Negative Equity caused by early repayment penalty. HELP!

opinions4u

5.49% is still an okay deal for a 5 year fix. That said, 9% is one hell of a penalty clause.

While sympathising with your circumstances, you signed for the mortgage, the rate and the penalty clause.

Why should the bank have to take a loss on your behalf by waiving the penalty? They are still committed to repaying whoever lent them the money to lend on to you.

The CAB suggestions are probably the best ones if you want to negotiate a reduction. But there is absolutely no obligation for a lender to agree.

SouthCoast

Advice from CAB on mortgage arrears can be found here:

http://www.adviceguide.org.uk/index/life/debt/mortgage_arrears.htm

And advice on business debt:

http://www.bdl.org.uk/

silvercar

You really need some debt counselling for the whole picture. Is your business still viable? Would you be better off closing the business and getting another job elsewhere?

Worst situation: you let the property be repossessed and see if you can manage to save some money while renting without the liability for the house. If you do this you could save enough to sort out a lump sum payment (Possibly plus a monthly schedule) to repay the shortfall from the repo'd sale. If that got too much to bear you could consider bankruptcy at a later date. Obviously not a step to consider lightly, but the bankruptcy laws have eased and you may find it is the easiest way out of the problem that allows you to start again with a clean slate.

Miss_Yell_2

Today is the 17th January and in todays post two letters from the bank of Scotland have arrived in the post! One is dated 5th December and telling us we have missed a payment , and the second letter is dated the 15th December and telling us they will now charge £35 for the missed payment (as we had not responded to their letter etc)
Last week we received a letter on the 14th January from them, dated 23rd December. When I queried this on the phone they assured me all letters were sent out same day they are printed. i.e. the date printed on the letter. They told me any delay in posting is down to royal mail! I don't think so!!!

What on earth is going on! Should we really have to pay these charges when we are not getting their mail? Sadly, there is no postmark of course to confirm dates!

withnell

Based on the figures you have provided, the fee of 21k is because you borrowed 420k!

Surely if your income was enough to cover the mortgage when you took it out you should still be able to cover it now?

Maybe rent a much smaller property in the new location until you get back on your feet?

Streeet

You've already relocated.. Another mortgage or rent?
Is the mortgage portable?? if it is you may be able to avoid the penalty. In addition you may be able to reduce the amount you borrowed by 20% (by buying a smalller house)

You have a fixed rate.. but you say your payment has increased by £32?? how come?

How much negative equity does the penalty put you in?
Whilst it is going to really hurt.. is it worth selling below your minimum and paying the difference back over time. eg £5k negative equity maybe managable through a personal loan etc etc.. at least it would save your current position and your business..

best wishes

Miss_Yell_2

We now have had a massive drop in income. The mortgage is just not feasable; we have two mortgages ! Both are with BoS. We remortgaged the house now in negative equity, so we could buy the second property (we needed it owing to relocation and the gradual way we had to do it; the plans have not worked out the way they were supposed too! The small property we now live in was to be holiday lets whilst we did not need it, that way it paid for itself whilst we relocated...its all complicated but believe me at the time it seemed the right move!) This was how the mortgage broker worked out was best for us to do it all. We are now about £20,000 in negative equity, but would just about break even if we could lose the penalty.
We are well aware that if we have to have one property repossesd it will affect the second one. The second property has a much smaller mortgage which we can manage. However it is still an 80% mortgage. Its the tiniest terrace you ever saw, happy to live in it, but just terrified its all gone wrong!

Still cannot believe that the BoS have sent two letters today to us dated 5th and 15th December!
Wish I knew why the fixed rate has gone up! BoS can't sem to tell me! I think though it is charges that they are billing us (two letters so far with charges of £35 for them and then interest on arrears that have now been paid off? No one seems to be able to explain it or send us a statement!)

Streeet

withnell wrote: »

Based on the figures you have provided, the fee of 21k is because you borrowed 420k!

Is this figure in the right ball park??

I assume you dont have repayment insurance...

feisty1

[quote=Streeet;17784071]Is this figure in the right ball park?? I assume you dont have repayment insurance...[/quote]

What do you mean repayment insurance?

luckyfool

opinions4u wrote: »

5.49% is still an okay deal for a 5 year fix. That said, 9% is one hell of a penalty clause.

It's a 5% penalty, not 9%.