Can't handle mortgage - advice needed!

Johnny_Segment

Hey all,

I’m new here and would really like some advice.

I was a first-time buyer at the end of 2007 when the prices were really high, and the market was booming. I bought a small flat which was very expensive, but I was advised to buy to get my foot on the ladder. I had planned to live there for a year or two, and then upgrade/move on to somewhere bigger, but obviously things went bad after that, and I’m still in the same place.

The property is in serious negative equity, and I cannot sell to make up the value. Over the last year, I’ve been really struggling to make my mortgage payments. I have not missed one, but in order to make sure I can pay, I have to really stretch my pay. I live and have the mortgage on my own, so things are very tight. I’m 35, and basically cannot afford to do anything except go to work and sit at home, and I really have to desperately scrimp with everything (food, petrol, heating – I just bought second-hand shoes!!). I’m in a very well paid job, but with the high mortgage, I’m spending well over half my monthly – then on top of that the rates, management fees, and all the other bills. It’s just too much to pay out. I have seriously cut back the last 12 months, and cannot cut back any further, but things just seem to be getting worse.

On top of the payments, the apartment itself is incredibly small (could be considered a bed-sit), and I have an endless stream of nightmare neighbours, and trouble in the area from youths (breaking in to peoples cars, smashing windows etc), which just makes life even less enjoyable.

Although I know I should be very grateful that I have a job and a roof over my head, I simply cannot go on like this. People are saying it could take 10-15 years for the market to recover, and that I should be able to sell then, but I cannot live here until I am 45-50. I’m close to going insane at the moment, and really can’t go on. I really am incredibly depressed by it.

I went to talk to a lawyer for advice, but they said my only option was to ‘hand my keys back’. Does anyone know the implications of this, or how to go about this. I have heard many bad things about this (such as having to declare oneself bankrupt etc).

I have friends who earn much less than me, but still rent, and they’re living life to the full. I cannot even afford to get out to see them because I need to save petrol, and feel spending money on a coffee with them, could be used for getting groceries. I’m just wasting my life away paying for this utter encumbrance.

If anyone can offer me any advice I’d really appreciate it. I really am at my wits-end!

Thanks!

dunstonh

I went to talk to a lawyer for advice, but they said my only option was to ‘hand my keys back’. Does anyone know the implications of this, or how to go about this. I have heard many bad things about this (such as having to declare oneself bankrupt etc).

Handing the keys back is the option of last resort and can be the worst thing to do. However, if things have got that far then it may be at last resort.

it will obviously destroy your ability to get credit again for many years and you will still be liable for the debt outstanding from the negative equity as well as their costs. This may well have an impact on you finding a place to rent as many credit score you on that front as well.

People are saying it could take 10-15 years for the market to recover, and that I should be able to sell then

Those that bought at the peak before the last property crash saw 12 years recovery time unless you were in a hot spot. This one is likely to be longer as much as a crystal ball can tell you. Indeed, it may never recover (unlikely but possible scenario).

You are stuck between a rock and a hard place and no outcome is going to be what you want. I suggest you get advice from a debt counsellor and not a solicitor at this stage.

Senior_Paper_Monitor

Do not hand the keys back !

This is worse than selling at a loss as:

1) you will incur considerable additional costs - leaving you a greater liability

2) the property will almost certainly be sold for less than you could do so - leaving you a greater liability

3) you will trash your credit rating permanently

You don't need a lawyer at this stage (particularly not that one), talk to a broker to see if any restructuring is possible - if they think not talk to a debt counsellor (and put property on market).

DannyboyMidlands

I'm a bit confused. Is there more to this story? Ok, so the value has fallen but how come the day to day expenses have become so unaffordable? Why are the bills increasing? Are you earning less than in 2007?

lavandergirl_2

can you get a lodger?

getmore4less

Some real data would be usefull.

whats the mortgage dea,l size, rate, term. promotional rate and followon rate

do a SOA and post it
http://www.makesenseofcards.com/soacalc.html

Johnny_Segment

DannyboyMidlands wrote: »

I'm a bit confused. Is there more to this story? Ok, so the value has fallen but how come the day to day expenses have become so unaffordable? Why are the bills increasing? Are you earning less than in 2007?

Due to pay-freezes the last few years, and I had to buy a car on finance. More going out, and less coming in really.

lavandergirl wrote:

can you get a lodger?

Nope, it's basically a bed-sit. Only room for one person.

Thanks for the feedback everyone! I'll try and do a SOA later.

xyellowx

get over to debt free wannabe site and post soa up for some tips on saving money

is selling the car or down sizing the car for a cheaper one a option?

chopper78

What attracted you to your super expensive pokey bedsit in the first place then?

Why did you have to buy a car on finance? You'll be better handing back the keys to this long before handing back the keys to the house. (Did you know that subject to vehicle condition, once you have paid half of the money due on Hire Purchase you can just hand the car back and owe nothing more)

Sooki

Rent your property out and lodge at a friends, that way you won't be lonely and make some money at the same time.

Thrugelmir

Johnny_Segment wrote: »

I cannot even afford to get out to see them because I need to save petrol, and feel spending money on a coffee with them, could be used for getting groceries. I’m just wasting my life away paying for this utter encumbrance.

And one day they going to wish they had what you've got.

Buying a home is a long term commitment. That one day will pay handsome dividends when there's no mortgage to pay.

Is your mortgage interest only or repayment?