Negative equity - practical advice please

cupid_s

Statement of affairs. You say what you income is and what you spend on what and people (very nicely) give you ideas on how/where you can cut back.

brighteyes78

thanks - will do!

Running_Horse

Towards the end of the last slump there were products became available allowing you to take negative equity with you to the next house; our neighbours did it. It may of course be different this time.

It is very demoralising being in negative equity, and I felt quite trapped. However, there came a point with values rising again, and the mortgage shrinking, when suddenly you realise things have improved. We sold in the end with £120,000 positive equity.

My advice is sit tight for the long term, and make the most of what you have. There is no shortage of people looking enviously at you and your lovely house, and relationship. The cup really is half full, rather than empty.

Thrugelmir

As has been said previously overpay as much as you can afford without over stretching yourselves. As you have borrowed through

When the fixed term ends look at reducing your mortgage term. 35 years to repay a mortgage is a very long time. Even without prices falling it would have taken many years to repay any significant ampount of the capital borrowed.

Fortunately you have borrowed from a considerate lender. So at the end of the fixed term you shouldn't have any neeed to worry. Below is an extract from an article in the Times of 18th February.

Coventry Building Society has thrown a lifeline to customers in negative equity after becoming the first lender to offer re-mortgage deals worth 100 per cent of a property’s value.
Coventry customers who took out loans of up to 125 per cent of their property’s value would have been forced to revert to the lender’s standard variable rate (SVR), currently 4.74 per cent, after their mortgage deal expires.
At present, homeowners in negative equity – where more is owed on the mortgage than the value of the property – are unable to secure a mortgage deal elsewhere, as all lenders are now demanding equity of at least 10 per cent, and up to 40 per cent, for the most competitive deals.
Now Coventry is offering existing customers coming to the end of their mortgage deal a new five-year fixed-rate at 4.99 per cent, worth up to 100 per cent of a property’s loan-to-value (LTV). The deal comes with no booking or arrangement fees.

whathavewedone

Definitely overpay as much as you can and if possible keep a separate fund for living on in the event that you or your oh lose their job.

I think it is very likely that negative equity mortgages at reasonable rates will be available by the time the bottom of the market has been reached. I've set out my reasons for this in detail on the interest rates thread. I was hoping to provoke a discussion about it but the thread died a death - I think it's on page 2 now.

Nevertheless it doesn't make sense to rely on that - our fixed rate mortgage expires in 2011 and we are saving as much as possible. We're not even close to negative equity yet but we could be quite easily by then. My personal view is that the bottom will be in 2010 sometime but I don't see house prices recovering to 2007 levels for a good while after that.

Anyway, 2012 is a long way off, plenty of time to save. Even if you are still in negative equity the fact that you have been saving money through the recession will demonstrate financial responsibility and make it more likely that you will be offered a negative equity mortgage if they are available by then.

Thrugelmir

whathavewedone wrote: »

Definitely overpay as much as you can and if possible keep a separate fund for living on in the event that you or your oh lose their job.

I think it is very likely that negative equity mortgages at reasonable rates will be available by the time the bottom of the market has been reached. I've set out my reasons for this in detail on the interest rates thread. I was hoping to provoke a discussion about it but the thread died a death - I think it's on page 2 now.

Nevertheless it doesn't make sense to rely on that - our fixed rate mortgage expires in 2011 and we are saving as much as possible. We're not even close to negative equity yet but we could be quite easily by then. My personal view is that the bottom will be in 2010 sometime but I don't see house prices recovering to 2007 levels for a good while after that.

Anyway, 2012 is a long way off, plenty of time to save. Even if you are still in negative equity the fact that you have been saving money through the recession will demonstrate financial responsibility and make it more likely that you will be offered a negative equity mortgage if they are available by then.

Lenders will offer existing borrowers with NE reasonable fixed rates in the future. As they will fund this by issuing fixed rate bonds to savers.

The only issue will be if sufficent funds are available to meet demand. As competition for funds will come from the Government and Companies.

lil'H

overpay, try not to worry 2012 is a way off yet. Make what overpayments you can, and do all you can to get in a position at work where you are recognised as an asset, to reduce the likelihood of redunduncy should that happen at your firm. Hopefully one or both of you will hbave been able to work towards promotion by 2012 so that if your SVR is higher you will be able to afford it.

Negative equity or not work hard, save hard and overpay is the best thing anyone can do at the moment.

Primrose

I think you are being extremely sensible about meeting this possible challenge head-on now, rather that waiting until your mortgage comes up for renewal. You are doing the right thing - overpaying on your mortgage as much as you are allowed to. I would echo previous advice to set up a separate Emergency fund of at least 6 months expenditure in case either of you lose your jobs and any surplus put in a separate savings account as you will probably have set-up fees to meet when your mortgage is renegotiated. With luck, you might both have slightly higher salaries by the time this is due to happen. Hopefully by 2012 the economic position generally will have started to ease and property prices will be rising again. Meanwhile, just hang in there, overpaying as much as you can afford to, especially if you get salary increases which enable you to pay/save a little more.

mr.broderick

b0rker wrote: »

We are in NE.

We have a JI of £45K.

Our mortgage is £700. We have no other debts.

We have agreed to save £1000 a month between us.

It can be done very easily.

In fact this month I saved £750 myself and made £250 on ebay selling things I never use so will be saving £1K alone with my partner saving £500.

Well Done.
I love people who are honest and don't claim to be in a position they are not.
Good Luck. One in the eyes of the sock puppets, god darn em.