Negative Equity

ukblondie1

We remortgaged a few years ago and the value of the mortgage was around £87K, the value of the property now is around £75K which means we will have a short fall.

As things are tight we are thinking about going for rented accom after selling but not sure what happens about the shortfall and what fees will be included and payments back.

I have tried to phone Northern Rock, but the department is moving and is unable to answer the phone

Does anyone have any similar experience of this?

Thanks

silvercar

You have two options. either get a loan or savings from elsewhere to make up the difference to clear the whole mortgage amount, or persuade NR to turn the negative equity to an unsecured loan. They may agree, they may not. The bottom line is that no-one will buy your property with that charge (the mortgage) on it, so one way or another you need to get it removed.

ukblondie1

Credit is shot, wondering if NR would chang to unsecure without credit check but doubt it......

lincroft1710

Selling your home could easily swallow £2K in fees, so in theory you will only end up with £73K, making the shortfall larger. Are you sure you cannot stay where you are for a few years.

silvercar

ukblondie1 wrote: »

Credit is shot, wondering if NR would chang to unsecure without credit check but doubt it......

Always worth asking, if a lender wants to clean up their mortgage bok it is surprising what they will agree to. Effectively they are already lending you the money unsecured as repossessing would not give them back the negative equity portion. The only difference having it on the mortgage makes is that when house prices eventually rise it will be secured. The downside for them is that you may be less able to pay your mortgage in the meantime.