Amount outstanding: 400,000
Value of home: 260,000
Take Home: 3,584
Rent A Room: - 400 renting a room
Revenue: - 500
Mortgage: - 2,613
Monthly repayment: 2,613.08 (TRS is not being applied to the repayment as monthly repayment is never paid on time i.e. on average one month late due to trying to gather the money together by using the following months salary. The bank claims because of the repayment arriving late their computer system is not able to apply the TRS????
they would simply request a smaller mortgage repayment be paid to make up for the tax not passed on. As soon as the issue be rectified it would immediately return to square one again.
This is the best advice given the circumstances. based on the financial info provided your friend is likely to struggle financially for many years while trying to hold on to a property and associated debt that is not sustainable. The bank have refused the option of lengthening the mortgage term and again I don't think this option will be a realistic one based on existing figures.Option 3 Reduce your repayments to a manageable level unilaterally
I think that you will eventually lose your home. So I don't see any reason why you should be paying down the negative equity at this stage.
So pay the interest in full but no more. Use the cash saved to live a little or to pay off the Revenue debt a bit quicker.
When the Revenue debt is paid off, you could enter into negotiations with the lender to do a voluntary surrender in exchange for writing off the shortfall. If they refuse, drag it out as long as possible. It will take them so long to get repossession, that it's possible that the shortfall will have been eliminated by rising house prices in the meantime.
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