Negative Equity

kelloggs36

You may have to sit tight - I got caught out in the last property crash - house purchased for 46k in 1988 and sold after tenant trashed it in 1997 for 25k! Bought current house for 46k in 1997 and don't know what it's worth at the mo, but as we extended and borrowed a bit, any equity is much less than it would have been a couple of years ago! Not bothered about the situation at present as we don't plan to move, as a previous poster said, it only becomes an issue if you want to move; if you don't have to, then don't. Bide your time, it will pick up again eventually - like my house last time, it took over 10 years to recover as it crashed in 1989 and only started to increase after we had sold at a loss!

pizzagirl

nicolabrown81 wrote: »

Hi,
Negative Equity!

It's increasingly common I believe thanks to blatant property ramping over many years

adrian_bond

hi everyone,

im in negative equity for sure too. me and the missus bought our 1 bed flat in norwich in april 2007 for £103 (valued at £105 at the time) taking out a £97500 mortgage fixed for five years at 5.5%. Mortgage multiple was 2.8 x joint income so we can manage. by my reconing the place is probably worth mid 80`s now maybie because we have improved the place a bit and its still a unique (within reason) property in a great area (central norwich NR1)

my plan is to overpay on the mortgage every month as much as i can afford until our fixed rate runs out in 2012 and then go from there. problem is now i may have to suport my missus while she goes back to uni for two years to do her masters (starting in feb), so overpaying may be very difficult (she should get tuition fees paid, and may get a bursary so happy days)! its annoing but should be worth it as she is gaurunteed a very large pay rise when she finished (40% etc) and will hopefully love her new career! i have put away a couple of month wages and filled last years isa up nearly, and transfered it to natwest who are paying a much better interest rate. this should then be my float money should i get made redundant (survived two massive rounds at work so far, and we all pray that the last one was the last!).

also, im desperate to start a pension (im 27) because i have no provisions in place and my employer doesnt contribute anything to thier metaphorical hole in the ground which is thier stakeholder. ive spoken to my IFA and he has set out a pension split (stock market and isa mix) equalling about £200 a month contributions from me, but like i said, i havent taken this plunge yet as my job has nearly disapeared twice, and im just savng like mad until things calm down.

we love our place and would definalty love a bigger one, but bigger places cost more to run and buy so we cant afford it anyway! we would love to exapand our famly sometime (especially the missus.....broody isnt the word), but should be able to graft though the next three years and come out the other side in a much stronger position.

its such a shame that we, and many others got sucked into paying over inflated prices in 2007 for it all to just tumble, but thats life and we will have learnt some prety harsh lesons from this. no one died, so no harm done. we were first time buyers, both fresh from uni and were desperate to buy a place together. even so, with hindsight, i think i would only be buying now maybie, and have a large deposit, but i would have probably spent £15000 on rent by now which is a slight comfort (as long as i ignore the fact that ive spent more on my mortgage for a place which is worth less than i paid....sniff).

anyway, ive rambled badly. we love our little place. its perfect for us at the mo, and its allowing us to send the muissus back to uni whereas a more expensive lifestyle would prohibit this hugely. for anyone else in negative equity my advise is just to sit tight, overpay what you can, and keep your chin up. youre not alone and dont make any silly desicions cos your mate in the pub recons that another "40% drop next week hugh hugh hugh" is happening. this website holds all the money knowledge you need!

thanks everyone, now lets stop calling it a ressesion and burn a few politicians for good measure. cheers

adrian

neas

the fact you want to buy another house while in negative equity, screams to me of the insane.

You were 1st time buyers, with no deposit and - 5,000 pound to your name?

You are now owners, with negative equity of 15k+ meaning you can only remain on the SVR of your current provider unless you get the equity back (pay off 20-25k worth or houses rise back up again... which doesnt seem too likely for a couple of years at least).

You want to be a 2nd time buyer, with no deposit, but now with -25,000 pounds to your name.

Anyone else see the pattern? You are overextending more and more, maybe not through choice but your debt has ballooned since the first time. Why would you want to waste more money on fees and buy a house that will lose only more money in a crash? I know you need the space but the sorry answer is you cant afford it.

You barely could afford the first house as you had no money saved just debt.

whathavewedone

I do agree that moving to a bigger place at this point in time is not a good idea because it looks as though the market still has further to fall.

However, we will reach the bottom at some point and when we do it is not necessarily a silly thing to do to borrow more in order to move.

My sister sold her 1 bedroom flat in 1996 at a major loss (I think she paid late 80s for it in 1987 and sold it for about 65k) but brought her negative equity with her to buy a 4 bedroom house in Tunbridge Wells for 90k. It needed a lot of work doing to it and she borrowed the money to do that too (about 30k). She sold the house in 2000 for 250k so had a stonking deposit to put down on her next place.

So just because you're in negative equity doesn't necessarily mean you can't and shouldn't borrow more but the timing has to be right. If you can hold fire until 2011/2012 I would do.

mbga9pgf

Its all irrelevant. Without a deposit, they arent moving anywhere (unless thy get a risky loan).

Pssst

If you think you guys have problems,spare a thought for those who bought into the idea of living in a flat..(sorry..apartment) in central Manchester.

http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=REGION^94019&sortByPriceDescending=false&displayPropertyType=flats&oldDisplayPropertyType=flats

Most were sold at inflated prices,many stand newly built and unsold,still many are un-let due to high expectations/need for rental costs and others are being sold at knock down rates as they are due to be repossessed.

Still ,the chavvers can now afford to live in them on housing benefit.

What a twist eh? City centre living for those who havent a days work in them !

That will devalue the others even more.

Buy To Let Blight-big time

phil1873football

I bought a 4 in a block style cottage in the peak unfortunately...Sept 07 for £70k fixed as I was worried incase the prices kept rising and rising and I would be left living with parents for the rest of their lives. I can easily afford the repayments which is fine as that is what I planned to achieve. I didn't want to over stretch myself so that if something happened with my job or bills rose, then i wouldnt be struggling. So I am fine with that, around 3months after moving in, I got offered a new job with a substantial rise in pay which means I can now afford a bigger and better house rather than a flat.

My dilema is this though...my property rose £5k in the first year to £75k after some improvements I made, it has now been valued recently at £65k so overall, a £5k loss from my purchase price. I took out a 100% mortgage fixed for 5yrs (my choice, so totally fine with that) so my flat is now in negative equity. The problem being is the council residents above me are a-holes, total and absolute a-holes and I NEED to move as soon as possible. I need to get up at 06.30 for work, but they seem to want to walk about back and forth back and forth and slam doors until 1am sometime 2am during the week, so very tired constantly which leave me stressed, anxious and drained....and believe me, its not a nice way to feel all the time.

Well I cant sell my house as its in negative equity so won't be able to raise the funds for my new property and on top of this...around February 2009, Mortgage Express (part of Bradford and Bingley, which is now state owned) stopped all further lending and any newlending. This was very frustrating as they had previously approved me for further lending and I was currently looking for new properties.

So i am stuck in this property for the foreseable future. But I guess, I just need to deal with it and get on with things hoping something will change.

What does annoy me though is the fact that i contributed to saving this d@mn bank helping them...but now they won't help me...I thought the Government took over these banks to save them and allow lending to start again...what seems to have happened is they've taken them over and ceased all lending...so much for the Government helping us

Anyways, thought I would let you know my predicament

mbga9pgf

Sell and move in with the parents till you have paid off the negative equity and saved for a deposit.

PasturesNew

Last time this happened, I really had no idea that prices were at a peak and dropping. I bought an early Shared Ownership house - it was a test/experiment in the area and one of only two. I bought a 50% share on a studio in a council road, 9 miles out of town in about 1990 for half of the £50k valuation. It was a hell of a job getting the mortgage because SO was so peculiar and unknown.

I sold it back to the council in 1997 and was in 5% negative equity. I remember writing out a cheque for about £1300 at the time to settle up to the building society so the sale could complete.

Back then we didn't have the information, media coverage, multi-channel TV, streaming 24 hour news broadcasting all about the housing market. Back then I knew I was selling for less than I paid for it, but I thought that was because I had it new and it was 2nd hand ... and also a small assumption that I'd been ripped off on the original valuation and ripped off on the selling it back valuation.

Now there's just more information about so more people are aware and panicky.

The only thing anybody can do is save as hard as they can to chase their value down, so that if they need to sell in the future it's more likely to be achievable.