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If you can no longer keep up with your mortgage repayments, you may want to consider selling and searching for cheaper housing.

In a nutshell If you can no longer maintain the payments on your mortgage, you should contact your mortgage lender in the first instance to inform them of the situation, asking for help in selling your property. Prior to this, you may want to talk with debt advisors from a longstanding debt agency, as they may be able to provide housing advice.

If your lender won’t negotiate and can’t assist you in selling your property, you might consider giving them your keys back. This debt solution is known as a voluntary surrender.

What debt problems is Surrendering property debt help suitable for?

Debtors who have considered all other debt solution options.

Our debt expert’s opinion on the pros and cons…

Advantages of Surrendering property debt solution

  • Mortgage repayments can be among the biggest outgoings, so surrendering a property can make a significant difference to your financial circumstances. But it is a big decision, and you should seek advice from reputable debt experts before moving forward.

Disadvantages of Surrendering property debt solution

  • If your lender does assist you and your property is sold at auction you may not receive the best price, limiting the impact on your debt problems.
  • If your home sells for less than you owe to the mortgage company, you will still be liable for the debt.
  • There will be costs involved in selling your property, this will include estate agent, surveyor and solicitor fees.
  • There will likely also be costs involved in moving home, such as moving costs, a deposit and the first month’s rent.
  • The viability of selling your home relies on how the property market is performing. If house values have fallen it may not make sense to sell up.

Worried about debts that won't go away?

FAQs – Surrendering Property

  1. When should I consider surrendering my property?

  2. If you’ve come to a point where you can no longer afford your mortgage repayments, you should contact your lender who are legally required to give you a reasonable period of time to sell your home yourself. However this will only be possible if your home isn’t in negative equity. If it is, or if you can’t or don’t want to sell your home yourself, you’ll need to hand your keys back to your lender.

  3. I need to save for a deposit for new rented accommodation. How can I do this?

  4. Save the money that would have gone towards your mortgage towards the costs of your new accommodation instead.

  5. My lender has asked me to sign a Voluntary Surrender – what should I do?

  6. The document that they are asking you to sign will speed up the process of repossession, and it may also confirm that you will have to cover any shortfall between the sale of your home and the lending that remains.

  7. Who do I hand my keys back to?

  8. You can hand your keys back in person – at your local branch if your lender has one, or you can send your keys via Royal Mail Special Delivery. In either case, make sure that you include a letter of explanation which details your mortgage account number (don’t write down your address if you’re sending your keys by post, for security reasons).

  9. What should I do before I hand my keys back?

  10. Prior to handing your keys back to your lender you should:
    • Secure accommodation
    • Move all your possessions, as you may not have access to the property after returning your keys
    • Take photos of your metre readings for your gas, electricity and water (if applicable)
    • Inform your local authority and utility suppliers that you’ve moved

  11. What happens after I’ve surrendered my property?

  12. After you’ve handed your keys back to your lender they will sell your property, which will most likely be via auction. If any profit is made on the sale after the repayment of your mortgage, this will be handed to you. However if a loss is made on the property, you’ll have to deal with a shortfall that will need to be repaid.

  13. Will I still be responsible for any bills that are linked to my home?

  14. You will still be responsible for bills such as council tax and water rates. You’ll also need to keep your insurance policies in place until the sale is confirmed.

  15. What is a ‘Deed of Acknowledgment’ and should I sign it?

  16. Your lender may ask you to sign a ‘Deed of Acknowledgement’ following the repossession of your home. This document, should you sign it, will make you liable for any financial shortfall on the property even if you were to declare bankruptcy or enter an IVA.

  17. There was a financial shortfall after the sale of my property. What happens next?

  18. You will remain liable for repaying this remaining debt, which may well total to thousands of pounds. Your lender may agree to reduce this debt if you’re able to offer a lump sum as a full and final settlement. However if you are in no position to repay the debt, with no reasonable chance of repaying it in the near future, you may want to consider bankruptcy.

*An Individual Voluntary Arrangement (‘IVA’) is subject to the customer meeting qualifying criteria and gaining creditor acceptance. Monthly IVA payments include fees and may differ to the example provided, based on the assessment made of your own personal circumstances – these fees will be clearly explained to you in writing by your IVA company. Debt write off amounts are subject to creditor acceptance and vary by individual customer based on their own financial circumstances, and are applied upon successful IVA completion.

Substantiation example, Someone owes £60,000, they pay £100 over 60 months which equals £6000, write off amount would be £54,000 which is 90% of total debt level. Upon submitting your details on this website we will pass your details to one of our approved partners as this website does not give any advice.

Free debt counseling, debt adjusting and credit information services are available from the Money Advice Service.

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