interest only mortgage term up can't pay what happens now please help

[madmaria43]

Hi everyone
First of all i want to apologise for coming on here and giving you what seems a whole confused mess of a story. I have used this site before and everyone was very helpful however i want to point out that I dont want to be judged i dont want sympathy and i am certainly not playing the victim i just want some understanding and help if at all possible, with this mess which i admit is entirely my own creation.
I will get to the point i have an interest only mortgage which is not in arrears however the term was up on the 21st of this month and i have no way of paying it off.
I informed the lender 12 months ago that i had put the house up for sale and of the situation and asked them to extend the loan term by another 5 years or whatever they could but they refused . I asked what my options were they said i none and that once defaulted it would go to court they would repossess the house and numerous charges and interest and evict us and auction it to pay the debt. However if there was a shortfall i would be still liable for this.
I asked if we could try to sell it ourselves and continue to live in the house and carry on paying the interest until it was sold they said no to this too. We are still paying the mortgage payment every month by standing order and not in arrears.
I just wanted to know that when it goes to court could i ask the judge to do any of these things and if they have the power to make the lender allow us extra time or is it just a matter of letting the process take its course and how long does it take. I just want to know what to expect and what to do or say in court because i am out of my depth here and going out of my mind with worry and dont know what to do. We are on benefits and have been receiving mortgage support and making up the difference from my benefits as i am disabled and receive dla. I dont even know if income suppot will carry on paying the payment anyway now the term is up i cant get any sense out of them when i ring nobody knows they are useless. My husband does not work as he is my carer.Thankyou in advance for your time and any help anyone can give me.

[nemesis45]

Re: interest only mortgage term up can't pay what happens now please help

Hi Welcome to LB.
Am I right in thinking there is no insurance cover to even cover a small capital payment?
You are wise to continue the interest payments, if this does get to court you can certainly
put your case to the judge he/she may be persuaded to allow you to continue paying the
interest until `the property is sold as there is no doubt that the house will be sold cheaply
at auction.
From what you about being disabled a judge I would expect a judge to take your disability
into consideration before making and order for possession/sale.

Which uncaring mortgage provider are you with there is no harm in naming and shaming here.

nem

[des8]

Re: interest only mortgage term up can't pay what happens now please help

One other point.
Was the mortgage always interest only, or was it originally a repayment mortgage?
If it was a repayment mortgage, did you request it be changed to interest only, or did the lender change it of their own accord "to assist you while you were receiving state support".
If the latter scenario applies (and I know of at least one case where it did) and the lender did not warn you of the possible consequences, they could face real problems as they changed the agreement without consultation. It would be akin to mis-selling
In the case I'm referring to the lender extended the loan for 15 years after a 'phone discussion.

[des8]

Re: interest only mortgage term up can't pay what happens now please help

Another option that might be open to you, (which will depend on your ages, the value of your house and the amount outstanding) is to explore the possibility of "equity release".
This could give you the money to redeem the existing mortgage.
If this is a viable option I believe the mortgage support continues, so that means a certain amount of equity remains for your heirs.

[madmaria43]

Re: interest only mortgage term up can't pay what happens now please help

Hi thankyou for your replies. To answer your questions firstly we have no inaurance to cover the payment. There is very little equity in the property and it was always an interest only mortgage with this company. I really screwed up because when we remortgaged i thought it was for 15 years but when i checked it ws only 10. I trusted the broker and didnt read what i was signing. I feel like such a fool. But its done now no one to blame but myself. I just wanted to know if the judge had the power to extend the term of the mortgage or allow us to stay till it was sold. I just wondered ifanyone had any experience of this situation. Thankyou for all your advice so far it is much appreciated.

[meellis]

Re: interest only mortgage term up can't pay what happens now please help

Even though you feel as though you can only blame yourself you should try to look into whether the mortgage provider/broker followed the correct procedures because the description you have made sounds as though you might have been mis-sold. Is it a first charge mortgage and who was it all through?

[Mr $quandaŁot]

Re: interest only mortgage term up can't pay what happens now please help

This will no doubt be a common problem in the near future.

I believe that many people are still paying interest only with little or no means to pay off the actual capital.

In some areas oc the country, there will no doubt be sufficient equity to remortgage, downsize or sort something else out.

This is s time bomb waiting to explode!

All I can say is try to negotiate. Most judges don't like unreasonable lenders so it's well worth a try!

[meellis]

Re: interest only mortgage term up can't pay what happens now please help

I think the estimate for people without sufficient endowments to pay mortgage is around 2 million with an average shortfall of Ł75,000, that is just figures I seem to remember from a while ago. On top of that the majority are people who wouldn't pass the newer mortgage checks so it will be a bit brutal. I have always said that they should have made it harder for people to get into debt after the crash but also do more to help people already trapped by debt to be able to find a way to make it more affordable, ie re-finance. They are just hanging everybody out to dry at the moment and when some of the victims are cases of mis-selling I feel that is immoral.