Moving with negative equity

property.advert

If your new place is 125k and you can get by with a 10% deposit, then you'll need to find 12.5 and have a mortgage of 112.5k.

If your current place sells for 85k and you owe 91k, then that 12.5k will rise by 6k to 118.5k.

With only 4k in savings, you are an awful way off this figure.

Yorkshire and Clydesdale offers a three-year fix at 6.99% with a £599 fee. When the offer finishes in 2014, you have to re-mortgage or will go on to the lender’s standard variable rate – currently 4.59% however likely to end up being significantly higher by then.

Nottingham Building Society as well as LloydsTSB are the only other options for individuals wanting 95% loans. The former’s threeyear fix is set at 6.39% and possesses a low £195 fee, but the standard variable rate you face paying in 2014 is currently a skyhigh 6.14% thus remortgaging elsewhere will almost certainly be essential.

http://www.best95mortgages.co.uk/2011/04/15/yorkshire-plus-clydesdale-banks-give-some-thought-to-95-lending/


At 95%, you'd have to find 6.25k on the new house plus the 6k on your current one (selling at 85k) meaning you'd have to find 12.25k.


At these small margins, you need to revisit your numbers with a fine toothcomb. Could you sell without an agent to save some money ? get your prospective property down a few thousand. Even borrow a few grand from someone.


However, I caution you on doing anything because in this period just gone, you have not repaid much from your mortgage and have saved next to nothing. DO you have a rainy day slush fund for example or are you in the doo dah if you lose a salary even for a month ? Adding to your repayments with a bigger mortgage isn't really viable is it ?

opinions4u

If you're in negative equity and want to move house there are usually three ways to do it.

1) Talk to your existing lender who may (or may not) have a scheme to allow you to transfer the negative equity to a new property (usually an expensive mortgage deal).

2) Save up enough to repay the negative equity, fund a 10% deposit based on the full purchase price of the new property and all the other moving related fees.

3) Save up enough to repay the negative equity and rent (some lenders may come to an arrangement to clear the negative equity after sale - this may have implications for your credit rating though).

If you can't do (2) or don't want to do (3) then (1) is your only option. If your lender doesn't support (1) then you're not moving.