[barbapapa]

The daily Mail article pointed out by Janey on the other threat got me worried about our prospects for remortgaging our "executive, cul de sac" modern house in the Uk (those are apparently in the danger zone of losing half their value according to http://www.dailymail.co.uk/news/article-1161317/House-prices-drop-55-leave-Britain-bankrupt.html).

We got a permission from the lender to let the house for a year until July 2009, and then we have to either 1) move back or 2) remortgage to a buy to let mortgage. 1 ) is not feasible as we have good jobs here in NZ and no job propects in the UK. 2) is a problem since we don't seem to be eligible for B2L mortage products (might be in negative equity already, don't know as neighbouring houses not selling and rent only just covers mortgage payment)

So does this mean bankrupcy (sp) for us in the UK? What are the implications for NZ as we already have PR? Are lenders pushed to be "understanding"? Is government going to chip in as in the US? I would gladly hand in the keys to the bank although OH likes to think of it as LOOOONG term investment - who's right?!

[victoria24]

House prices will recover at some point, its just when. on the other point, you wont go bankrupt if you give the house back to the mortgagee. it will affect your uk credit rating massively but not your nz one.

[IanR]

I'd write to the bank and explain the position - they ought to be understanding in this market as long as you're happy to keep on paying - if they're not let them take on a depreciating asset.

As Victoria says, it's unlikely they'll make you bankrupt either way.

[barbapapa]

Thanks for your replies. I guess i'll have to find out more about UK bankruptcy - i assumed if i hand in the keys the bank still wants rest of the money after the proceeds from mortgagee sal e of the house? Worry is if they'll come after NZ house or inc0ome.

The lender is not very considerate. they have charged 500 quid just for the 12 months permissoon to let. We have always been very good customers, always on time with payments etc.

Fed up as reminded how inthe UK going by the rules, you loose.

[Jo Jo]

Have you re-contacted your lender about the terms of the mortgage? I would challenge your lender on the fairness of the condition they've put on the mortgage, and get some legal advice as well. It seems very drastic to have to have to give the house back just because of a technicality when the mortgage is (presumably) being paid, and not in arrears.

I'm not sure who you should approach to get legal advice, but if you have no joy with your mortgage lender, you could complain about the unfair terms of the mortgage to the Financial Services Authority (http://www.moneymadeclear.fsa.gov.uk/about_the_fsa/unfair_contracts/reporting_unfair_contract_terms.html) as they may be able to help.

[barbapapa]

Thanks JoJO

That's a good idea to contact the financial dervices authority. We might do that if the lender is still difficult.

The mortgage is not in arrears and everything is and always has been paid in time - we have professional tenants who always pay in time and are in secure employment (teachers I think). The latest fee we had to pay the lender was 500 quid and the worry is that if they keep on charging us massive fees for letting us do what is sensible i.e. let the property then they may be driving us into defaulting.

The latest letter we received from the lender very clearly said that either we move back in or we change to a buy to let mortgage, however, buy to let mortgages only seem available to 80% of value and have other conditions we may not satisfy. Who determines the value in this market.

[victoria24]

who is your lender?

[barbapapa]

scottish widows

will I get in trouble for saying the company name - i have internet paranoia:-)

[victoria24]

This is their tariff of fees and notice that it applies for short term lettings and says "up to" which infers that it is negotiable. banks have to treat all their customers the same under the treating customers fairly principle based approach so if they vary the fee on a case by case basis this is effectively breaching the guidelines.
http://www.scottishwidows.co.uk/documents/bank/41541.pdf

These are the people that handle complaints. Bear in mind, if you start a complaint, they get charged £500 by their PI company regardless of liability. As has been mentioned before, the FSA are all over banks at the mo and as they are part of the lloyds banking group now will be particularly sensitive once you speak to the right person.

Mike Munro 15 Dalkeith Road
Edinburgh
Midlothian
EH16 5BU44
0131 655 3341

Ann Johnstone
44 0131 655 3224
44 0131 655 6413
ann.johnstone@scottishwidows.co.uk

here are some of their current deals if it helps also:
http://www.scottishwidows.co.uk/bank/mortgages/flex_interest_rates.html

[victoria24]

scottish widows

will I get in trouble for saying the company name - i have internet paranoia:-)

as long as you are factual its fine. martin lewis would be unemployed otherwise!

[IanR]

Looking at the situation from the lenders perspective:

There's a possibility of tenants living in BTL property about to be repossessed being given extra rights, which will disadvantage the lender when they attempt to repossess. Couple that with falling values and an expected disproportionate rise in BTL landlords having property repo'd (compared to owner occupiers) and you can perhaps understand lenders reticence?
http://www.residentiallandlord.co.uk/news1769.html

Me? I'd get an honest ' quick sale ' valuation and hope to find it's not yet underwater.

[IanR]

Perhaps of interest?
http://news.bbc.co.uk/1/hi/programmes/working_lunch/7949165.stm

and a place to get your questions answered by experts for free:

http://www.bankruptcyhelp.org.uk/forum/forum_experts.asp

[KatieBen]

Bankruptcy in the UK will not affect your credit rating in NZ. A standard UK bankruptcy lasts up to a year with repercussions on your credit rating here for 6 years and the possibility of monthly payments to the Official Receiver (the court official handling the bankruptcy) for 3 years.

However, it's a serious step to take as there are reciprocal arrangements in place which mean that if you have assets in NZ (car worth more than a certain amount, house with equity, reasonable disposable income after paying essential bills and living expenses) the Official Receiver may be able to claim those assets (e.g. request that you sell your car and replace with a cheaper model, sell the house and give them the equity, place a payments order on any disposable NZ income for 3 years).

If your house is in negative equity in the UK then at the moment you would be liable for the shortfall in outstanding mortgage once the house is sold.

If you were to declare bankruptcy then that shortfall is included in the bankruptcy; however there are new insolvency laws coming into the UK with regard to debts of less than £15000 which may be applicable and prevent you having to use the bankruptcy route.

What you need to do is take some professional advice - I have some contacts in the bankruptcy/debt management field if you would like their details. Feel free to PM me for more information.

(Currently bankrupt in UK, emigrating to NZ in June, gave up the house to do it - loooong story)

[barbapapa]

I've been procrastinating (sp?) and will eventually contact the lender. I hope a letter will do to start with.

Thanks for all your valuable advice! This is a great website and you are a great bunch. Appreciate it.