Help with mortgage shortfall

Jake25uk · 27 September 2016 at 11:15PM

I own a flat which I lived in before I got a home and family and was advised to keep it whist buying my house as I was locked in to the mortgage for 6 months and had plenty of equity (flat then valued at 105,000... i owe 72,500) and would sell easy. However during these 6 months the credit crunch hit and the value plummeted (and has never gone up again). I tried to sell the flat many times over the years and got into lots of debt having to pay both mortgages and got a bad credit rating, the mortgage on the flat is very high and quite low on the house i live in, the house has about £40,000 or more equity but the flat is in negitive equity . We have recently rented to bad tenants who have not paid and we are in real trouble. It is affecting our family and we can not go on. The lenders for the flat morgage will not help and my bad credit means its hard getting equity release for a shortfall from the house if i sold the flat at a loss.
I got some advise from community law and was told to sell the flat at a loss and get flat mortgage lenders to agree to put a charge on my home and accept payments for the short fall ( someone wants to buy for 52,000 for a quick sale with the bad tenants sitting) and i would make payments for the 20,500 shortfall (with my home at risk if i do not pay).
The flat mortgage lenders (santander) have said NO and they will try to reposess my home if i sell at a loss.
The community law man said a judge would not let them reposess if i make fair payments and have equity.
I really do not know what to do and wnat to make sure my home is not taken. I can afford reasonable payments but cannot take being a landlord any more. It is ruining my family financially and emotionally.

Because I own 2 properties (even though I loose money each month rather than earn, even with tenants) i have had trouble getting any advice or help ( i cannot afford solicitors fees... can hardly afford food at the moment).

Sorry for the long post (and not so good spelling). Any help would be greatly appreciated.

csgohan4 · 28 September 2016 at 7:51AM

Ireland?

Do not use quick buy companies, search them for reviews, they gazunder you at last minute making you more desperate

Pixie5740 · 28 September 2016 at 7:56AM

How much equity is in your home? Could you remortgage to release enough money to cover the shortfall of the other property to get rid of this albatross around your neck?

silvercar · 28 September 2016 at 9:48AM

I got some advise from community law and was told to sell the flat at a loss and get flat mortgage lenders to agree to put a charge on my home and accept payments for the short fall ( someone wants to buy for 52,000 for a quick sale with the bad tenants sitting) and i would make payments for the 20,500 shortfall (with my home at risk if i do not pay).
The flat mortgage lenders (santander) have said NO and they will try to reposess my home if i sell at a loss.

One option is to sell both. The equity you release on your home will cover the loss on the flat and you walk away with no property ownership but money in the bank.

If that is too difficult to stomach, the other option is to hand the keys back to the flat. The lender will sell at a loss and come after you for repayment. At that point you negotiate a monthly payment to repay the loss. The lender may or may not try to get a second charge on your house.
What they won't be able to do is repossess your home, as you are keeping up with repayments on it.

Either option is not ideal, but it gets rid of the headache and puts your finances on a stable basis going forward. Of course a repossession will damage your credit rating, but you said it was already bad.

Jake25uk · 28 September 2016 at 2:00PM

Thank you, i really do not want to sell both if i can avoid it as its our family home, i am not planning on selling to a quick buy company, someone i know wants to buy for the price an estate agent reccomended to sell for with sitting tenants (I am not using this estate agent, he just gave me some impartial advice) would handing the keys back not have the same outcome as selling at a loss and paying the sale amount to the mortgage company, also, can i hand back the keys whilst tenants are living in the property.

I tried to remortgage to get the equity but was refused,i have yet to try 'bad credit' remorgaging or loans as i have been warned against them by everyone i have spoke to.

Thrugelmir · 28 September 2016 at 2:06PM

Jake25uk wrote: »

would handing the keys back not have the same outcome as selling at a loss and paying the sale amount to the mortgage company,

You are liable for the shortfall. Walking away because it hasn't been profitable isn't an option.

Why not remortgage your residential property to cover the shortfall?

At the very least tighten your belts and throw whatever money you can spare at the BTL mortgage.

Jake25uk · 28 September 2016 at 2:49PM

Thanks, As i stated i cannot remortgage as my credit rating is so bad, i do understand i am liable for the shortfall and as i stated in my original post an willing to make payments, but i am loosing so much each month (due to bad tenants/empty property whilst trying to sell) that i WILL go bankrupt/get in to worse debt if this goes on much longer.

Jake25uk · 28 September 2016 at 3:16PM

I have someone who is willing to buy at a lower price as a quick sale.... whatvi really need to know is how likley are santander to reposess my property if i am willing to make payments for the shortfall (they say they will, the man from community law says they won't is this scaremongering from santander?)

silvercar · 28 September 2016 at 4:18PM

Jake25uk wrote: »

I have someone who is willing to buy at a lower price as a quick sale.... whatvi really need to know is how likley are santander to reposess my property if i am willing to make payments for the shortfall (they say they will, the man from community law says they won't is this scaremongering from santander?)

Repossess which property?

The problem is that you can't sell with negative equity unless the lender agrees to release the charge they have on the property, which allows the new owners to have clear title.

So you need to either get the lender to agree to transfer the negative equity to a loan or to come up with the funds to clear the mortgage totally.

I assume Santander have the mortgage on the property you are trying to sell, let us know if they have the mortgage on both.

Jake25uk · 28 September 2016 at 8:52PM

Hi Santander have the mortgage for the flat which i would like to sell. Not on the house, i was told by community law that they CANNOT block the sale and i can sell at a loss but santander will come for my house after I have done this. Have I had in correct advice? Can Santander block the sale? Thanks.

Thrugelmir · 28 September 2016 at 9:00PM

Santander hold the mortgage charge on the property. Until you settle the debt they will simply sit on their hands. The sale goes nowhere.

I have someone who is willing to buy at a lower price as a quick sale

Leaving Santander with an even bigger shortfall.

Help with mortgage shortfall

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