Going interest-free on HSBC mortgage

[Sappho54]

We have a first mortgage with HSBC. It has run for ten years and we are now in the capital repayment period. We have applied to them to pay interest only whilst we sell our house. It has been on the market since July and we have potential buyers but are waiting for them to complete the sale of their own property. Cutting our mortgage payments at this time would help as we are really struggling at the moment and we do not want to be repossessed. We are currently not in arrears, but have other debts which are causing us difficulties. HSBC's response is that they will only help us if we are going through a divorce or are redundant and will not consider our proposal. Has anybody any advice on how to persuade them? We do not want to be forced to split up but it seems the only option they are giving us.

Edited February 9, 2012 by Sappho54
typo

[Lea_HTH]

We have a first mortgage with HSBC. It has run for ten years and we are now in the capital repayment period. We have applied to them to pay interest only whilst we sell our house. It has been on the market since July and we have potential buyers but are waiting for them to complete the sale of their own property. Cutting our mortgage payments at this time would help as we are really struggling at the moment and we do not want to be repossessed. We are currently not in arrears, but have other debts which are causing us difficulties. HSBC's response is that they will only help us if we are going through a divorce or are redundant and will not consider our proposal. Has anybody any advice on how to persuade them? We do not want to be forced to split up but it seems the only option they are giving us.

 

Are the debts that are causing difficulties secured on the house?

[Sappho54]

Yes, we have a smallish loan with Acenden, who threaten us with repossession frequently though we have overpaid on the loan, and we owe council tax. The council is trying to get an attachment of earnings order, and we need to reduce our outgoings otherwise we will not be able to make the secured loan payments.

[Lea_HTH]

If your intention is to sell the house, and there is sufficient equity in the property to discharge all loans secured on it, then there appears to be no apparent reason why HSBC should object to you going interest only.

 

If, on the other hand, there is negative equity, then there is every reason for their refusal.

 

You may need to negotiate with the other loans that are causing you problems - request they go to interest only - or renegotiate any other debts that you have to take token payments until the house is sold.

 

Unfortunately, the council tax is not something you're going to get much help with in relation to the amount they will request - however it should not leave you unable to pay for your living expenses.

 

Do a full income and expenditure (sticky thread at the top of the repossessions forum created by Ell-enn contains links to download the sheet) and work out precisely where your money is going and what, if any, you have left over. Then you can start to look at where you can make cuts to your expenditure.

 

Once you've done that, you will have to negotiate with all your creditors so that you can reduce payments until the house is sold.

 

This all hinges on whether or not you have any equity in the property.

[Sappho54]

We have 80% equity in the property. We had a 17 year mortgage, and are ten years into it and are currently in the capital repayment period, so we did not think our request was unreasonable.

[Lea_HTH]

There is 80% equity in the property once all the secured debts are discharged? If so, then HSBC are being entirely unreasonable, and so, frankly, are the other secured lenders.

 

Write to each of them and give them a proposal for payments for the next 6 months - explain that the property is up for sale and you will accept a reasonable offer (you're not in a position to wait and wait for the best offer possible if you cannot afford the monthly repayments at present). Each one (secured loans) have to respond to your proposal within 10 days (tell them this), and if they refuse, make the payments anyway. If any of them decide to take you to court, then you simply produce the relevant letters and proof of payments and inform the judge (with proof/evidence) that the property is worth X, the loans secured against it are worth Y, leaving equity of Z - which means that all creditors secured on the property have no prejudice or risk to their loans in waiting a few months until the property is sold.

 

It is crucial, however, that you prove the property is being actively marketed, at least two estate agents, plus proof of the value (estate agents can provide valuations, but in court the judge will be more impressed if there is a witness statement from the estate agent verifying the truth of the value of the property), plus proof of market viability at the present time.

 

If you can prove those things in court, it is unlikely a judge would award anyone possession, particularly with such a high level of equity.

[Sappho54]

Thank you Lea for your advice and for showing me the way forward. Will act upon this.

Many thanks

 

Sappho