This article explains what happens if you miss a mortgage payment. If you keep missing your mortgage payments, your house is likely to be repossessed. It will usually be sold at auction. Any mortgages or secured loan will be settled from the equity and the balance will then be passed to you. If there is not enough equity to settle all the secured debts, you will still be liable for the shortfall debt. The bank has up to 12 years to chase this debt. Some building societies choose not to, however, you should get some advice.
I have multiple mortgages, can I default on one mortgage payment?
If you have multiple financial products, that are not linked in any way, then missing a payment on one does not mean that you have also missed a payment on the other. However missing mortgage payments can have other possible risks, such as loss of property. You may need to speak to the mortgage lender or a mortgage adviser and provide additional details, to see how best to manage your current situation.
Please note, If you are named on the mortgage then you are entitled to know about any payments made to it and/or any interest and charges being added to it.
Can I default on mortgage payments in a joint mortgage?
As this mortgage is in joint names then you are jointly and separately liable to pay it. If you have been contributing towards the new household then you may have created a beneficial interest in the new property and the mortgage company may be able to claim on the equity in your new wife’s property. You should also be aware that if no one pays the mortgage, it will have implications for you everyone named on the mortgage. Defaulting on a mortgage will greatly affect your credit rating, causing problems for you in obtaining credit in the future, amongst other issues. I would advise you to speak to a debt advisor who will be able to advise you further on the implications of a mortgage default. Please see our article, Going bankrupt with a joint mortgage for more information.
How will repossession affect a joint mortgage?
As a joint owner, you have joint rights over the property and the house cannot be sold without your permission (or an Order of the Court). It is wrong to say you have no legal rights. If you have a joint mortgage (or jointly owned) in a property, after repossession both your credit scores and ability to get credit in the future will be affected.
If you want to transfer ownership, please contact your mortgage provider who can tell you their procedure of how to transfer the mortgage into your name and whether you are eligible. You will need to take legal advice, in particular how to pay the other parties involved their fair share of the equity (if there is any). If the mortgage falls into arrears you may get to the stage where the house is repossessed. It is better to be proactive and take action before this happens.
Please note divorce or being separated does not mean you don’t have to pay your share of the mortgage. You can, however, suggest if you are paying more of the monthly payment, that you are entitled to a bigger portion of the equity when the house is sold.
Can I buy back my property to pay off my mortgage?
If your property has been repossessed, it is likely that is now the property of the bank or government. Banks normally sell properties way below the market price at property auctions to recover funds as quickly as possible. While you can buy back your property, this will not affect the amount you owe the mortgage company or lender. In other words, you would still need to pay the remaining amount due on the mortgage.
I can’t afford my mortgage payments, what should I do?
If you are now in a position that the mortgage is unaffordable and you are worried about whether you will be able to maintain the payments then there are several things that you may be able to consider. It may be that child maintenance payments need to be gained with the assistance of the Child Support Agency, so that your income is increased and you can use the money to pay the mortgage. You may have other benefits entitlement that need to be claimed. Plus, the mortgage lender will be able to let you know whether there is any additional support they can provide if the arrears continue.
If you choose to declare bankrupt, as part of the bankruptcy process there will be a check to see if any money can be gained from the property. However, if the value of your property is only just a little bit higher than the mortgage then there isn’t anything to be gained from it. You may need to seek legal advice to ensure you protect your interests in the property, if you are trying to find legal advice locally then your local Citizen’s Advice may be able to identify what is available in your area.
If you need assistance dealing with the remains of the joint overdraft, and any other unsecured debts that may be difficult to manage, contact one of the free debt advice charities and they will help identify the options available to you.
Can an overseas mortgage provider claim my UK home?
It is unlikely that your overseas mortgage provider will have any claim on your properties in the UK. They may, however, repossess your property investments abroad and should there be any outstanding balance once they have been sold you will remain liable for this. If the debt is with an international bank they could choose to chase you in the UK for any outstanding balance owed.