Negative Equity - Possible way out?

poppysarah

Yellabowley wrote: »

I'm trying to offer an alternative, and at that one which eats into the profits of the lender. If that lender chooses to pass this loss of profits on to borrowers then the borrowers will go elsewhere. If this prevents one person going down the IVA or bankruptcy route then that's better for everyone..

Speak to your mortgage company.

Do you have any savings at all?
If not then you would need to take a loan for the deficit. Which if the house isn't selling at the moment will probably only get larger.

Why do you need to relocate? Is this a long term thing or short term?

Yellabowley

poppysarah wrote: »

Speak to your mortgage company.

Do you have any savings at all?
If not then you would need to take a loan for the deficit. Which if the house isn't selling at the moment will probably only get larger.

Why do you need to relocate? Is this a long term thing or short term?

Savings were the first thing to go when the wheel came off! We need to move long term due to proximity of care for the little 'un. We've got a couple of options including renting the house out but we'd far rather get rid and start afresh.

The point of the post was not so much looking for advice and more to make people in the same situation aware that there's another option.

Yellabowley

mbga9pgf wrote: »

Bit of Wikipedia for you:

http://en.wikipedia.org/wiki/Moral_hazard

Something lost under Labour in the past 13 years.



Sound Familiar?

I hope by now i've made it clear that I am not looking for a bail out or charity. I have never asked for a single benefit from the state during my adult life.

My opinion on this matter is simple. If my suggestion costs a mortgage lender £10k but prevents one person with £40k debt going bankrupt then i'll be happy as I've saved the taxpayer money. Even if the lender goes belly up it's 10 instead of 40.

poppysarah

Yellabowley wrote: »

Savings were the first thing to go when the wheel came off! We need to move long term due to proximity of care for the little 'un. We've got a couple of options including renting the house out but we'd far rather get rid and start afresh.

The point of the post was not so much looking for advice and more to make people in the same situation aware that there's another option.

Well loan to sort the deficit... but speak to them first to see what they say.

But you're right not to rent. It might be stressful and you need to put your energy into your family.

Is there any charity for the illness that might be able to help with anything?

olly300

Yellabowley wrote: »

I hope by now i've made it clear that I am not looking for a bail out or charity. I have never asked for a single benefit from the state during my adult life.

My opinion on this matter is simple. If my suggestion costs a mortgage lender £10k but prevents one person with £40k debt going bankrupt then i'll be happy as I've saved the taxpayer money. Even if the lender goes belly up it's 10 instead of 40.

You don't realise that you are about 20 years to late for the scheme you have dreamt up.

In the 90s recession it was possible to do what you posted in your initial post, now it is not.

Lenders would rather you pay them back at £5 a week for the rest of your working life and into retirement or force you into bankruptcy, then let you off paying anything. They are also very happy to ruin your credit file as why should you be able to get credit when you can't pay them back?

So yes sell your house but be prepared for the lender to turn your shortfall into an unsecured loan which they will get you to pay off.

mcc100

A couple of points Yellabowley.

If you have no interest from potential buyers at £170k, then it is unlikely that you would achieve a selling price of £157k.
Any serious buyer in this climate would probably make an offer of between 10% - 20% below the asking price. ie between £136k and £153k and would not consider paying more than £153.

Regarding negative equity it does not sound as though you are old enough to remember the late 80's and early 90's when hundreds of thousands of homeowners were stuck in negative equity for many years and were unable to move.
Many just handed their keys back to the mortgage lender not realising that the property would be sold as a repossession and that they would be responsible for paying any shortfall and were chased for the balance for many years.

olly300

mcc100 wrote: »

Many just handed their keys back to the mortgage lender not realising that the property would be sold as a repossession and that they would be responsible for paying any shortfall and were chased for the balance for many years.

Not all of them where chased for the short fall which is why the keys were handed back to the lenders.

Lenders changed their contracts around the mid-90s due to the increasing numbers of people doing this as the loophole got into the newspapers.

And yes I know someone who did this who wasn't chased. While others just sat it out as they were too late to do this, or for most of them too honest.

papermoney

It's probably worth mentioning that when I entered into an insecure loan with my previous mortgage company for the shortfall, it did not effect my credit rating at all. The only issue I came across was when I was applying for my current mortgage as it already showed I had a mortgage with the previous mortgage company on my credit rating report, so I just had to proof to my solicitor that I was no longer liable for the previous house.

neas

Right so we've gone through all the permuations of 'maybe i can pay them less as i am in NE and borroewd at 95% and prices went down' scenarios.

Shall we see a rihtmove link please?

Trollfever

Bear in mind that the mortgage lender has 12 years from last date of contact to chase a mortgage shortfall (20 years in Scotland)

They would prefer to sell the debt on than accept a loss.

There has been a lot of confusion about how long the lender has to pursue you for a mortgage shortfall under the Limitation Act 1980. This has now been clarified by the Court of Appeal in the cases of Bartlett v Bristol & West plc, Paragon v Banks and Halifax v Grant. The court decided that the limitation period for mortgage lenders trying to recover mortgage shortfall debts is 12 years under Section 20 of the Limitation Act 1980.

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=11_mortgage_shortfalls