Negative Equity

sportie

Hello

My other half and I have split up and own our flat together. We have a 100% mortgage with northern rock and on our own we cannot afford to keep it. It is only a one bedroom flat and therefore cannot get a lodger to help cover the payments.

The only option we have is to sell the flat but we will end up owing Northern Rock money. What will happen? Are we allowed to sell the flat for less than our mortgage?

Please help as the last thing I need is to be financially tied to her

Thanks

Ilian2008

Hello. Sorry to hear about your problem. You wont be able to sell if there is a shortfall you cant pay. Can you rent the flat out completely? Will the rent cover the mortgage until the market picks up?

sportie

Renting the flat out would probably only cover half of the mortgage payment, I would not then be able to afford to rent anywhere and neither would she

Ilian2008

Hi. Perhaps you could speak to the lender and see if they can do something with the payments to get it down to somewhere near the rental even if its for 6 months or so to allow you tor ent the place out and see which way the market goes. Its costly for a lender to repossess and they wont get all their money back so they might do even a payment holiday or something.

My friends had something similar and they were advised to let it be repossessed. However this is a massive decision not to be taken lightly as the lender will pursue you in the future for the shortfall. I think they have 12 years to do it.

(Obviously this is no substitute for proper legal advice and no reliance should be made)

feisty1

Ilian2008 wrote: »

Hi. Perhaps you could speak to the lender and see if they can do something with the payments to get it down to somewhere near the rental even if its for 6 months or so to allow you tor ent the place out and see which way the market goes. Its costly for a lender to repossess and they wont get all their money back so they might do even a payment holiday or something. My friends had something similar and they were advised to let it be repossessed. However this is a massive decision not to be taken lightly as the lender will pursue you in the future for the shortfall. I think they have 12 years to do it. (Obviously this is no substitute for proper legal advice and no reliance should be made)

This is NR we're talking about here, they sadly not known for showing empathy.
Is yr mortgage on repayment or interest only, if repayment how many years & how much are you paying per month?

silvercar

Sell it and get a loan for the difference between the sale price and what you need to pay off the mortgage.

Northern Rock did offer 100% mortgages where some of the money was given as an unsecured loan. You could keep that part going and still sell the flat to clear the main mortgage.

sportie

feisty1 wrote: »

Is yr mortgage on repayment or interest only, if repayment how many years & how much are you paying per month?

it is repayment over 30 years, we have only lived there two years and about to come off our fixed term. Obviiously we are unable to remortgage with any other lenders. We are paying £830/ month

sportie

silvercar wrote: »

Sell it and get a loan for the difference between the sale price and what you need to pay off the mortgage.

Northern Rock did offer 100% mortgages where some of the money was given as an unsecured loan. You could keep that part going and still sell the flat to clear the main mortgage.

That sounds promising, will have to look at our agreement to see whether this was the case. Fingers crossed, this sounds manageable

feisty1

Sportie........one option is to fone NR and ask what the payments would be when you come off yr fixed rate and change to interest only. At a rough guess, you would probably be able to save £200pm, which may or not make a difference. But at least this will be another option for you when considering what to do next

Beckymarshall07

Sorry to hear about your situation. I think you need to decide if you want to cut your ties with flat now you've split up or do you want to make best out of a bad situation.

If you want to keep flat and hope market recovers next year then I agree with feisty - look at interest only repayments. Under new government legislation NR are obliged to give you benefit of doubt and this includes interest only repayments. You'd just need to bear in mind that you would pay hell of alot more in the long term doing this.

If you want to get shot - get rid of the flat now. Under r'po rules they are obliged to get best price for it - if they dont then it'd got to auction. This is what is happening with my sister - she handed keys in as soon as you couldnt keep up with the payments. This may mean you take a hit but better than it going to auction straight away. Consider taking a loan now before anything happens as no one will want to lend to you with r'po on your credit file.
Good luck.