A shortfall is the situation where the current value of the property is exceeded by the debt secured against it. e.g. debt £100,000 value £60,000 Shortfall £40,000. Otherwise known as negative equity.

Lenders do not want to be estate agents. They are not equipped to sel properties. They know hat if they take possession of a property,it may lose up to 30% of its value in a forced sale. Fees charged for conveyancing and taking legal proceedings can be expensive, reducing further the momey they will realise from the sale.

No. It depends on the borrower's financial circumstances and the value of the property.

When you realise you are in difficulty, you should contact the lender and explain your difficulties, requesting a shortfall pack. It will contain forms designed to elicit your financial status, helping the lender to make an informed decision about granting consnet to a sa;e.

You instruct an estate agent to put tje property on the market, usually for 3 months. You should also select a solicitor but hold offf appointing him until you know you have a sale and the lender has consented to it. At the end of the sale period, contact the lender with detaiks of the sale and a letter from the estate agent detailing the marketng process and interest in the property.

If you are confident you can handle the process yourself----no. If you need guidance I can handle the whole process for a fixed fee.

You should avoid certain predatory firms who prey on your vulnerability when you are under pressur. Some charge £5000 or more. It is not reasonable for an uncomplicated process!

I usually secure the lender's agreement for these to be paid out of the sale proceeds.

AS part of the deal, the the settlement is recorded as being full and final. Otherwise the lender can pursue for the shortfall. In theory 12 years for any principal owed and 6 years for interest. In practice lenders do not go beyond 6 years

Creditors determine the amount of a mortgage shortfall through the following process:

1. Property sale: After repossession, the lender sells the property, typically aiming to get the best price possible.

2. Calculation of outstanding debt: The lender calculates the total amount owed, which includes:

   • Remaining mortgage balance

   • Any secured loans on the property

   • Accrued interest

   • Legal fees

   • Estate agent fees

   • Other costs associated with the sale

1. Deduction of sale proceeds: The amount received from the property sale is deducted from the total outstanding debt.

2. Determination of shortfall: The difference between the sale proceeds and the total debt is the mortgage shortfall.

For example:

• Property sold at auction for £85,000

• Outstanding mortgage: £80,000

• Fees to solicitor and estate agent: £3,000

• Secured loan on property: £15,000

• Total debt: £98,000

• Shortfall: £13,000 (£98,000 - £85,000)

It's important to note that the shortfall may include:

• Capital (the original amount borrowed)

• Interest (charged on the borrowed amount)

• Additional costs and fees associated with the repossession and sale process

Lenders are required to provide a full breakdown of the mortgage shortfall to borrowers. If you haven't received this information, you can request it under the Data Protection Act 2018.