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As the various lending institutions work through their ‘delinquent’ mortgage books, more and more people are approaching us at the end of the sale process, when the lender and their agents, usually solicitors, chase and seek recovery of the outstanding amount due, after the disposal of the asset(s) involved.
If a property was purchased pre property crash, then inevitably there will be a significant price variation after a sale based on today’s property values. Negative Equity is an extremely prevalent issue in today’s property climate in Northern Ireland and across the UK.
Invariably this balance will be a lot higher than you thought but will include the following additional information:
1. All the interest since the last payment made.
2. The property would have been sold ‘In Repossession’. Recent DSD figures show that these properties yield as little as 59% of the market value.
3. Costs of the necessary action to recover the property through court.
4. Any other associated costs
The balance left after the sale, I.e. ‘The shortfall’ is relative and the route which is taken is dependent upon two key factors
1. Do you have significant surplus income? And/or
2. Do you own other assets?
Inevitably, the balance is irrelevant. If a client cannot afford to pay a £70,000 shortfall, then they most certainly will not be able to afford a £100,000 shortfall.
Therefore, If the answer is no to both of the above questions then the options open to you firstly and the lender secondly are:
1. A choice of formal insolvency, be it bankruptcy or IVA, subject to your individual circumstances.
2. An informal insolvency option to settle with the lender on a full and final basis for a reduced amount.
As ever we would implore you to be proactive as these things will not just go away. By this stage the lender and their advisors usually want the matter resolved, one way or another, as does the client.
Bell & Company have developed a specialised team who work with a wide variety of lenders and situations and resolve issues like these on a daily basis with excellent success. If you find yourself with any of these issues, please get in touch with us here at Bell & Company. To discuss your case with us please call Karen on 02895 217373 to arrange your free initial consultation at a time and place to suit you. We look forward to assisting you.