Negative Equity

Lucy_Lu_8

I am currently living with my BF who is still married. His wife left him 2 years ago. They own a house together which me and him live in. It's market value is about £150000 and their mortgage is £156000. We would like to stay in the house and take her off the mortgage but the bank only value the house at £140000 and then want the mortgage to be only 90% (£126000) therefore we'd have to pay the bank £30000 (£156000 - £126000) also it would then be put on a repayment which would more than double our monthly payment. We are in quite a good position at the moment because it is on interest only so only pay £350 per month which is cheap for a 3 bed detached considering his wife is paying £450 to rent a 2 bed flat literally round the corner from us. We are giving her £100 a month to keep her sweet. I just wondered if she demands to be taken off the mortgage before we can afford to take it on, what can she legally do?

dimbo61

Yes can go to court and ask the judge to force her EX to put the property on the market and sell it!
But once sold she would then owe half the debt outstanding after all selling costs are taken into account and would need to make arrangments with the lender to repay her half of the debts!! IE take out a loan
so it may not be in her interests and as long as you and your partner pay the mortgage each month and hope prices start to rise

poppy10_2

Lucy_Lu_8 wrote: »

We are in quite a good position at the moment because it is on interest only so only pay £350 per month which is cheap

An interest-only mortgage on a property deep in negative equity doesn't really sound like a good position to be in.

At the moment it is unlikely that the ex-wife will go to court to force a sale, as she would have to pay up her share of the negative equity.

Why are you paying her £100 per month?

Lucy_Lu_8

Cos she kicked up a stink cos she's paying more for her little flat and it is still her house. And she said she was entitled to half of what i paid in rent. I don't really agree, but it's keeping her sweet at the moment.

It's not exactly in negative equity i would say its about break even but it's on a new development and they are still building new ones so if it were to go on the market i don't think they'd be able to sell it anyway.

I meant we were in a good position because we aren't paying equity off for her to benefit and the payments are low so we can save up to take it on.

Henry_P_Chester

Lucy_Lu_8 wrote: »

It's not exactly in negative equity i would say its about break even but it's on a new development and they are still building new ones so if it were to go on the market i don't think they'd be able to sell it anyway.

Hmm sounds quite deep in NE from what you just said. What are the new ones on the development going for? Remember even if you priced the same as those no one would buy yours as they could get a brand new one for the same price and they offer all sorts of incentives.

My advice would be to change to repayment and start paying down the NE.

Thrugelmir

Lucy_Lu_8 wrote: »

Cos she kicked up a stink cos she's paying more for her little flat and it is still her house. And she said she was entitled to half of what i paid in rent. I don't really agree, but it's keeping her sweet at the moment.

I would use the £100 to reduce the mortgage debt. As this would at least be to her benefit in reducing her potential liability.

If you wish to retain the property longer term yourselves. Then you are going to have to increase your mortgage repayments significantly to tackle the negative equity. Interest rates are low at the moment once they start increasing your "rent" may rise significantly.

Your BF needs to come to a formal agreement with the ex as to how and when she is removed from the mortgage. Or you could both find yourselves in an arkward situation in the years to come.

noodle

Lucy_Lu_8 wrote: »

Cos she kicked up a stink cos she's paying more for her little flat and it is still her house. And she said she was entitled to half of what i paid in rent. I don't really agree, but it's keeping her sweet at the moment.

So she has a liability.. her share of the house.. and you're paying her rent on it?

Unless the domestic repercussions could be a problem (are there children involved would would suffer from a breakdown in good relations?) then tell her to get lost. It's enough that you're keeping up repayments to maintain her chances of getting out without losing money.