Negative Equity - remortgaging

Emma18

Can anyone offer advice? My brother bought leasehold house four years ago at height of market. He is on low income (recently had to take significant drop in salary). He thinks he is now in negative equity, although hasn't had a valuation for a couple of years.

His fixed rate mortgage ended over a year ago and he is now on the Santander SVR (currently 4.24%). His original deposit was £20,000 and the mortgage is for £167,000. He is on interest only - he was advised this in the beginning and regrets it as now he can not afford to go on a repayment mortgage.

If I understand correctly, his LTV will now be at least 100%....?

Does anyone know if there is a better deal he will be offered or will he just have to hang in there until the market picks up?

He doesn't want to lose the house as that will be his £20,000 gone too - he'll have nothing.

Any advice gratefully received - thank you!

beecher2

He's stuck on the SVR, and needs a plan of action for dealing with the negative equity and starting to repay the capital,.

Henry_P_Chester

He also needs to plan for interest rate rises. Which look to set to start withing a few months. Each 0.25% rise will add roughly £25 per month to his mortgage.

Emma18

Thank you. We are going through his budgeting now and know that the mortgage payments are likely to go up - thanks for giving me that figure we can use.

It seems a no-win situation....does anyone know if there comes a time when it's just better to give in and sell up? I guess it would be better to do that than end up with problems repaying and ultimate repossesion. Do you get a mark against you if that happens that would stop any future mortgage applications once he was back on his feet?

beecher2

Might be better to sell up, particularly if he can break even in doing so. Have a look at nethouseprices or ourproperty to find out what similar houses have gone for recently.

Thrugelmir

Emma18 wrote: »

It seems a no-win situation....does anyone know if there comes a time when it's just better to give in and sell up?

Why? He has a home.

As you are doing work through the financial budget. Find a way of starting to pay off the capital owed. Even if just a few pounds to start with.

Rent a room out, take a part time job. Do anything to bring in more income.

Life is difficult at times. Don't give up until all options are explored, and do allow time. Take the long term view.

Emma18

The main trouble with that option is wife and young child to consider. I don't suppose that will have any bearing on the situation....!?

ILW

He needs to up his income or reduce expenditure if he wants to keep the house.

Thrugelmir

Emma18 wrote: »

The main trouble with that option is wife and young child to consider. I don't suppose that will have any bearing on the situation....!?

Without knowing detailed circumstances just not possible to give a precise answer. Amazing how little you need to get by with if you have to. Support from family and friends helps as well. Ultimately its about survival, not what anybody else thinks.

When I bought my first flat. Interest rates went by 1% a month for 4 consecutive months shortly afterwards. I used to walk round Sainsbury's with a calculator. Taught me to budget well..............

Emma18

Thanks Guys. Will pass your comments on. You are right - he has a home and that's the main thing when you get it into perspective.

dimbo61

so he is paying about £590 a month at the moment for a £187K property
Just keep paying the mortgage and overpay what ever he can afford each month