We want to pick your brains

stintond

fooman wrote: »

have you worked out how much Rent x 72 payments is ?


Think you might find its nearly as much as most negative equity

I dont know what it is but dont forget mortgage payments are mostly interest as well so either option has a waste in it.
We can compare the two amounts butdont forget ,its not just the neg equity , there is also the total amount of interest which will be charges , I would say you could probably double the 48k once you allow for the interest. My rent 550 a month 6600 a year , times 5 years 33000 , a lot of money indeed but less than 48000 times two

stintond

peachyprice wrote: »

Please explain how it's costing you £48k, I'm obviously missing something fundamental here.

It doesn't cost you anything unless you want to sell your house.

You're not adding £48k to your mortgage.

If prices never increase and you remain in negative equity for the next 20 years your shortfall would still be covered by your bankruptcy.

Where is the risk, and where's it costing you £48k

If you are in neg equity , you are in a position where you owe the cost of the house you are in (in our case 80k) plus the cost of the neg equity (in our case 60k) in total you have to pay the bank back 140k plus interest( over 200K)
When I buy a house for 80k , I pay the 80k back plus interest , got it?

peachyprice

stintond wrote: »

If you are in neg equity , you are in a position where you owe the cost of the house you are in (in our case 80k) plus the cost of the neg equity (in our case 60k) in total you have to pay the bank back 140k plus interest( over 200K) When I buy a house for 80k , I pay the 80k back plus interest , got it?

If you stay in the house you pay the bank back £80k plus interest, not £140k plus interest.

You only pay back the negative equity if you move out of the house.

Once you are BR you will never be liable for any negative equity shortfall.

Got it?

fooman

stintond wrote: »

the poiny I want to make is the fact thatby staying in the neg equity house they have to pay off the neg equity before they can start actually paying for the house. In my case , I reckoned it would have been 6 to 7 years before I was back in equity , in comparison , 6 years from now , I hope to have a lot of equity in my new house.
So th op needs to consider both scenarios and , looking forward , say 5 years , ask themselves which situation would make them better off

Trying to work out how the negative equity is a debt ?


I owe 210k on my house and it will be paid for in 18 years and is in negative equity by 30k at the monent

If my house is still only worth 180k in 18 years time i will still only have paid the outstanding balance on the mortgage,

Then i have a 180k all paid for :j

peachyprice

Exactly fooman, you don't suddenly owe your bank £240k just because your house is £30k in negative equity.

stintond

Ok I didnt know this , please accept my apologies but I assume then that I must either stay in the house for the rest of my life or still pay back the neg equity when I leave.
We couldnt stand the area where we lived , we were being pestered so we would have left anyway but thank you for clarifying this point

peachyprice

Every time you make a mortgage payment you are decreasing the negative equity (asssuming prices have stabilised) so it really wouldn't take that long to no longer be in negative equity, and certainly not the rest of your life.

stintond

I estimated that in our case we would be breaking even after 6 or 7 years , I decided that it was too long to have to work long hours for this length of time to then be worth nothing , in effect.
But , if you are telling me I could have just paid the value of the house(80k) and then the house was mine , then this is something I didnt know and I wasnt told about

stintond

"rented accomodation, which TBH, is a route we are now thinking of taking. We still don't feel completely debt free with the SL hanging over our heads."
I hope you dont mind me quoting you like this but I am just very confused

tic_toc

Now you have got the NE thing sorted, can we get back to our original question????? Lol.

In short we seem to think the general view is that once BR the OR is unlikely to force us to have the house repo'd.

In relation to the arrears. Our current arrangement with our mortgage company is that once we have paid 6 full monthly payments they will allow us to add it to the original mortgage.
Are we still going to be able to do this after BR due to it being over the £500 limit. Will it be classed as new credit even though its being added to the original mortgage and we wont be taking out a new mortgage?

About 90% of our NE is on a secured loan.

In an ideal world it would be great if the OR would write off this secured loan leaving us with just the one mortgage. But surely this isnt possible???? That would make our lives so much easier just having the one mortgage, but dont know if it can be done with it being secured.
Any views/knowledge on this please????