stuck with house in negative equity

lucus

Hi. If there is anyone out there who can help me with any advice it would be great. Basically i bought a house in 2006 for 110,000 with a mortgage of 113.000 5 year fixed with, you guessed it, northern rock. house needed quite a bit of work etc. now 3 years down the line, my circumstances have changed and i really need to move. recent valuations have put my house at around 90 to 95.000. which puts me in negative equity. (redemeption fee 117,000). Is there anyway i can move house? if i sold my house for 95, for example, could i move into a house bought for 95 with the same mortgage? if that was possible can i do that with a house being sold on a shared equity basis? if not is there any other way i could do it? cheers for any help.

beecher

No, you can't move until you clear the mortgage - if you sell for £95,000 and need £117,000 then you need to come up with the £22,000 before NR will let you sell. Once you come up with that money you need a further 10% (at least) deposit) for a new place. If you got permission to let the house, would you be able to rent it out for enough to cover the mortgage? It is the only suggestion I can come up with.

Gorgeous_George

I think that some lenders will allow you to port the negative equity. I doubt NR will be one of these.

You could talk to your MP. A little pressure might make them (NR) see sense.

Letting might work but it is not a magic wand. Being a LL can be stressful, time-consuming and expensive (especially if you get the wrong tenants).

GG

beecher

Gorgeous_George wrote: »

I think that some lenders will allow you to port the negative equity. I doubt NR will be one of these.

You could talk to your MP. A little pressure might make them (NR) see sense.

Letting might work but it is not a magic wand. Being a LL can be stressful, time-consuming and expensive (especially if you get the wrong tenants).

GG

Which lender is allowing people to port negative equity? I think contacting MPs is a waste of time personally.

lucus, are you sure your mortgage is for £113,000? If it is for say £90,000 with an unsecured loan on top you may have options.

lucus

your right actually its 102,000 with the rest as an unsecured loan to make it up to 113. what other options can that give me?? thank you so much to guys who have replied it is much appreciated.

SDW22

Hi I am in a similar situation. I have a mortgage of £135k total currently made up of £106k secured and £29k unsecured with Northern Rock. My relationship has broken down and the only option we have is to sell. I have visited a solicitor and he said from the sale of the house we are only required to pay off the secured part. We will then have to agree a new individual agreement with NR on how to split the remaining amount as our house is valued at £115k so we have negative equity. This is my problem as I will be 'asking' my ex to sign for £12.5k if the house sells for the £115k.
I looked at renting the house out but NR have strict rules on who they will allow to rent such as the amount of equity and the rent amount V's mortgage repayments. They have a page on their website that asks you questions and gives you an answer - we failed!!
My solicitor also said that NR are no longer acting as a mortgage lender/building society but more as a debt collector so dont expect much flexibility from them.

Hope this helps.

Deleriad

lucus wrote: »

your right actually its 102,000 with the rest as an unsecured loan to make it up to 113. what other options can that give me?? thank you so much to guys who have replied it is much appreciated.

In theory you can pay off the secured part (102K) at which point the unsecured part (11K) becomes a variable rate loan at (I think SVR+5%). That means you're talking about a roughly 10% rate now which will go up as the SVR goes up.

However, if you can't sell your house for more than 102K or don't have enough savings to make up the difference then, basically, you're stuck. If you do manage to sell the house you will need a minimum of 10% deposit on a new place with (at least) an 11K variable rate loan hanging over you so it is *very* unlikely that another lender would offer you a mortgage.

Basically, as someone who is in a similar position - though one not quite so bad - you have no normal way out. You could try letting out the house but it is *very* unlikely that any rent would cover your mortgage interest payments (let alone the capital repayments) and NR would almost certainly not give you "consent to let" which would mean you would have to do it illegally.

Essentially you are caught in a trap. You either need to get access to enough money to be able to pay your way out of the mortgage. The absolute minimum is paying off the secured amount (102K) and working to pay down the NR loan as quickly as possible. Or you have to stay there. Or you have to break your contract by letting the place illegally, moving to somewhere cheap to rent and risking having NR find out and repossess the house. No easy answers that I know, I' m afraid.

GSXRCarlos

do you have family you could stay with if you did manage to sell?

Be prepared to stay with these people for more than 12 months while you sort your finances out if you do

geoffky

GSXRCarlos wrote: »

do you have family you could stay with if you did manage to sell?

Be prepared to stay with these people for more than 12 months while you sort your finances out if you do

I have just noticed....A FORTY YEAR MORTGAGE....OH MY GOD,,:eek::eek::eek:

GSXRCarlos

geoffky wrote: »

I have just noticed....A FORTY YEAR MORTGAGE....OH MY GOD,,:eek::eek::eek:

lol - yeah, it's only to keep my repayments down while i do work on the house (payments are £400/month) then after my 3 year fixed period i'll reduce back to 25 years (or less) and pay out more per month.

I just need the caash in the bank at the minute

Phil777

SDW22 wrote: »

Hi I am in a similar situation. I have a mortgage of £135k total currently made up of £106k secured and £29k unsecured with Northern Rock. My relationship has broken down and the only option we have is to sell. I have visited a solicitor and he said from the sale of the house we are only required to pay off the secured part. We will then have to agree a new individual agreement with NR on how to split the remaining amount as our house is valued at £115k so we have negative equity. This is my problem as I will be 'asking' my ex to sign for £12.5k if the house sells for the £115k.
I looked at renting the house out but NR have strict rules on who they will allow to rent such as the amount of equity and the rent amount V's mortgage repayments. They have a page on their website that asks you questions and gives you an answer - we failed!!
My solicitor also said that NR are no longer acting as a mortgage lender/building society but more as a debt collector so dont expect much flexibility from them.

Hope this helps.

Glad to see you've made some moves forward.

To the OP, the court can order the lender to let you sell, the decision of the court will of course depend on your circumstances. Your first port of call should be to Northern Rock to see what they will do, I am sure they are lending again so there should be some alternatives. Some lenders will let you transfer your negative equity but it comes with high rates.