Help negative equality and new home

joey298487

Hello,

I wonder if anyone can offer any advice..

We bought a flat five years ago for 91k but our mortage was 96k. It was 100% fixed term mortage for five years which is due to expire in Jan.

Our house was recently valued at 90k.

We really would love to move out of our flat to a house. The house would be about 130k. Which would mean at 85 % Mortage we would need 19k to puy down.

My question is this does 100% mortages still exist. Do you know of any company that does a loan specifically for people who dont have the 15%.

Would you wait till the housing market picks up or take out a 25k loan ?

Any advice would be great

mbga9pgf

1) Its negative Equity


2) Unfortunately, (or fortunately dependent on your perspective) the FSA are looking at banning 100% mortgages. Even if you could find someone to do it, the Interest rates would be horrific.

Why not save the 19K over a couple of years? You will save yourself a fortune in the long run becuase

1) Prices are set to fall again
2) The interest rate you will get will be much better.

Why are you so confident the housing market is going to "pick up" again? Even if it did, expect mortgage lending from here until 2014 to get more restrictive, not less.

makingbetter

A friend of ours recent had his mortgage pulled at the last minute when they discovered his deposit was aloan (it wasn't an obvious loan, not was it even a actual loan,in a way- basically he had inheritance tied up in something and his parents offered to put up the cash until it could be relased from the investment)

poppysarah

Save up. You might have enough to cover the NE on your place when you sell it.

makingbetter

19k is a huge amount to save. Even if you could spare £200 a month that would be nearly 8 years.

joey298487

thanks for your advice but saving up is not going to help me.

it would take to long.

There must be thousands of people like us who are stuck on the first run of the ladder.

there must be a solution for this. I mean how is the market surpose to grow when people have to have at least 20k in order to buy a house.

im not even a first time buyer i just bought at the wrong time.

i guess we are going to have to rent a house and rent my flat.

there must another route?

mbga9pgf

Unfortunately not. This is the end state of uncontrolled house price inflation I am afraid. You are correct in that a lot of people are stuck, but until houses become more affordable for all (and I mean relative to wages, not some poppycock government scheme) the housing market is stuck in the doldrums. I would seriously look at pumping as much cash into overpaying the mortgage as possible, as this is a pretty efficient way of saving (assuming the interest on the mortgage is more than 3%).

My advice remains extant; overpay the mortgage by as much as you can comfortably bear, cut down expenditure and try and boost your salary, either by pay rises or by training for a better job. We have all been sold a kipper by the FSA and Labour who refused to limit mortgages as a multiple of salary.

Running_Horse

Having been in negative equity like yourself (in the 90s), I would not be brave enough to risk things getting even worse by increasing my exposure. However, in the last slump there were schemes to let people transfer their negative equity to a new property. Seem to remember hearing about similar plans this time, but until prices rise, the best way is to save and/or overpay the mortgage.

mbga9pgf

makingbetter wrote: »

19k is a huge amount to save. Even if you could spare £200 a month that would be nearly 8 years.

It wouldnt be if you make mortgage overpayments. If you overpaid 200 quid a month, mortgage interest average 4.5%, you would save 19K in 7 years.

You are also forgetting that whilst things are bad, salaries will climb over time (so will taxes?) and thus your 200 quid overpayment now should be a lot more in a few years time.

ginvzt

joey298487 wrote: »

t
There must be thousands of people like us who are stuck on the first run of the ladder.

there must be a solution for this. I mean how is the market surpose to grow when people have to have at least 20k in order to buy a house.

im not even a first time buyer i just bought at the wrong time.

i guess we are going to have to rent a house and rent my flat.

there must another route?

I didn't know five years ago was a bad time to buy? Buying a flat may have been a bad move in first place (this country seem to have something against flats and they are not build very nicely - compared with continental Europe)

You need to start saving now! Actually, you should have been saving all along if you thought you will want to move in 5 years time.

Eric1

joey298487 wrote: »

there must be a solution for this. I mean how is the market surpose to grow when people have to have at least 20k in order to buy a house.

Two solutions:
1) Lots of lottery winners.
2) More realistic prices.
Not sure which is more likely