Should I Hand Back My House Keys?
Mortgage problems are on the increase, with many homeowners struggling under the weight of unaffordable repayments. The worsening economy is forcing hundreds of thousands of people into mortgage arrears, with the real threat of repossession proceedings hanging over them.
When it becomes clear that a mortgage is unaffordable, some people are tempted to simply hand in their keys and walk away, hoping that this might solve the problem. Indeed, your mortgage company may even suggest this as a course of action.
Voluntary Repossession
Voluntary repossession, as handing over your keys is known, may be presented as a way of avoiding the stress of legal proceedings to force you out of your home, and you may think that it's a sensible way of dealing with the inevitable.
Unfortunately, while it might be a good option for the mortgage lender, it's unlikely to be a good one for you. The lender will avoid the costs involved in forcing a repossession, and is able to dispose of the property more quickly, so recovering its debt sooner.
You're Still Liable For The Mortgage
There is less to gain for the mortgage borrower. Not only will you be liable for repaying the mortgage until the house is sold, you may be racking up penalty charges for missed payments in the interim. You'll also be liable for the costs of the sale, and as your property will likely be sold at auction, it will usually fetch less than a sale on the open market. In today's climate, the sale may not even cover the amount of money you owe on your mortgage, so it's better to arrange a private sale if at all possible.
Don't forget that you need to find somewhere else to live, so you could end up having to pay rent and your mortgage at the same time, which is almost certainly going to be impossible if you were struggling enough financially to get into mortgage arrears.
Seek Debt Advice
All in all, while handing in your keys might seem to be a quick way out of a repossession nightmare, in reality it's usually anything but, and will often make your problems even worse.
If it's something you've been considering, or it has been suggested to you by your mortgage lender, then get some free debt advice as soon as possible, and certainly before agreeing to this course of action.
Related Articles:
- Can Unsecured Debt Cost You Your Home?
- What If You Can't Pay Your Mortgage?
- Avoid Repossession with Sell and Rent Back
- What To Do If You've Missed A Mortgage Payment
- Negative Equity
- What Are Charging Orders?
- Could Your Home Be Repossessed?
Site is for information only and does not constitute financial advice. E&OE.
