Urgebt advice/help needed...i feel trapped!

Kensam81

Hi,

If anyone can advise in this situation I would be greatly appreciative.

My partner and I are basically a product of the credit crunch, we had a mortgage with Northern Rock which in retrospect we shouldn’t have taken (or rather they shouldn’t have given us) and we managed to re-mortgage last year onto a three year fixed deal with the Halifax that ends in Summer 2011. Since this time our financial situation has worsened with my partner’s recent redundancy from work we anticipate that within a month or two our finances will be stretched to the limit and defaulting on our mortgage payments will begin.

We have the option of moving back to my parents house but the problems with this are what to do with the flat, originally we bought a two bed flat for £138K, at the time of remortgaging it was valued at £160K by Halifax and we took a £150K mortgage, as property prices have dropped over the year we are either narrowly missing or already in negative equity at around the £150K mark. I have never sold a property before so I am a bit bemused at how to do this, plus I am not 100% sure if trying to sell is the best option. We can’t rent it out legitimately with our mortgage lenders knowledge as they will charge massive amounts to exit our current deal (and won’t guarantee that there would be a deal for us anyway on a buy-to-let), renting out without their knowledge would mean making a loss every month to cover the mortgage and other associated costs (management fee, insurances etc).

I love the sound of going back to my parents as I will be able to clear debts that we have accumulated and start fresh, getting a sizeable deposit together for a house and doing it properly rather than having people (NR) throw money at us! Other options people have mentioned to me are simply handing the keys back to the Halifax although I now understand this also carries huge risks. I just want to make sure that whatever route I choose to go down it is the best for us financially in the long run.

Help!

lynzpower

Oh hello

Welcome to MSe, you are really in the best place, hopefully we can all give you advice that will help you unravel this mess and get straight.

My main thought is, could you rent the flat out on LHA. You might be surprised how much Local housing allowance pays, so search for the rate for your local authority. If you could rent it out to someone on LHA then that might be an option. It might cover the rent and increased charges. Its worth doing some sums.

How is the market in your area. Have you looked on rightmove? Have you installed property bee? This shows you how long propertys in your area have been on the market for and what price drops are around. There might be alot of properties the same as yours on the market, I dont know.

Could you get a lodger?

Have you looked into "mortgage rescue schemes" I dont know much about these, but other MSers will hopefully be able to advise.

good luck x

hamblettamaud

Just out of interest, what are the implications of handing the keys back to the Halifax? Are you entitled to do this?

Maybe it would be an idea to stick tight. The property crunch won't last forever and you may regret having got rid of your flat when the time comes for you to look around to buy again.

Blacksheep1979

Kensam81 wrote: »

we had a mortgage with Northern Rock which in retrospect we shouldn’t have taken (or rather they shouldn’t have given us)

Yet again someone else not taking responsibility for their own actions...

silvercar

Handing the keys back means the Halifax will then sell it for the best price they can get in a short time. They will then sting you for repossession legal charges, interest until it is sold and the costs of selling. With a mortgage as large as the property value you are probably looking at a five figure sum.

Further downside is the big black blob on your credit record, making it very difficult to get a mortgage at a decent rate in the future.

Investigate:
1) whether you can claim benefit help with the mortgage interest; there is meant to be a scheme for people affected by the credit crunch. Also check you are getting any benefits you are entitled to.
2) Ask Halifax if you can rent it out, don't presume the answer will be no without asking.
3) selling up quickly. The way to do this is to put it on the market at slightly under value and hope the buyers spot it. You will then need to scramble together the difference between the sale price achieved and the mortgage- credit card loan, unsecured bank loan, family.

lynzpower

Blacksheep1979 wrote: »

Yet again someone else not taking responsibility for their own actions...

I think the op is trying to take repsonsibility for her actions for heavens sake thats crystal clear from the opening post.

Reported to abuse, unneccesary.

Blacksheep1979

and that's the liberal attitude that has got this country shafted - people not taking responsibility for their actions and others saying it's their right to be that way/it's abusing them to state that.

What if I see their original post as abusive towards bankers...

G_M

Yet again someone else not taking responsibility for their own actions...

lynzpower wrote: »

I think the op is trying to take repsonsibility for her actions for heavens sake thats crystal clear from the opening post.

Reported to abuse, unneccesary.

He's entitled to his view - it's not abuse.

No - the OP is trying to extract himself from his current problem which arguably he brought upon himself.

Fire_Fox

As it's a two bedroom flat can you take in a lodger?