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Facing repossession which may leave a second charge for a secured loan unsatisfied: what will happen if this is the case?
I have a secured loan on my house but we can't afford it with our mortgage any more. We are trying to sell our house so we can pay both off but if we don't sell within the next 2 months then we may be repossessed. If we are repossessed there will be enough money to pay off the mortgage but I'm not sure about the loan, if the loan is not paid off in full what will happen.
Any residual from the mortgage after disbursements will go towards paying the secured loan but if there is a shortfall you will remain liable for the balance which will then be unsecured.
You will need to arrange a payment plan with the creditor for any balance, but they may seek a higher rate than for the previous loan as they will be unsecured. That said, at this stage the second mortgagee is in a significantly weaker negotiating position and will realistically be seeking to recover what they can and you should be able to negotiate a good outcome.
Do not overstretch yourselves in the repayment plan but get the interest payments down as low as possible try and pay off the debt as quickly as you can.
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