Topic: Secured loan

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This topic contains 2 replies, has 3 voices, and was last updated by  Peter Smith 2 years, 7 months ago.

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  • #1325

    Ally_Cat
    Participant

    I have a mortgage and also a secured loan. Due to relationship breakdown we want to sell but are in negative equity. I’ve heard that some lenders will accept a discount to have their loan paid off. Is this true? How much discount can I expect if they will?

    #1328
    Richard Watters
    Richard Watters
    Moderator

    Some lenders will take a write down, particularly if they are concerned about their security (i.e. they think you might default on the loan). If you’ve missed payments to them they might be more amenable because they see this as a real possibility.

    However you won’t know unless you ask. I’d write to them outlining the current value of the property, the amount owed to your first charge lender, and the equity available to them (if any). Tell them you are concerned that you might not be able to repay their loan and ask what they can do to help.

    I’ve known write downs of as much as 50% although 20% is more typical. Many lenders won’t agree to a write off at all though.

    If they won’t do this, you could ask them to change it to an unsecured loan – sometimes they’ll agree to this.

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