move in. if i default on these mortgage payments for the flat can they repossess my house
It will depend on the terms of the mortgage on the flat, whether you are in negative equity with it, and/or how nasty your mortgage company are.
In general terms a mortgage is a loan secured on property. Legally if you get into arrears with a mortgage the lender has the right to insist on full repayment there and then. If you fail to do this (and clearly most people can’t) they can then issue proceedings to repossess the property used as security to sell it so they can pay off the debt. If the security for the mortgage on the flat is only the flat itself, then the lender can only issue formal repossession proceedings against the flat.
But if you are in negative equity (or close to it) the sale of the flat may not be enough to cover the mortgage debt. In these circumstances the lender will sue you for the balance. If you have no other means of payment they could attempt to enforce this debt by requesting a court order for the sale of your house. This is a method of enforcement that is available for any debt awarded by a court. Obviously the mortgage on the house would get paid off first, so they are only likely to do this if you have enough equity in the house to pay the excess owed on the flat.
There is no reason why a mortgage lender has to opt for repossession first. They could choose call in the mortgage debt, then sue you for it. Normally they don’t because for most people their home is the only significant asset they have. But you also have your house. If the lender on the flat thinks that you have enough equity in the house, and that it would be much easier to sell the house than the flat in the current market they may make this choice instead. But I suspect that in practice this would be unlikely.
Btw, I’m not sure if I have missed the point, but the method advocated by ingenious is rubbish. He suggests you take £30k of equity out of your property and use it to pay off half-your mortgage. You can’t just take equity “out” by magic. You release equity by MORTGAGING. Which means you would take out one mortgage to pay off another. Overall you would have the same amount of debt with the same repayments. Actually, to get the new mortgage you would have to pay arrangement, valuation and legal fees so you would be over £1000 down on the deal.
There is only one way I can see that doing something like this might make sense. It would only apply if you have a really low interest rate and lots of equity on your house, and you are able to add to that existing mortgage without penalty, and you have a much higher rate on the flat. It may then be worthwhile to take some equity out of the house and use it to clear the arrears on the flat. You are effectively swapping some expensive debt on the flat for cheaper debt on the house. But you need to take professional advice before doing this because there will clearly be major implications if you get it wrong.
Free Special Report: House Repossessed
One of the main reasons why residents in the United Kingdom choose to sell their homes is to avoid house repossession. Due to varying circumstances you may become behind on your house or mortgage payments to the point where there is no chance of recovering. When this happens, house repossession may occur. When you discover that your home may be repossessed one option that you have is to seek out house buyers in order to sell your home in order to pay off your outstanding mortgage payments so that you can avoid full out house repossession.
Additionally, you will never know when your Real Estate agent will be dealing with your home or how much effort they are really putting into selling your home. Additionally, you will not be aware if there are house buyers available who may wish to instantly purchase your home. In most cases you will have to wait for your house buyers to get approved for loans or to free up funds to purchase your home.
This can cause an extended sales process that is not acceptable if you are facing house repossession. Therefore, your only option is to seek out another means of selling your home in order to obtain the money that you need in the time frame you desire in order to avoid house repossession. The good news is that there is an excellent alternative for you to consider in situations just like this.
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Finding house buyers to purchase your home in order to avoid house repossession doesn’t have to be a difficult task. With Fast Sale Today you can quickly sell your home and pay off your bills in order to avoid repossession.
Article Source: ArticlesBase.com – How To Avoid House Repossession And Find House Buyers
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