Repossession threats

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    Repossession threats

    Hi there

    I have a consent to lease on a help to buy property and the equity loan, which is 25% of property value, has now matured. I have had significant difficulties passing a credit check and am concluding it is probably highly unlikely that I will be able to remortgage in time now before the developer starts legal action to reclaim the value of the equity loan.

    I have looked at my credit files with all three agencies. They are all excellent scores with only 1 missed payment (1 month late) 21 months ago. I have in the past 18 month got PCP car credit and a new credit card so I am surprised that the checks are declining. I am on the electoral register. The only issue big issue I can see is that for work I move frequently (part of my contract) so I have been renting at three properties in the past three years. Affordability wise, I pass the rental yield checks and have a good job with a good salary in which I could get a residential mortgage for more than the full 100%

    I feel the situation is quite grim and am very much fearing repossession now due to threats from the developer.

    I was wondering the following:

    1. How likely is it that the developer will pursue repossession of is it an empty threat?

    2. Any suggestions for lenders who may be less picky? (given I now have two hard checks on my file in a one week period)

    3. What alternatives do I have? Could I quickly move in to the property and live there myself and get a residential mortgage (I will now be working close to my property for the first time in years). Would a residential mortgage credit check be less strict and more likely to pass?

    4. Secured loans - would this be an option to pay of the developer and then I could at a later date remortgage to pay off the secured loan?

    5. Selling the house - I’d rather not as I want to Keep it. But if the developer sees me putting it up for sale will it hold them off repossession? If I have issues selling the house should
    i ever consider using a quick sale company who specialise in avoiding repossession?

    6. If I offered to pay a percentage of the equity loan off from savings could this hold off the developer and give me time to find a solution?

    A repossession is my worst nightmare. I have kept up with all payments and feel trapped in this situation.

    Any advice would be greatly appreciated

    Many thanks




    #2
    The best person to advise on your situation is Loanarranger .

    If you have been using an equity loan which has matured , you need to obtain a loan from another company. to replace the equity loan from developer.

    If you can live in the property, you can apply for "owner occupier mortgage loan" and get lower interest rate compared to interest rate charged for BTL mortgage.

    You should visit the Halifax and Nationwide shops with your tax statement for past 3 years and ask if you qualify for their mortgage loans.

    Comment


      #3
      Good morning Worldview88
      Firstly may I try and put your fears aside in terms of repossession by the developer, whilst in theory they have the right to demand their equity stake is repaid by the time the facility expires the fact remains that as the second mortgagee they would need to take over the first charge in order to be granted a possession order, furthermore the courts would take a dim view of such actions given that you have as yet not defaulted on your borrowings. You no doubt will get a strongly worded letter from the developers legal representatives requiring the equity charge to be repaid and the consequences of failing to do so withina certain period of time. I would advocate talking withthe developer explaining your situation andthe actions being taken.
      What complicates matters is that you have obtained a Consent to Let and a new lender would need to throw their rule book out of the window and be prepared to grant a new residential loan knowing that it is tenanted with no immediate prospect of you occupying the property because of your work.
      Asking the obvious question have you spoke with your current lender to establish if they would grant a Further Advance to discharge the developers loan , this of course is dependent on the property having increased sufficiently to accommodate the increased borrowings.
      You can indeed consider applying for a second charge loan to repay the equity loan , the rates for such facilities are very competitive being only slightly higher than First Charge Loans , however not every main stream lender grants permission for such types of borrowings whichis why you need to have a dialogue with your present lender.

      Ideallyyou need the help of a good broker who can discuss the situation with both your present lender and investigate alternative lenders, at this stage if you go down this route it is imperative that such Decisions in Principle are made with lenders where the enquiry incurs only a soft Footprint , you can ill afford anymore Hard Footprints as this has a negative effect on your Credit Score.

      If all main residential options are closed then go for a Buy toLet Mortgages of 80/85% and get the developer offyour back.

      Comment


        #4
        It seems to me that you have bought the property with a 25% equity loan ( by Developer ?) and 75% normal mortgage and nil deposit from yourself .

        The equity loan is now matured , then you have to re-pay the equity loan and you must re-mortgage the property. Re-mortgage of loan happens quite often after the fixed interest period expires.

        So you should check to see if the property has increased in value since the purchase date.

        Has the property value has gone up 10-20% ? You must look for prices of recent sales of other property in the block ( for a flat ) or similar houses in the same street and a good website site is zoopla.

        If the property price is the same as when you purchased , then best mortgage loan available is 90% ( normally for home owners ) and you have to find 10% deposit from your own savings.

        If you think there are 100% mortgages available then you have to chase for it., I am not aware any lenders exist for 100% BTL mortgages.

        Comment


          #5
          Gordon is quite correct in sofar that 100% mortgages are not available , there are however three lenders who subject to status etc will consider a remortgage of up to 95%:-

          Nationwide
          Skipton
          Hinckley & Rugby Building Society.

          If you go onto their web sites and go to affordability assessment this should at the very least give an indication of your eligibility. I would advocate applying for the maximum term permitted in order that the loan repayments can be kept to the lowest level even though you may not intend to stay there for more than 2/3 or five years.

          Comment

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