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  • FIRST POST
    elizabethdane
    Barratts dream start help desperately needed - we may be forced to sell our home
    • #1
    • 2nd Feb 13, 10:26 PM
    Barratts dream start help desperately needed - we may be forced to sell our home 2nd Feb 13 at 10:26 PM
    Hi folks, I'll keep this as simple as possible and stick to the facts.

    We purchased our home eight years ago with a mortgage of £120k and a dreamstart offset of £40k. We were told at the time that the £40k would be repayable either upon sale of the property or after ten years, and that the figure would be adjusted in line with the value of the house.

    We were assured repeatedly that in any event we would be able to remortgage should we need to, and absorb the 40k into our existing mortgage.

    As there's only two years to go and with the house in negative equity I decided to get the situation under control and started the process of remortgaging only to find that there is not one bank willing to give us the finance. We have been informed that the repayable figure adjusted for current market value is a little over 37.5k and if we don't come up with it then we have to sell the house. This will leave us renting and absolutely unable to get back on the property ladder.

    We have a combined income of 46k but we've always been on a repayment mortgage and now have a son, so there's been no money left to save. We had no idea that this could happen and are now facing a life of paying somebody else's mortgage for them. I am devastated. Has anybody got absolutely any suggestion at all for how we should proceed? Any advice is greatly appreciated. There must be many, many people in this position.

    Many thanks. Vic.
Page 4
    • joolsyp
    • By joolsyp 5th Aug 15, 7:22 PM
    • 5 Posts
    • 2 Thanks
    joolsyp
    What would the lender gain by repossessing if there is significant negative equity? In my case the first lender/mortgage company has to be paid off first which means the second lender would stand to lose way more through a repossession than coming to an agreement with the owner (either a lump sum or extension to the terms of the loan).

    If the shared equity is secured on your home, either as a second charge or as part of the main mortgage, the lender can repossess.
    Originally posted by silvercar
    • silvercar
    • By silvercar 5th Aug 15, 10:25 PM
    • 34,058 Posts
    • 142,397 Thanks
    silvercar
    What would the lender gain by repossessing if there is significant negative equity? In my case the first lender/mortgage company has to be paid off first which means the second lender would stand to lose way more through a repossession than coming to an agreement with the owner (either a lump sum or extension to the terms of the loan).
    Originally posted by joolsyp
    Some lenders are capable of seeing this, others just follow their rules. Not all are capable of joined up thinking.
    • hildosaver
    • By hildosaver 6th Aug 15, 11:28 AM
    • 220 Posts
    • 372 Thanks
    hildosaver
    It is a crap situation to be in alright - I have been there myself and was at one point (4 years ago) around £30,000 in negative equity. The only three options available to you really are to

    1: accept you will be living in that house (which you originally bought to be a home after all remember) for the next 5-10 years until the market recovers and overpay your mortgage in the meantime.

    2: Save a deposit on the new house you want, get 'permission to let' on your current home and rent it out for 5-10 years and then sell.

    3: Go bankrupt.

    Both 1 and 2 require you to overpay and/or save a significant amount of your income for a prolonged period - difficult yes but not impossible and probably better options than number 3.

    I have been overpaying like crazy and now have almost 80% equity in my home but it has been really tough and we have sacrificed a lot but I know it will be worth it in the end.
    Last edited by hildosaver; 06-08-2015 at 11:29 AM. Reason: error
    Mortgage balance September 2012: £121,086 (First ever OP)
    Mortgage balance December 2016: £85,971
    • Chz_uk
    • By Chz_uk 27th Sep 16, 3:56 PM
    • 4 Posts
    • 1 Thanks
    Chz_uk
    Hi, I'm looking for some advice on a plan I have to resolve my similar situation please - any comments would be gratefully received.

    I bought a Barratt home in 2009 with their Head Start scheme where they had a 15% equity in the property. The sale price was £116,995, Barratts stake was £17,549.25, my deposit was £5849.75 (5%). As other posters have mentioned, the second charge now resides with Rose Shared Equity.

    My property is now worth less than the purchase price, I recently had it valued at £90 - £95k and one of the same type sold on the street last week for £92,500. I have had a repayment mortgage from the start and have about £86k remaining on it.

    I need to repay the 15% by 2019 however I plan to move during the next year. I took Voluntary redundancy last year so had a pay-out that £20k of which was going to be used for a new deposit on my next house.

    Anyway, thats the background. I was considering whether it would be better to try to get the second charge removed early using my new deposit money? As the property is now worth about £95k max then 15% is £14,250. If I can negotiate with Rose Shared Equity to say £10k to remove the charge would that be worthwhile looking at my figures? I'd be spending £10k of my saved money but I wouldnt have to pay 15% of the value to Rose when I sell the property next year. Say I sell it for £95k, after I've paid the mortgage I'll get £10k back (obviously minus all the fees).

    Sorry if that went on a bit. Does this make sense? Would it be recommended to get rid of the second charge before selling?

    Also, some of the early posters in this thread will have gone passed their repayment dates by now - does anyone have any experience of that which they could share?

    Thanks for all your help in advance.
    • Tree85
    • By Tree85 9th Oct 16, 8:09 AM
    • 1 Posts
    • 0 Thanks
    Tree85
    We were in a similar situation we bought our house 8 years ago for 132 and when we looked at selling 4 years ago it was only worth 100!!!! When we spoke to barratts about the shortfall they offered an interest free loan over 3 years to repay the deficit. At the end of the day there are thousands of people in your situation because barratts over price their houses trust me if you speak to them about your situation and offer to pay so much back a month they'd be more than happy to look at it as at the end of the day they won't be getting it back otherwise!!! We've just sold our property and luckily we have enough equity now to pay them off but now barratts have passed the loan on to some other company and we've got to pay them £180 admin fee!! I'm trying to fight it as we speak!!! Good luck
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