It may not be much use to you, but perhaps you should speak to your lender again. In these days with call centres etc, perhaps the person you were speaking to didn't have the skills or experience to understand your situation.

Lenders would much rather help you out than repossess your property. Try calling again and ask to speak to a supervisor, manager or even an underwriter. If that fails, write to them - you're much harder to fob off if their response is going to be in writing.

Don't give up hope, though.

I have a mortgage and secured loan on my property. The problem is there is not enough equity to cover both.  Due to a recent change in circumstances I am unable to afford to stay in the property. My only option was to sell the property, which after clearing the mortgage would leave me with 33k. The secured loan is 40k. Obviously after legal & estate agent fees I would be left with approx 28k to pay off the secured loan. The 12k remaining I am prepared to secure against a property with a smaller mortgage. This way I could manage. However my secured loan people are refusing to secure on a different property unless there is the extra equity (even though they do not have adequate cover now). This now means they can block the sale on my property. The only option left for me would edventually be repossession. I assume this would mean the mortgage lender would auction the property to cover their risk. In which case I amunsure where this leaves the secureed loan people & me.  This doesn't make sense.  Is there another way around this?