Help with Property Debt

sophieboo · 7 August 2017 at 9:47PM

Hello

A friend has confided in me that she is having major struggles with her property. She bought it for £80k some years ago, but it has had lots of issues including a bad damp problem & the boiler has been condemned so she's had no hot water for 6 months. She believes it may only be worth £50k now - although she is too scared to have it valued.

She has been burying her head in the sand majorly for years. She is so unhappy & doesn't know what to do next. How can I help? If she gets it valued & it is great less then what she borrowed, what happens? She's obviously not in a position to find £30k to pay it off.

I've promised I will help her. Ideally, she wants out of the property. She can move in with family short term while she finds her feet.

Any advice is greatly appreciated - I'm not very knowledgable on this subject & feel a bit helpless :-(

fatbelly · 7 August 2017 at 9:49PM

Well, the first step is to get it valued. Tell us how much it's worth.

How much is the mortgage balance?

Is there anything else secured on the property such as a charging order or secured loan?

sophieboo · 7 August 2017 at 11:14PM

Yes getting it valued definitely seems like a sensible start. I have a feeling her mortgage is interest only, so full amount still to pay unfortunately:-(
I'm not sure re: last question.

What is the worst case scenario here?

Thanks in advance

fatbelly · 8 August 2017 at 7:28AM

So, actual numbers would be helpful.

Until we have the actual numbers we don't know whether she is in negative equity or not, or by how much

Local estate agents are the most reliable for a valuation, though Zoopla will give you a good idea.

The mortgage lender will give a settlement amount as of this month. Her credit report will give a 'balance' figure which should be more or less the same

The Land Registry entry (costs £3) will show what else, if anything, is secured against the property and will need to be cleared at the point of sale.

National_Debtline · 8 August 2017 at 12:45PM

Hi there,

Fatbelly is right, that we need real figures to help. It would also help to know if your friend has any other debts as that would likely affect her options.

Generally speaking, if she has any equity, she can look to sell and walk away with the equity remaining after selling fees and, if she has no other debts, use that money to help get herself set up in rented accommodation.

However, if there is negative equity it is more complex. She can still look to sell but the mortgage lender, or anything else secured, can object to a sale if the sale price won't satisfy everything that is secured. From here she would need to evaluate her situation on the whole. Would she be better to try and overpay the mortgage and improve the property, so that a sale would satisfy everything, or hand back the keys to the lender.

This is not as straight forward as it sounds, because she would still be liable for the mortgage payments until the house is sold, plus the council tax so this could end up creating more debt than it solves. Please post some figures, and hopefully we can help from there,

Laura
@natdebtline

sophieboo · 8 August 2017 at 3:58PM

Thanks. I've enquiried about valuations so will get some organised in the coming weeks. How many valuations should you get - 2?

Will update this as soon as I know more.

Thank you for getting back to me - it's much appreciated.

chevalier · 10 August 2017 at 9:36AM

Not quite on point, but if she is struggling so much, is she on benefits? If she is i thought she was able to get a new boiler for free with a govt grant. Or have they stopped doing this now?
good luck

enthusiasticsaver · 10 August 2017 at 5:58PM

You have not elaborated on her financial position other than the state of the house. Is she working or on benefits?

I would also get quotes for essential works from plumber for the boiler and a builder for the damp problem. That way she will know if it is worth getting these done prior to selling as it will sell for a better price if it is liveable. If it is in such a state it is not liveable the chances are buyers will have difficulty raising a mortgage on it.

fatbelly · 10 August 2017 at 6:04PM

That's good advice above.

From personal experience it's very difficult to find a buyer for a house with an obvious damp problem.

chevalier · 11 August 2017 at 9:33AM

i have not looked into this but here is a link about boilers
http://freeboilergrant.org.uk/?gclid=EAIaIQobChMI2da5iOLO1QIV2QgqCh0BqA2QEAAYASAAEgK84_D_BwE

i hope this helps

Help with Property Debt

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