Bought a house with 2 mates and now we need a way out.

vinnyhull

Hi i'm new to this and am i a bit of a pickle. 2 years ago when we were all free and single, myself and two mates got a house together but decided that a mortgage was the only way to go as its an investment. 6months later the market crashed and to date we have £30k ish negative equity on the house. coupled with that we all have girlfriends and two of them are not expecting children (mine included), we are looking at going our seperate ways as neither of us can afford the house. my two house mates where made redundant some time ago so one of us keeping the house on is almost impossible. I personally cant as my partner has a son who goes to school on the other side of the city where she lives and as its one of the top 3 schools in the area she is reluctant to move him to the lower performing schools in the area in which i live. of the three of us two of us are named on the mortgage (myself included), but the three of us had a Document of Trust drawn up between us with our solicitor stating that the three of us are responsible for a third each of the mortgage in return for a third of ther stake in the house when we decide to part ways. can anyone help??

thanks

vinny

pawpurrs

Your only option is to sell and get a loan to cover any shortfall as I see it, other than options like BR or repossesion, that I wouldnt recommend.

Or rent it out, but unlikely if its in NE that you would get permission to do so, and the rent is likely to be less than the mortgage.

Horrible situation.

vinnyhull

the best for the three of us would be something along the lines of voluntary surrender but with us being in Ne then it would be an extremely generous lender to even consider wiping out or even reducing the shortfall as i see it, and i can see that happening to be fair.

lincroft1710

Although selling is about your only option if you want to move on, that in itself has problems with £30K neg equity. The 2 who are redundant will struggle to get a loan of £10K each, and there's no way you'd want a loan of £30K hanging round your neck with no absolute guarantee of getting housemates to pay their "shares".

You may all have to remain where you are until house prices pick up or housemates get jobs so they can qualify for loan.

Repossession would mean you could all end up owing lender much, much more than £30K, and they can and will chase you for it.

BitterAndTwisted

That house may turn out to be an investment in the much longer-term but in the short-term it's an albatross round all your necks. The only solution that I can see is if one of you sits tight in the house and gets lodgers in to cover the mortgage payments. That people would consider starting a family with £10k each of negative equity and no home of their own, bought or rented, beggars belief. Sorry if that's totally unsympathetic

Squish_21

If you rented it out and all moved out would this cover the mortgage etc.? Just an idea.

vinnyhull

the mortgage is around £800 per month, but the same properties around us are renting for £400-£500 per month. but im not sure of the legalities of renting out the property. if it was a viable option for me then i would consider renting it out. and making up the rest of the mortgage repayment myself. but as i have said im not sure of the legal ramifications of this.

theartfullodger

Sadly your lender is likely to only take it back with NE which will mean you will end up owing £30k(your est) plus costs (?£20k) and as the mortgage probably has the phrase "jointly & severally" in it you will each be liable for debt - and the lender will go after whoever they think they can most likely winkle money out of.

Sorry, not nice. Good luck!

Lodger

Geenie

My first thought is don't let this situation cause grief with you and your mates. Keep talking and looking at solutions to get out of this, as once money and debt come into the equation, too often it can lead to grief about who owes what etc and lead to breakdowns that can turn nasty.

Did your friends not take out some kind of insurance to help with mortgage payments if they lost their jobs or has the mortgage company been approached for a payment break until they can get work again?

vinnyhull

Right, the initial panic has subsided quite a bit. the initial post was due to one of my mates calling me and saying that he wanted out, this is the other lad who is on the mortgage. and the original £30k NE was a best guess based on there being one on the net on our complex which is similar to ours being up for £105k however the design different to ours and have been told that the internal design and layout is not ideal. there is however an identical home to ours on the market for £134k which is only £2000 less than we paid for ours, whether it will go for that much is yet to be seen. i have also had a look on Zoopla and that gave me an estimate of £121k, which is a lot more then the amounts a was originally panicing about. but i would still like some more advice, prefferably from people with similar experiences. and possibly anyone who has had an extremely understanding lender who has come to some form of arangement. thanks

penguine

vinnyhull wrote: »

the original £30k NE was a best guess based on there being one on the net on our complex which is similar to ours being up for £105k however the design different to ours and have been told that the internal design and layout is not ideal. there is however an identical home to ours on the market for £134k which is only £2000 less than we paid for ours, whether it will go for that much is yet to be seen.

A good place to start would probably be to get a couple of estate agents round, tell them that you need an idea of how much the property would realistically sell for if it were priced for a quick sale. That will give you a better idea of what it's really worth than Zoopla which isn't really very reliable. Then you can phone your lender and tell them you want to sell and find out your options based on how much negative equity you are likely to really have. Although others can talk about their experiences yours is going to be different especially due to the complications of multiple ownership.