HELP, are we stuck in our house?

benz52

Hi,

This is the situation and looks like we are stuck in our house.

* Bought brand new house at peak in 2007
* Now need to relocate abroad
* Value of the house is at least 10% down as per HPI
* Tried selling the house at original price, didn't sell. 10 weeks on the market and no viewings because the builders around here are building cheaper and bigger houses. The builders will be out within the next 18-20 months.
* Tried looking for BTL mortgages, but the market is only offering 60% LTV
* Have initiated contact with current lender, awaiting response. But they gave clarified that I cannot let my house with the current mortgage I have

At the moment, the options we see are:

* Sell the house for a lower price and take a big loss
* Stay in the house and lose the opportunity that is being offered abroad until the house price comes back to 2007 peak, which I believe will take another 2-3 years or even more.
* Don't know, but let the house regardless of what current lender says?? Is that legal??

Would really appreciate some great pointers from professionals..

Thanks
T

PasturesNew

If you sell it at a big loss, you've not got something lurking here that you're wholly responsible for. If you sell it at a loss you've freed yourself up from having to think about it and sort out long-distance problems. If you sell it at a loss you get to have a fresh start in your new country with your outgoings (the debt) known and manageable.

So, the question might be: where would you raise the money from to be able to settle the mortgage? When you sell at a loss, the lender wants to know where ALL their money is, this means you will have to do one of:
- borrow the money to pay them off before completion (your solicitor will be able to tell you close to the date exactly how much is needed)
- negotiate with the lender for the outstanding amount to become an unsecured loan, something they might not be keen on if you're skipping the country.

Having a property sitting there is costing you. It is costing you the mortgage repayments, the council tax, insurance, some basic bills ... and an empty property is a risk.

Selling and crystallizing your losses is hard to swallow, but at least you've removed risk/stress and removed the doubt of how much money you might make/lose by keeping it and renting it.

maninthestreet

How much is outstanding on the mortgage, how much did you pay for the house??

PasturesNew

Looking at your RM entry, I'd be looking at offering £165k really ... if I was caught on a good day. Especially knowing you might find that amount acceptable just to get rid. *mulls over the idea of moving to Corby*

DVardysShadow

So how much money would you need to get BTL approval?

Evilm

What is your LTV? If you can get an offer higher than the amount outstanding on the mortgage - including early payment penalties - then all you have to do is bite the bullet and "lose" some of the equity that is no longer there.

If it would mean a sale less than the mortgage value you would have to make that up somehow.

I wouldn't personally pursue letting the property out without the lenders consent.

benz52

We are in positive equity if I did not mention that.

Loopgames

I thought as long as the tax man knew you were renting then the lender only cares that the mortgage is paid on time?

Cannon_Fodder

If you have equity leeway, drop the price and get it sold.

Trying to remotely manage a property from abroad, or incurring 15% letting agent fees, will take a toll on your funds if you don't.

Think of this as though moving house in the UK. You do not need to worry about taking a drop in price, if the place you are going to has also had price drops - the two cancel each other out, and you may end up gaining from smaller gaps in the property ladder.

Many countries are also suffering in their housing market. If you have chosen one of those countries, you are gaining from the global credit crunch there, and losing from the global credit crunch here. Call it quits and move on...

Cannon_Fodder

Loopgames wrote: »

I thought as long as the tax man knew you were renting then the lender only cares that the mortgage is paid on time?

Possible repercussion;

A thread elsewhere on the board today, saying when their Lender discovered property was let, they had 7%+ rate imposed and were told to find another lender...

GDB2222

benz52 wrote: »

* Stay in the house and lose the opportunity that is being offered abroad until the house price comes back to 2007 peak, which I believe will take another 2-3 years or even more.

What would you do if house prices don't go up over the next 2/3 years, or even go down? How serious would that be? You need to weigh that against the known downside of crystallising your loss.

I agree with others that trying to manage a rented property at long distance is a nightmare. Besides that, yours is a very nice owner-occupier house, but is there any demand to rent houses of this size in Corby?

There are around 10 4-bed houses for renting on Rightmove within a mile of your houses. The highest rent on offer is £800/mth. Allowing for all the expenses, voids, etc, say you had £6,000 - £7,000 a year left over to pay your mortgage. Would that be enough to at least cover the mortgage interest, or would you have to subsidise your tenants from your work abroad?