House value less than mortgage?

johanne

Hi,

My partner is in ALOT of debt due to self employment and cant keep up the payments on his mortgage amongst other things, after much thought he's decided to sell up and move in a a rented property with me. He remortgaged about 3 months ago to consolidate a secured loan and the mortgage into one (drastically reducing his interest rate and monthly repayments by about £500) but he still cant afford this repayment as the business has now completely failed.

The problem now is, the mortgage on the house is now £66k..... It was valued for the remortgage at 75k bricks and mortar... but the house down the road which is identical in size/layout BUT is in better condition (i.e. new bathroom, central heating, double glazing/upvc windows) has just sold this week for only 70k.

My partners house currently has a leaky roof, no hot running water, no central heating, half a kitchen (no ceiling/ only 1/2 the floor tiled/no wall tiles/bare plaster walls in need of repair), an ancient avacado green bathroom (suite + tiles) with a hole in the ceiling + signs of damp, cracked windows + rotting frames... i could go on.......

As you can see I dont think it will sell for 70k even nevermind tyhe 75k it was valued at for the remortgage.. So what would happen - worse case scenario if the house was worth less than the mortgage and hes forced to sell it for less than the mortgage??

He cant afford to do any work to it at all now (hence why its in such a bad state as he had to stop renovation 1/2 way through) so what would be his options?

abaxas

Maybe go on a credit card rampage spending spree then go bankrupt?

If your 'f**ked', go out with a huge bang. It make no difference either way.


(sorry for being so negative, but what do you have to loose)

rsykes2000

Well, that's quite possibly the stupidest thing I've read on here (referring to the post directly above, not the OP)

mustrum_ridcully

johanne there's a term for this problem - "negative equity", it's a term that'll ring a few bells for anyone who bought a house at the end of the 1980's (just before the crash).

I suggest a visit to the local CAB...

leftieM

rsykes2000 wrote:

Well, that's quite possibly the stupidest thing I've read on here (referring to the post directly above, not the OP)

I assume it was tongue-in-cheek.

I think the OP would benefit from a visit to the 'debt-free wannabe' board. They seem a supportive bunch.

filo_2

surely you have to find a way of fixing the problems with the property. if it is in that kind of a state then the cost of repairs and a basic refurbishment would easily be covered by the increase in value and more importantly make it saleable.

aderbyshirelad

Agree with leftieM. A visit to the Debt Free board would be far more use to the OP...

silvercar

what rent could he get on the property, if he can get it into a state where it will rent out, consider this option.

leftieM

It sounds too knackered to rent out. Would it not be wiser to sort the financial mess out now rather than borrowing more to get the house into a good state of repair? He might claw back the equity but it sounds like he'll be bankrupted before he has a chance to do this.

mrsS_2

you say you are renting a property- could you leave that, move into the house with him and put your rent money into paying the mortgage each month?

noyk

how many women want to live in a house with "leaky roof, no hot running water, no central heating, half a kitchen"?
Not many me thinks!