Looking for non-judgemental advice

cam101

Hi, i'm looking for some advice regarding our mortgage/housing situation... would be especially grateful if anyone in a mortgage advisor role was out there with some words of wisdom...

Partner and I bought a house for 133,000 in 2007 with a 100% mortgage. We paid for 3 years on a fixed deal, then it dropped down to 2.5% SVR. For the last 5 months we've been making overpayments of 250 per month.

Our outstanding mortgage balance is approximately 125,000, and three recent estate agent valuations put the property at around 120,000-125,000. However I know they can over value in an attempt to get you to use them, so we're prepared for a figure more like 115,000 (although of course we just don't know unless we actually put it on the market).

We do have family backing in terms of potential help gathering a deposit together, however despite hours of research I can't see what our exact options are.

Is it 100% set that we will have to find cash to pay off any negative equity?

Would involving family members benefit us given that they have their own mortgage still?

Would we just be back in the position of first time buyers again?

I have all sorts of questions going round in my head, I suspect I know the answers aren't what I want to hear... but we could really use some neutral, honest but not judgemental advice on what our options are.

If we stay put and overpay, it will still be many years before we have enough equity to move- are we better to stretch ourselves to get into a bigger property and be able to stay there come what may?

At the moment the monthly payments of a new deal wouldn't be an issue, it's the fear that we could come off the end of a fix in 5 years and face interest rates of 10%+

We are toying with the idea of staying put and investing in a large conservatory which although not ideal would buy us a few extra years in the house- however its really hard knowing what to do for the best.

Is there anyone out there who knows the market quite well that could outline our potential options? I'd be eternally grateful as I can't seem to see the wood for the trees.

Thank you.

beecher2

your only option is to overpay (though you should perhaps be filling up your ISA limits first as you'll get a higher rate than 2.5%) until you have the negative equity paid off, and a 10% (at least) deposit saved up.

You could post a Statement of Affairs on the Debt Free Wannabee forum to get help with your budget in order to save more than £250/month.

BoGoF

The bottom line is if it sells for less than the mortgage still due then the lender will not release their charge on the property - which means they sale will not happen. If you are still exploring options then you need to speak to the lender first and see what the options (if any) are should there be a shortfall. They may point blank say if mortgage not cleared in full then no sale. If they say that then your only option is to stay put for the time being.

getmore4less

Where is the money coming from to build a conservatory?

To move you need negative equity paid off and a new deposit

Probably at least £25k more if you are usizing a lot.


Why do you need(not want) more space?

Thrugelmir

cam101 wrote: »

If we stay put and overpay, it will still be many years before we have enough equity to move-

This is a fact of life. Paying down the mortgage quicker, negative equity or not, is the only way of achieving your goal. Always has been. There's no quick answers.

Run through your household budget and economise. Then increase the overpayment you make.

ACG

If you move house, you wont be able to get a 100% mortgage anymore. You need atleast a 10% deposit, so even if you sell and manage to break even you will have no dpeosit to put down on a new property.

Your only realy option is to get the mortgage down and/or the value up. Can you build an extension rather than a conservatory? It would give you the extra space, it usually puts the price up although you would have to find some money to pay for it.

pinkteapot

Other posters are correct I'm afraid. If you want to move, you'll need to have enough money in the bank to pay for all of the following:

1) Any negative equity owed; the bank will want this on completion of the sale (I sold in negative equity and had to transfer the money to my solicitor a couple of days before completion)
2) Deposit of 10% on the next property you buy (e.g. £16k for a £160k property)
3) EA fee for selling your place
4) Solicitor's fees for selling and buying
5) Removal costs

You need to work out what this adds up to, and get that much money together in order to move.

I don't quite understand your question about whether family help benefits you, given that they have their own mortgages. Do you plan to just borrow/take money from them for your deposit? Or do you plan to get a joint mortgage of some sort with them?

Assuming the former (they help with deposit): If they give you the money (as a gift) for the deposit, there shouldn't be an issue with your mortgage. During purchase, your solicitor will ask for proof of where deposit funds have come from. If the money is from family members, you'll need a letter from the family members stating that the money is a gift, not a loan.

If family loan you money for a deposit, this will need to be declared when you apply for the mortgage and would make it harder for you to get a mortgage.

For family help with the deposit, their own mortgages are irrelevant. If you're talking about buying jointly with them (and them being on your mortgage), it'll get a lot more complicated.