I am in a real mess! Advice needed please

amilea

This might be quite a long post...Where to start!

In July 2007 I bought my house (with my now ex partner) for 129,000 - however as first time buyers was completely naive to the whole buying process and did not get a good deal on our mortgage.

We were advised to take out a Northern Rock mortgage where we would be able to get 100% mortgage and they would provide us with a loan for a deposit - our total mortgage value is £143,000 - a big mistake I know! It is also an interest only mortgage!

In Summer 2009 our relationship broke down and my partner moved out refusing to pay the monthly mortgage as I was still living there. This has gone on now for 18 months - I have paid all of the mortgage each month on time.

Our initial thoughts were that we would wait to sell to see if the house prices would go back up - this has not happened and the house is now worth between £115,000 - £120,000.

Northern Rock now NRAM - do not want to help, I am now out of a fixed period and cannot remortgage anywhere because of the negative equity.

I am in a position where I can not afford to take the mortgage on by myself and do not have any money saved for a deposit for a new property. I am completely stuck and do not know what to do. Should I rent the property out? Sell it?

What legal position am I in in terms of negotiating a settlement?

Any advice would be really, really welcomed!

Thank you very much

betmunch

Why not continue as is?

If you feel house prices will go up in the long run as most people do then simply continue to pay your mortgage.

Alternatively overpay your mortgage when you have the money to reduce the balance, this will also mitigate the damage when rates do rise.

As for legal position negotiating a settlement, I dont think you have any legal recourse unless you can prove there was a better option available to you which was considered and ignored by the Mortgage Advisor, although someone may correct me.

How long do you have left on the mortgage term?

amilea

My ex partner wants to get the house valued and I feel will want to push a sale of the house. The remaining term is 22 years. House prices may well go up but it will be in the long term rather than in the next couple of years.

I just feel really stuck.

GMS

The sale of the property cannot be pushed by them unless they agree to make up the shortfall between the mortgage balance and sale price.

NRAM can stop a sale if it does not clear their balance as they can refuse to release the charge.

Write a letter to NRAM explaining your position. They may be willing to come to an arrangement

betmunch

let him get the house valued, even let it go on the market, just dont accept less than the secured part of your mortgage plus and selling fees to the EA. (and dont sign up for and EA unless its no sale no fee)

Its all well and good trying to get you to sell, but if you cant get a buyer then its tough really!

If you want to change to a repayment mortgage just go to a mortgage calculator on line and put in the balance, interest rate, and 22 year term and it will tell you how much you should be paying. Pay this amount rather than the interest only figure and you will start paying off the neg equity

Senior_Paper_Monitor

You are (both) stuck ! That is what happens when you sign a contract (its binding and for better or for worse).

If he pushes for a sale you will both be liable (joint and several) for the shortfall.

The existence of that debt (even if correctly maintained - if it isn't both your credit ratings will be trashed) will affect your future borrowing capability until it is cleared, so that is presumably some years before either of you can clear the debt, raise a deposit and get another mortgage.

Is your current (and immmdiately forecast) monthly mortgage less than your rent and shortfall debt repayments would be (frankly on 100%+ LTV interest only all you are doing is renting and hoping for a windfall profit/reduction in debt) - if so stay put and explain the implications of a forced sale by him for you both.

If there is vital reason (personal or work) why you have to move or you can reduce your costs (and thereby redue your debts more rapidly) as a result of selling up then agree to doing so.

Israfel

If there's a spare room in the property then possibly you could rent that out and stay in the property. I think to rent the whole property out you'd have to change your mortgage but under the rent a room scheme you can earn £4,250 on the room tax free, might be enough for you to cover the mortgage and stay there.

amilea

Unfortunately NRAM have been really unhelpful so far so I feel a bit stuck with them - they have only been interested in the fact that payments will be made on time.

I have def thought about paying extra to make up the short fall - but do not want to do this myself without any contribution from him.

Thanks for all of your responses.

LilacPixie

How much is outstanding on the actual secured lending part. From memory 95% was secured and the remaining was an unsecured loan that ran alongside the mortgage. If there any scope for you to save save save, taking in a lodger or something and then have the property in soley your own name assuming you earn enough for that. Alternatively would NRAM take your EX name of the secured mortgage.

Ultimately if your in NE then you can't sell unless you both have enough savings to cover the shortfall.

First thing I would do wuld be get it valued by a local EA just to confirm you are in NE then go from there.

AMILLIONDOLLARS

Does your expartner help with the mortgage? She is also liable for the mortgage, if you default it would affect her credit rating, so she is being a bit short-sighted. You should try to rent out any spare rooms in the property to help with the mortgage and to help you make over payments to reduce the shortfall and speak to your ex about making a contribution.

AMD

Thrugelmir

amilea wrote: »

Unfortunately NRAM have been really unhelpful so far so I feel a bit stuck with them - they have only been interested in the fact that payments will be made on time.

There's very little they can do or offer to do. The matter is between you and your ex partner to resolve.

I agree with the suggestions of letting a room and getting a lodger.

In addition if you and your ex partner were to agree on each making an additional payment in the mortgage account every month. This would at least start to reduce the shortfall.

There is no benefit in your ex forcing a sale. As this merely incurs unnecessary cost and crystallises the debt.