Negative Equity Options and new house

lee_d_m

Hi,

Looking for advice on my pretty dire situation.

I'm in about 20k of negative equity with a mortgage that has reverted to the SVR of 4.99%.

We can easily meet the payments so that in itself is not a big deal.

Next year, we'd like to move, and so have been saving for the last year or so, I expect we'll have around 25k saved by the time we're ready to move next year. This amount will probably work out at around a 10% deposit if I inlcude fees and stamp duty etc.

So, at the moment, I'm thinking we'll rent out the current place and apply for a mortgage for the new one.

Assuming the mortgage market is the same in a years time as it is now, does this sounds like a viable option.

Would be happy to hear of potential issues with this idea and any other suggestions that may be more favourable financially that I should consider

Thanks

Lee

Annisele

Who is your current lender? If you're in negative equity, they might not (i.e. probably won't) give you consent to let.

lee_d_m

Santander.

Thrugelmir

lee_d_m wrote: »

Next year, we'd like to move, and so have been saving for the last year or so,

You may well obtain a better return by overpaying your current mortgage.

beecher2

I can't see how you could get consent to let without paying off the negative equity. You may well have to keep saving in order to get a deposit for your new place - if you've saved 25k in the last year, then postponing your plans for another year may well be the best option.

lee_d_m

Thrugelmir wrote: »

You may well obtain a better return by overpaying your current mortgage.

Sure, I could overpay, but if I did, that would mean I had no deposit for the new place, does it not ?

lee_d_m

beecher2 wrote: »

I can't see how you could get consent to let without paying off the negative equity. You may well have to keep saving in order to get a deposit for your new place - if you've saved 25k in the last year, then postponing your plans for another year may well be the best option.

Thanks for the reply. What I meant was, by this time next year, I'll have saved 25k, it will have taken me the best part of 3 years to have saved that much !

lee_d_m

What's the process for applying for Consent to Let, go in and talk to someone at a branch ?

beecher2

lee_d_m wrote: »

What's the process for applying for Consent to Let, go in and talk to someone at a branch ?

Phone them up and ask them. If they have rules about LTV being below a certain level, ie 75%, then at least you know and can revise your plans.

Thrugelmir

lee_d_m wrote: »

Sure, I could overpay, but if I did, that would mean I had no deposit for the new place, does it not ?

By not repaying the mortgage you are not maximising your return.

The negative equity will need to be repaid when you sell your existing property. So your deposit may well evapourate.

The chances of obtaining consent to let with negative equity is zero.

lee_d_m

Thrugelmir wrote: »

By not repaying the mortgage you are not maximising your return.

The negative equity will need to be repaid when you sell your existing property. So your deposit may well evapourate.

The chances of obtaining consent to let with negative equity is zero.

Ok, I appreciate your advice.