I can not pay my mortgage anymore

[val1]

I have a property and I can not pay my mortgage anymore. An investor approached me and offered to pay my mortgage for 2 years and buy it after that. What would happen with the property if I went bunkrupt in the 2 year period.

Thank you very much for the help.

[MelanieGiles]

Hi cal1 and welcome to the forum

Is there any equity in the property at present?

[Reviva UK]

Hi Val1
There are lots of investors who would be happy to purchase your property under various conditions and be able to offer you various options or rent back, free rent for a period purchase back in time etc.

However they all will want to buy it at around 80% of its value or less.

There are a number of companies you will guarantee to may you an offer but when it comes down to it the offer is very low.

It would be helpful to understand more of your situation and perhaps the experts here can help you with some ideas.

As Melanie says we need to know how much debt you are in and details about the house etc.

thanks

[val1]

Thank you very much for your reply.

Yes I do have about 50K equity in my property, and that is why I do not really want to sell to a cash buyer, as I know that thier offer will be enough to pay out my outstanding mortgage. This other gentleman offered me to pay my mortgage for a couple of years and then he would buy it at 95% of todays market value, that would mean I could still get around £40K after a couple of years. I would probably rent something smaller maybe a 1-2 bed flat, so my outgoings would be much less, however I am worried about what would happen if for any reason I went bankrupt. What would happen to my arrangement with this investor?

Thank you very much for your help

[chris.g]

Hiya Val1, I'm now way an expert but what I think you are saying is that this investor would pay your mortgage for the next 2yrs, charging you rent. After the 2yr he would pay you a lump sum for the house. If this is the way it is, I should imagine because you will still be the legal owner of the house, if you declare br the house will still be seen as an asset and it would be claimed by the OR. The OR will need to know of any house sale within the previous 5yr of bankruptcy anyhow so you it might come under scrutiny if it were sold. He could, by rights, pay the beneficial interest in the property if you filed and then allow you to rent it I suppose...... Experts, please confirm this for me....
Just out of curiousity, you say he would pay 95% of todays value...what would happen if house prices fall drastically, would he still be willing to pay 40k???

[val1]

Hi Chris

I tried to sell my house as it is far too big for me now, since the kids moved out. and I can not cope with the outgoings anymore. I would not stay in the house, because even renting it would be too expensive. I would rent a much smaller place, and I guess that investor would rent the place out to some tenants. Regarding the question of the investor paying me 40K even if prices go down. Well I am not sure, but he mentioned an option agreement, that does not force him to buy if he doesn't want to. But I just feel I have no other choice since my property has been on the market for 5 months now with no luck.

So about bankruptcy, how would that affect the arrangement with the investor then.

[chris.g]

As far as how bankruptcy would affect the arrangement, as I've already said, the house will still be owned by you so therefore should still be any asset and be claimed by the OR. I don't think the OR will allow an agreemnet like that to carry on knowing that after Br discharge you can 'sell' your house and keep the 40k......

[val1]

Hi Chris

what is OR?

[chris.g]

sorry, Official Receiver. They are the people who will deal with your bankruptcy after you have filed. They will take over with your creditors, arrange a payment arrangement if you have enough disposable income and take control of any assets that you have. Basically, any assets are sold and then the money raised will go to your creditor to help pay off some, or all, of the debt.
xx

[MelanieGiles]

How much do you currently owe to your creditors, Val? If you are thinking of selling the house and downsizing in any case, why not use some of the sale proceeds to offer a settlement to creditors either in an IVA or a DMP?

[val1]

Dear Melanie

I owe 160K to my mortgage lender. My mortgage interest rate will soon go up, and I know I won't be able to handle it. I have been trying to sell the house but with no luck. I could sell it to a cash buyer and pay back all my debts from the proceeds but then I would loose a large chunk of my equity as these cashbuyer will only pay 80% of the market value.

[MelanieGiles]

How much do you owe to unsecured creditors - or does your enquiry on the site just relate to an equity release issue? If so, you really need to take the advice of a specialist broker who can look at your case carefully for suitability.

And have you tried reducing the price to effect a quick sale?

[val1]

I reduced the price 2 in the last 4 months but still no luck. I guess it is not the best time to sell. I have unsecured debts of around 5000, that is council tax, and electricity bills, but I managed to negoitation with them to pay it back in instalments. But the problem is here that I won't be able to pay my mortgage once the fixed period ends.

[Andrew Graveson]

Hello val1,

I think you should do all that you can to sell your home in the normal way to a private buyer via an estate agent.

Have you discussed with your estate agent (and others) what they believe the property would need to be priced at for a prompt sale?

I'm sure that could result in a further reduction in the sale price but surely this would be better than handing away so much of your equity to a sell-and-rent-back company?

[MelanieGiles]

I absolutely agree - and this leaves you able to find an alternative, cheaper property that you can afford and is owned by you.