![]() This is because the money from the sale of your house will usually be taken by your lender to pay the interest that is owed before the capital that is owed. Check whether you owe mortgage capital or interest This is under section 20 (5) of the Limitation Act. For this part of a mortgage shortfall debt, the lender has six years to use court action to make you pay. Your lender may also charge interest after your home is sold. Mortgage interest is the interest you were charged to borrow the money. This is under section 20 (1) of the Limitation Act. ![]() For this part of a mortgage shortfall debt, the lender has 12 years to use court action to make you pay. Mortgage capital is the money you originally borrowed. However, the Court of Appeal has now decided that the following limitation periods apply to mortgage shortfall debts. There has been some confusion in the past about mortgage shortfalls and the Limitation Act. If, by law, your creditor has run out of time the debt is 'statute-barred'. This is because if the creditor has run out of time, you may not have to pay the debt back. Limitation periods for debts are important. The Limitation Act 1980 sets out the rules on how long a creditor (who you owe money to) has to take certain action against you to recover a debt. How long can I be pursued for a mortgage shortfall debt? The legal position under the Limitation Act Until the house is sold, you are liable for these costs, as well as legal and estate agents' fees. Sometimes the debt includes the monthly instalments and interest added to the debt while your home is being sold. Money you still owe to your mortgage or secured loan lender in this situation, is called a 'mortgage shortfall'. This happens when the amount your home is sold for is not enough to pay the outstanding mortgage and any secured loans. In some situations where you have had your home repossessed, or handed back the keys to your mortgage lender, you may later be told you still owe money. The sample letters mentioned in this fact sheet can be filled in on our website. Get some practical advice about your options to deal with your mortgage shortfall debt. See if you can complain about your mortgage lender and ![]() Find out how long you can be pursued for a mortgage shortfall debt Ĭheck your rights if you owe a mortgage shortfall debt jointly with someone else įind out if it is worthwhile disputing the amount your lender says you owe
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