Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • emmasam0
    • By emmasam0 29th Nov 17, 2:01 PM
    • 8Posts
    • 1Thanks
    emmasam0
    Negative Equity Nightmare
    • #1
    • 29th Nov 17, 2:01 PM
    Negative Equity Nightmare 29th Nov 17 at 2:01 PM
    Hi, hopefully someone on here can help me with my problem.


    I bought a 25% share in a property in 2008, which I moved out of 3 years ago as I moved in with my now husband due to my property not being big enough for both of us. Since I bought the property it has decreased in value by roughly 30 - 35K, leaving me in a negative equity of £8,500.00. A member of my family lived in the property at first but then when they moved out my only option was to look at renting. I couldn't sell due to the negative equity. After going through a lengthy process the housing company finally agreed to let me sub-let the property temporarily as did the mortgage company. Now the mortgage company have said that I can no longer do this and my only option is to go onto a mortgage at a higher rate as it's a consent to let mortgage and not a residential.


    I am totally stuck with this property and not sure what way there is out for me. I am at a loss financially every month even with having someone living in the property and now my mortgage rate is increasing. I still can't sell due to the negative equity I owe and I really can't see a way out. I have looked into purchasing the other 75% but that won't work either. It's going to take me at least 9 years to pay off the mortgage that I owe at the current rate.


    Does anyone have any suggestions or advice? It's difficult to find someone who knows all about the shared ownership in's and out's.


    Thank you!
Page 1
    • Pixie5740
    • By Pixie5740 29th Nov 17, 2:09 PM
    • 11,202 Posts
    • 15,655 Thanks
    Pixie5740
    • #2
    • 29th Nov 17, 2:09 PM
    • #2
    • 29th Nov 17, 2:09 PM
    Have you looked into getting an unsecured loan for the £8,500 shortfall?
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • Comms69
    • By Comms69 29th Nov 17, 2:11 PM
    • 1,322 Posts
    • 1,073 Thanks
    Comms69
    • #3
    • 29th Nov 17, 2:11 PM
    • #3
    • 29th Nov 17, 2:11 PM
    Your choices are:


    Let it out (and get increased mortgage rate)
    Live there
    Sell it and pay the difference
    Let it get repossessed
    • theartfullodger
    • By theartfullodger 29th Nov 17, 3:55 PM
    • 9,128 Posts
    • 12,093 Thanks
    theartfullodger
    • #4
    • 29th Nov 17, 3:55 PM
    • #4
    • 29th Nov 17, 3:55 PM
    Or declare as bankrupt, wipe the debt: Now, wonder who pays...
    • bouicca21
    • By bouicca21 29th Nov 17, 4:31 PM
    • 3,300 Posts
    • 4,123 Thanks
    bouicca21
    • #5
    • 29th Nov 17, 4:31 PM
    • #5
    • 29th Nov 17, 4:31 PM
    If you are at a loss every month surely you would be better selling the place and swallowing the 8 grand loss.
    • AdrianC
    • By AdrianC 29th Nov 17, 4:31 PM
    • 15,776 Posts
    • 14,076 Thanks
    AdrianC
    • #6
    • 29th Nov 17, 4:31 PM
    • #6
    • 29th Nov 17, 4:31 PM
    You keep saying you "can't sell" due to the negative equity - but you can. You would simply need to find the shortfall.

    You say you're losing money every month in the current situation - how much? For how long now?

    Just cut your losses and get away from this situation.
    • hayleylouise1991
    • By hayleylouise1991 29th Nov 17, 4:35 PM
    • 12 Posts
    • 1 Thanks
    hayleylouise1991
    • #7
    • 29th Nov 17, 4:35 PM
    • #7
    • 29th Nov 17, 4:35 PM
    you can sell the property and you are liable for the shortfall (negative)
    ....
    • glentoran99
    • By glentoran99 29th Nov 17, 4:42 PM
    • 4,951 Posts
    • 3,955 Thanks
    glentoran99
    • #8
    • 29th Nov 17, 4:42 PM
    • #8
    • 29th Nov 17, 4:42 PM
    Hi, hopefully someone on here can help me with my problem.


    I bought a 25% share in a property in 2008, which I moved out of 3 years ago as I moved in with my now husband due to my property not being big enough for both of us. Since I bought the property it has decreased in value by roughly 30 - 35K, leaving me in a negative equity of £8,500.00. A member of my family lived in the property at first but then when they moved out my only option was to look at renting. I couldn't sell due to the negative equity. After going through a lengthy process the housing company finally agreed to let me sub-let the property temporarily as did the mortgage company. Now the mortgage company have said that I can no longer do this and my only option is to go onto a mortgage at a higher rate as it's a consent to let mortgage and not a residential.


    I am totally stuck with this property and not sure what way there is out for me. I am at a loss financially every month even with having someone living in the property and now my mortgage rate is increasing. I still can't sell due to the negative equity I owe and I really can't see a way out. I have looked into purchasing the other 75% but that won't work either. It's going to take me at least 9 years to pay off the mortgage that I owe at the current rate.


    Does anyone have any suggestions or advice? It's difficult to find someone who knows all about the shared ownership in's and out's.


    Thank you!
    Originally posted by emmasam0

    You have been paying the mortgage for 9 years, What is the outstanding balance on the mortgage and the current value?


    Unless it is an interest only mortgage then the negative equity wont be as much as you have said,
    • Gwendo40
    • By Gwendo40 29th Nov 17, 5:31 PM
    • 20 Posts
    • 10 Thanks
    Gwendo40
    • #9
    • 29th Nov 17, 5:31 PM
    • #9
    • 29th Nov 17, 5:31 PM
    This is what happens when we have almost a decade of government/BoE policies that are aimed at protecting existing homeowners at ALL costs... the concept of negative equity or reduced values become almost incomprehensible to people.
    • dimbo61
    • By dimbo61 29th Nov 17, 5:35 PM
    • 9,595 Posts
    • 5,187 Thanks
    dimbo61
    You say you are losing money each month.
    are you paying a repayment mortgage ?
    Could you change to a BTL mortgage ?
    What is the increase the lender wants ? are they offering to let you change onto Interest only ?
    • TBagpuss
    • By TBagpuss 29th Nov 17, 8:55 PM
    • 6,088 Posts
    • 7,842 Thanks
    TBagpuss
    Do you have children? If not, why is the property too small for you and your husband?
    Would moving back in be a short term solution to let you overpay and get out of negative equity?

    If that isn't possible, then it's worth looking into whether you could sell and pay off the shortfall.

    Do you or your husband have any savings? If not, have you looked into whether you could get a loan, and how the cost would compare with switching to a consent -to-let mortgage.?

    It might be less stressful for you to sell and pay off the shortfall through a loan.

    Is the £8,500 negative equity the figure now, or 3 years ago when you moved out?

    How much rent could you get compared with the cost of a mortgage on a consent to let basis?
    • glasgowdan
    • By glasgowdan 29th Nov 17, 9:06 PM
    • 2,645 Posts
    • 2,959 Thanks
    glasgowdan
    As above, how much have you paid off in the 9 years? You need to provide some more specific figures for anyone to get a handle on it and suggest the best options.
    • silvercar
    • By silvercar 29th Nov 17, 11:26 PM
    • 36,219 Posts
    • 153,105 Thanks
    silvercar
    This is what happens when we have almost a decade of government/BoE policies that are aimed at protecting existing homeowners at ALL costs... the concept of negative equity or reduced values become almost incomprehensible to people.
    Originally posted by Gwendo40
    Clearly the OP thinks there is negative equity here, contrary to your statement.

    I am curious as to what part of the country is in negative equity after almost a decade other than Northern Ireland.
    • emmasam0
    • By emmasam0 30th Nov 17, 3:14 PM
    • 8 Posts
    • 1 Thanks
    emmasam0
    I think thatís what Iíll have to do but was trying to find another way rather than get a loan. Also, we got married this year so I was waiting till that was out of the way before taking on the debt.
    • emmasam0
    • By emmasam0 30th Nov 17, 3:49 PM
    • 8 Posts
    • 1 Thanks
    emmasam0
    Thanks for all your replies, sorry I am unsure how to reply individually.


    Yes you're right, I was looking at the amount of the mortgage when I first took it out. The neg equity now would be approx. £5,500 depending on what it sold for. Unfortunately when I first bought the property I was making very small monthly payments off the mortgage, as that's all I could afford. It's only when I moved in with my partner and had his income to help that I increased the payments to try and reduce the balance. I was also fairly young and didn't understand how mortgages worked, therefore I was on a high rate for a long time.


    I have had it up for sale in the past but as it's shared ownership it proved difficult to sell, I ended up renting it out again to help with the monthly costs. I had A LOT of interest from investors but the housing company won't allow me to sell to those. The buyer has to meet the requirements for the shared ownership scheme, which proved difficult. It is still up for sale on the housing companies website and I have had no interest for approx. 6 months now.


    I wanted to try and avoid a loan as I try my best to avoid debt. Also, my partner had a large loan when I met him which we are paying off monthly so I didn't want to add more to this. However, it looks like this is the best way for me to go. Thanks for everyone's help, it's difficult to find people who understand the ins and outs of my situation. I think I will put it back up for sale with an estate agent and cross my fingers! It's a bargain for someone to buy now!




    This is what happens when we have almost a decade of government/BoE policies that are aimed at protecting existing homeowners at ALL costs... the concept of negative equity or reduced values become almost incomprehensible to people.
    Originally posted by Gwendo40

    The concept of negative equity is stressful for me as I have lived on my own for 12 years since the age of 17 working full time as well as working part time weekends in an attempt to stay out of debt. I thought I was making a good decision "getting onto the property ladder" which is what I was told back then. Now that decision has resulted in this situation which is quite disheartening.
    • emmasam0
    • By emmasam0 30th Nov 17, 3:50 PM
    • 8 Posts
    • 1 Thanks
    emmasam0
    Clearly the OP thinks there is negative equity here, contrary to your statement.

    I am curious as to what part of the country is in negative equity after almost a decade other than Northern Ireland.
    Originally posted by silvercar

    Thanks. I live in the North West, Liverpool area.
    • emmasam0
    • By emmasam0 30th Nov 17, 3:51 PM
    • 8 Posts
    • 1 Thanks
    emmasam0
    As above, how much have you paid off in the 9 years? You need to provide some more specific figures for anyone to get a handle on it and suggest the best options.
    Originally posted by glasgowdan

    I have paid off roughly £3000.00.
    • emmasam0
    • By emmasam0 30th Nov 17, 3:55 PM
    • 8 Posts
    • 1 Thanks
    emmasam0
    Do you have children? If not, why is the property too small for you and your husband?
    Would moving back in be a short term solution to let you overpay and get out of negative equity?

    If that isn't possible, then it's worth looking into whether you could sell and pay off the shortfall.

    Do you or your husband have any savings? If not, have you looked into whether you could get a loan, and how the cost would compare with switching to a consent -to-let mortgage.?

    It might be less stressful for you to sell and pay off the shortfall through a loan.

    Is the £8,500 negative equity the figure now, or 3 years ago when you moved out?

    How much rent could you get compared with the cost of a mortgage on a consent to let basis?
    Originally posted by TBagpuss

    Because it's shared ownership I pay rent to the housing company and mortgage as well. I can't be seen to be making a profit on the rent so what I am allowed to charge a tenant doesn't cover the rent & mortgage that I pay. I'm currently at a loss of £105 every month at the rate I'm on now. They want to put the interest rate up by 3%.
    • Scotbot
    • By Scotbot 30th Nov 17, 4:26 PM
    • 139 Posts
    • 97 Thanks
    Scotbot
    Liverpool house prices have risen 8% over the last 10yrs so a decrease in 30k seems an unrealistic valuation. If it were 300k originally a 30k drop would be a 10% decrease and I doubt it cost that much for housing association in Liverpool so a 30 k drop is probably considerably more than 10%. When did you last have it valued? Your figures seem outdated.
    Last edited by Scotbot; 30-11-2017 at 4:29 PM.
    • emmasam0
    • By emmasam0 30th Nov 17, 4:29 PM
    • 8 Posts
    • 1 Thanks
    emmasam0
    Liverpool house prices have risen 8% over the last 10yrs so a decrease in 30k seems an unrealistic valuation. If it were 300k originally a 30k drop would be a 10% decrease and I doubt it cost that much for housing association in Liverpool. So a 30 k drop is probably considerably more than 10%. .When did you last have it valued? Your figures seem outdated.
    Originally posted by Scotbot

    Hi, I had it valued in March this year by 3 different estate agents. Also had it valued in March 2016 by 3 different estate agents. They said it was because of the area and because there had been "trouble" locally which brought the prices down.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

4,394Posts Today

7,913Users online

Martin's Twitter