Negative Equity Property & Struggling to Manage

Krish_2

I bought a brand new flat built by UK's renowned builder two and half years before. I even recieved 5% gifted deposit from the builder. Anyhow the value of the property fell down drastically, and because of work related transfer, I had now let it out with the consent of my lender, and move somewhere else. Anyhow the rental income doesnt even cover 70% of my interest on it. And I could not sell it off because I will burn my fingers by loosing around £25,000. Its due to remortgage in couple of months now, I am planning to do get a Buy to let mortage at the lowest possible interest so that I can minimise my monthly loss(currently around £300/ per month). But again because of the dip in the property value, I have to pumpin more money to get a 85% mortgage on the value of the property.:eek: I dont have anymore money to pumpin.
I think it is only our "Guru" Martin :money: can help me in this situation! Please help!

maninthestreet

How come your property has fallen in value so dramatically in the 2 1/2 years since you bought it?
What did you pay for it, what is it worth now?

Krish_2

Bought for 215K, now worth 195(based on going prices for similar property within that development.

talksalot81

You need to seriously think. As far as I know you could have some difficulty arranging another deal (since you are in negative equity). This might mean you are stuck with SVR or another high interest rate on the large loan.

Is the place you currently live your own or rented?

Just a general point - your situation is one which a great many people on this site have long refused to acknowledge as a possibility. You are going to prove alot of people have been thinking far too simplistically about the market.

Krish_2

talksalot81 wrote:

You need to seriously think. As far as I know you could have some difficulty arranging another deal (since you are in negative equity). This might mean you are stuck with SVR or another high interest rate on the large loan.

Krish says, "True Though"

talksalot81 wrote:

Is the place you currently live your own or rented?

Krish says, "The place I currently live is my own(with mortage on)."

talksalot81 wrote:

Just a general point - your situation is one which a great many people on this site have long refused to acknowledge as a possibility. You are going to prove alot of people have been thinking far too simplistically about the market.

Krish says, "Yeah, my case is a clear example of the Demand&Supply effect. There are 300 apartments in this development, huge & posh, yet because of the huge supply, and hyped up prices, the market is over supplied and turning upside down on all those who bought in this development. Its not just me, but most buyers within this place are affected. All I need now is to hang around for few more years and atleast break even. But to do that I need to stop incurring loss by paying more interest rates"

Krish_2

talksalot81 wrote:

You need to seriously think. As far as I know you could have some difficulty arranging another deal (since you are in negative equity). This might mean you are stuck with SVR or another high interest rate on the large loan.

Krish says, "True Though"

talksalot81 wrote:

Is the place you currently live your own or rented?

Krish says, "The place I currently live is my own(with mortage on)."

talksalot81 wrote:

Just a general point - your situation is one which a great many people on this site have long refused to acknowledge as a possibility. You are going to prove alot of people have been thinking far too simplistically about the market.

Krish says, "Yeah, my case is a clear example of the Demand&Supply effect. There are 300 apartments in this development, huge & posh, yet because of the huge supply, and hyped up prices, the market is over supplied and turning upside down on all those who bought in this development. Its not just me, but most buyers within this place are affected. All I need now is to hang around for few more years and atleast break even. But to do that I need to stop incurring loss by paying more interest rates"

mpsavuk

I can't understand it. I thought property only ever goes up in value?

Surely you can't loose if you've invested in bricks & mortar?

robwend

mpsavuk wrote:

I can't understand it. I thought property only ever goes up in value?

Surely you can't loose if you've invested in bricks & mortar?

mmmmmmmmmmm smell that coffee........... you awake yet lol:D

PropertyGuru

sell it fast. For whatever you can get.

In another month or 2 you won't have that option, and then you will *be forced to hang onto it* and *subsidize your tenants* for the forseeable future.

Just my opinion.

See you in 2015.

movieman

All I need now is to hang around for few more years and atleast break even.

If the oversupply is that bad, you may find it takes a lot more than 'a few more years' to break even. There are so many new build flats around here I just can't see how they can avoid at least a 50% drop in price over the next few years... far too many flats, far too few real buyers, far too few renters.

Speculation must be the only thing holding up flat prices around here, and if the speculators stop buying then the builders will slash tens of thousands off the price to shift them rather than be stuck holding them for years.

mpsavuk

Ok, explain it to me then if you are so clever.

Renting is dead money so it's always best to buy.

Prices are going to keep rising so best to buy before you get priced out.

The media say prices will be going up 10% this year and 12% the year after.

You can't loose if you get on the property ladder, even with an interest only mortgage.