Repossession of flat

[clawrence251]

I am currently selling my flat as I can no longer afford to keep it. I have a buyer but there is a problem with damp which may take a couple of months to sort out. The buyers are willing to wait but I have already had a 3 month repayment holiday on my mortgage which finished last month. After how many missed payments do mortgage lenders usually start repossession proceedings, or do you think they will wait until I am able to complete the sale?

I am worried sick as I need the money I will make from the sale to settle other debts so would appreciate any advice anyone can give.

[bednobs]

the simplest thing to do (in my opinion) is to offer the buyer a discount of however much it's going to cost you to sort the damp out, thus completeing the sale with out delay

[Ethel]

I agree entirely with bednobs.

You need to sell quickly, so get three quotes for the necessary work, show them to your buyer and offer the equivalent discount

[Barmaid]

If I were you, I would talk to the lender and explain the situation. If the buyer won't accept what bednobs has suggested, you could be in for a bit of a wait. However, my experience is that most lenders will allow the borrower to conclude a sale that has been agreed since all they do is run up further costs in achieving what you yourself are about to achieve.

[clawrence251]

Unfortunately their mortgage lender won't accept this. They are holding a 100% retention until the work is carried out.

[sandmaster]

Talk to your lender asap. If you have exchanged contracts and the delay is only due to the retention I think your lender will cooperate. After all, there is a sale agreed, and it will save your lender the hassle of applying for possession and finding a buyer. Good luck!!

[jen78]

Has the lender taken any repossession proceedings as yet?

If not then it does give you some time.

Normally you would have two court hearings before a District Judge who would give time to try and make repayments or get a sale to pay the lender back then the third is usually a matter of fact possession hearing when a time and date is set for the eviction and, unless the arrears are discharged before then, the property would be repossessed.

Make sure you know your financial situation fully, especially if your mortgage account is in litigation. Many people seriously underestimate what they owe especially with any early repayment penalties and arrears charges and, if it has gone that far, solicitor's fees.

It is vital you know you can get enough money to fully discharge everything you need to, mortgage, any other charges secured over the property (make sure you check whether there are any other secured loans or unsecured ones which have since been awarded a charging order secured over the property), anything else on the title which needs paying off before the title can be transferred etc...

Also bear in mind any other creditors who may apply for charging orders which can be registered on the property so you are prepared for that scenario.

Searches can be done at the Land Registry to check this (OS1 or a free daylist - your solicitor will know what this means).

Also consider daily rates of interest so you can try and work out how much your mortgage will increase over a period of time. You could get a redemption statement calculated to a future date, but, if the account has been referred to solicitors or similar then the true figure is often not available until finally requested due to arrears penalties, solicitors fee etc...

Make sure you have a cushion for that kind of thing, the last thing you want is to face a negative equity situation and not

[jen78]

As regards a lower price, it might be worth the buyers checking whether their lender would consider switching their retention to a mortgage condition on the buyers to get the work done within a certain period of time or, at, least, a lower retention.

If not then make enquiries as to how quickly, feasibly, the work can be done. Make sure it will be done to the buyer's lender's satisfaction as they would need confirmation of this, often by re-inspection.

If money is an issue then ask about the possibility of a conditional exchange of contracts ie contract does not become binding until a certain event such as rectification of the damp and see if the deposit funds could be used for the work. May be a tricky one to argue but worth a try.

Is it a private buyer to live in the property or an investor?

If the latter, I've sorted one before where the buyer has paid off the arrears on the mortgage in order to take it out of litigation on the basis that the bank does not reinstigate proceedings for a minimum of say 3 months (to protect the buyer).

At the same time an Option to Purchase is given to the buyer giving him the right to purchase the property within that 3 month period.

The period could be tied in with the damp fixing period though it is a big risk for the buyer counting on you to get the work done in that period in order for them to get their mortgage as they would then have to chase you for the money.

Depending on the equity situation of the property, you could offer a second charge should the option not be able to be properly exercised due to you default.

Hope this helps.