Urgent Mortgage advice (any advisors?)

meandbex

Hi all, forgive my kind of ignorance in realtion to how our mortgage works but i need to clarify in my mind that what i am thinking is correct please, and if i am correct is to ascertain s to what i can maybe do.

In march 2008 we bought a house from Barrats on 75/25 basis. we own 100% of the house but for 75% of its value.The other 25% is owned by barrats as it were as a charge that can be paid anytime within 10 years. The house we purchased was £163,400. The mortgage we obtained was £123000 or therabouts-(75% of its value remember)

The problem we have is as follows>When we put our house on the market 15 months ago was valued at £138,000. We have since been told that we need to reduce the value to £123000 approximately-due to the area and the housing market.I targeted Barrats who had reduced our style of home 6 months after we bought one to £126000-i was not happy obviously about this. I was told by Barrats Midlands Director that their had been a shift in the market, they were not meeting their sales deadlines and on that basis felt obliged to reduce many house on the building estate!!

The whole idea of moving is for a number of reasons really- the area has become really bad with crime and one thing or another and it has affected my partner who has stress and panic attacks for fear of going outside. We also need or want to be closer to the inlaws for childcare arrangments but all in all we are DESPERATE to get away from the area.

So apologies for it being longwinded, but IF we sold the house at say £123000 would that then mean we would still owe Barrats £30,000 and therefore we are in NEGATIVE EQUITY so we are the biggest losers, and Barrats win every time, or is it the fact that we would owe them nothing??? I am a bit confused.

We have seen a Redrow home on a 85/15 and the cost of the house is £174000 minus the 15% = £150,000. Is there anyway given the circumstances as outlined that we would be able to move or obtain a mortgage?

Would we be better of changing our current mortgage to a buy to let one??

Please please can someone offer me some help or advice as my partner is getting iller and iller.

Thanks for taking the time to read this. :T

opinions4u

It depends on the scheme used, and you should check the small print provided by builder and checked by your solicitor.

Many builders did have schemes that meant they effectively lent you 25% of the house value interest free over a period of up to 10 years. That's a real debt and doesn't go away just because the value of the house has fallen. So I suspect you have a big problem heading your way in the not too distant future.

so we are the biggest losers, and Barrats win every time

Of course if house prices had risen, the builder would not have benefited in any way shape or form and you would have benefited. So it is a two sided coin.

We have seen a Redrow home on a 85/15

The old cynic in me suggests that the nature of these schemes contributes to reducing the value of the property after purchase. If that is the case, do you really want to make the same mistakes you made when you bought your present dream house inder a similar scheme?

BadgerFace_2

Many of these schemes are linked to the property price, so if it goes down, the share you pay back also goes down.

So for instance if you owed 25% of £163400 in 2008, that was £40850; but now in 2010, you may owe 25% of £123000 which is £30750. SO in this instance, Barratt are sharing the loss with you.

By my calculations, you owe Barratt £31k on top of whatever it costs you to clear the mortgage, so probably about £30k of negative equity.

From the figures, it looks like you put no deposit at all down. Did you think you could buy a house with someone else's money, then sell it for 40k less and not pay the difference? This is a big down-side of shared equity, when people have no idea what they're getting themselves into! How do you intend to pay the £40k in 7 years time if you don't move? If the mortgage market stays as it is, then that option will not be open to you unless the house value has massively increased.

You will not be able to sell the house, as Barratt will not let you unless they get some money, which it looks like they won't be able to.

It sounds harsh, but stop looking at houses beyond your means and think about how to make this one work.

Conrad

you need to stop letting things stress you out and change the way you view it - or as you say your mental health pays a price.

!!!!!! like this happens. You need to recognise you were very happy when you bought the place and over the moon you didn't have to put that 25% deposit down.##You also watched the news back then and would have been well aware we were in a recession and credit crunch that began more than a year prior.

You must have seen all the news that prices would fall for a while.

So you entered that deal and you need to stop feeling like a victim and trying to place blame with the builder. Of course prices fell - what did you expect when many of the worlds lenders had gone bust? It is your responsibility to take notice of the news as opposed to football / Kerry Katona / Iceland food / Sky TV / The Sun paper.

So here you are - now make a realistic plan and dont expect too much.

I suspect you will end up having to sit this one out.

Remember there are millions of children who live in cardboard boxes, even in America now, so you need to accept your situation is in fact not nearly as bad as manyand knukle down.

In time prices should rise anyway.

Good luck - d=hope you don't think me harsh - just wanted to give you a metaphoric slap - and pay attention to the news in future - far more important that Hello mag etc.

Lynsey

meandbex wrote: »

I targeted Barrats who had reduced our style of home 6 months after we bought one to £126000-i was not happy obviously about this. I was told by Barrats Midlands Director that their had been a shift in the market, they were not meeting their sales deadlines and on that basis felt obliged to reduce many house on the building estate!!

This happened on lots of new build estates though and even now the prices being asked are lower than the peak (much lower).
A lot of estates were "moth-balled", just left unfinished during the crash. There now seems movement in the new build sector (in my area at least).
The price you agreed to and the value now is not Barratts responsibility - it's a gamble when buying a property. Generally over time you will make money on a property - but it's not a God given right.
I bet Barratts would love to be at the peak now, their profits will be suffering due to lower prices.
Shared ownership is not for me, but good luck to those who take this route.

Lynsey

SouthCoast

Comments deleted.

https://forums.moneysavingexpert.com/discussion/comment/31319045#Comment_31319045

meandbex

SouthCoast wrote: »

Comments deleted.

https://forums.moneysavingexpert.com/discussion/comment/31319045#Comment_31319045

all paid and sorted up to date :beer: (changed jobs better pay )

meandbex

Conrad wrote: »

you need to stop letting things stress you out and change the way you view it - or as you say your mental health pays a price.

!!!!!! like this happens. You need to recognise you were very happy when you bought the place and over the moon you didn't have to put that 25% deposit down.##You also watched the news back then and would have been well aware we were in a recession and credit crunch that began more than a year prior.

You must have seen all the news that prices would fall for a while.

So you entered that deal and you need to stop feeling like a victim and trying to place blame with the builder. Of course prices fell - what did you expect when many of the worlds lenders had gone bust? It is your responsibility to take notice of the news as opposed to football / Kerry Katona / Iceland food / Sky TV / The Sun paper.

So here you are - now make a realistic plan and dont expect too much.

I suspect you will end up having to sit this one out.

Remember there are millions of children who live in cardboard boxes, even in America now, so you need to accept your situation is in fact not nearly as bad as manyand knukle down.

In time prices should rise anyway.

Good luck - d=hope you don't think me harsh - just wanted to give you a metaphoric slap - and pay attention to the news in future - far more important that Hello mag etc.

not in hello magazine-just a hard working bloke thats all that didnt keep on eye situation.

meandbex

Conrad wrote: »

you need to stop letting things stress you out and change the way you view it - or as you say your mental health pays a price.

!!!!!! like this happens. You need to recognise you were very happy when you bought the place and over the moon you didn't have to put that 25% deposit down.##You also watched the news back then and would have been well aware we were in a recession and credit crunch that began more than a year prior.

its not so much that-its the area.