Negative equity in Northern Ireland

ymac2012

Can anyone else in my position suggest how we can lobby our MLA's to help us with the negative equity which effects a quarter of all house loans in Northern Ireland since 2005. My partner and I felt we had better get on the house market and bought a small property for £170,000 when prices were escalating at unbelievale rates. Panic had set in and we jumped on the banks offer to give us a mortage at 21 years of age for the 40 years. The loan was for 165,000. The market then fell just as quickly when the economic crisis happened. Our property is now worth around £85,000!
It will never rise to the original price again and we are stuck with a loan from a bank which we cant move from. We are at their mercy with interests, cannot sell the house unless we do at a loss of £85,000 and are working just to pay of a loan for the next 40 years. Meanwhile we are taxpayers contributing to bank bailouts...HELP please.

saverbuyer

caveat emptor

I assume you're around 26 now. Bankrupcy might be an option to look at.

Smick100

The MLAs know all about it. Nelson McCausland came out and said nothing can be done.

As far as I can see, the only thing to do is to hang on in there and hope things get better.

Of course, if it does come back up to its previous value, every other house around you will have in increased as well so that exact house is all you might be able to afford then.

All we can expect the MLAs to do is to get jobs in to NI, improve the economy, get more money in and raise the house prices.

if you are young, healthy and living with your partner then you should smile every day and get on with having a nice life.

NAR

What is it you expect the MLA's to do for you?

Kitten-B

No advice but same position - bought in 2007 for £235k (going price on a first time buyer 3 bed terrace in local area!) now worth £140k (if we're lucky). Stuck on SVR ( a crap one at 4.99%) and can't move. You have my shared sympathy!

The only way to live with it is to think of it in a different way.

First of all the negative equity issue only really crystallises if you can actually sell your house (ignoring the annoyance of being stuck on SVR - which I'm less worried about, likely to stay low until 2016). We can't - haven't a hope. There's one of our street which has been on since 2008, another which has dropped the price to £130k and still not selling. So the real issue is you can't sell anyway.

Secondly we accepted the price we paid at the time and thought when we moved up the ladder (ie: to a 4 bed semi or detached in an passable area) it would cost around £350k. That sort of house now costs £200k. So if we ever find a way to move up we will actually end up better off than we first thought when we got on the property ladder. It's really just a question of financing - assuming you can afford the original mortgage and could afford to move up and pay a larger mortgage. The only issue is getting the capital.

And speaking of which have you seen the new FSA rules which allow mortgage lenders to let you move with negative equity? Not sure it will come to much but worth bearing in mind.

But irrelevant for us as we'll never sell the house. We actually put it on the market (mainly to humour my husband but with a view to using savings / loans / borrow from parents to pay enormous cost of moving) 2 months ago and still not a viewing. Gutted but at least we have our own home and can afford to pay for it. Just a shame we can't swing a cat in it - particularly as we have 2 and a highly active toddler!

irishcol

Whilst it's an unfortunate position to be in, how would you have felt if house prices had continued to rise and, now, the MLAs were being petitioned by wannabe first time buyers to make houses affordable - and the solution they came up with was to impose a tax of 50% of the net increase in value on all purchasers made over the past 10 years? Woudl you just hand over the money (which no doubt you would describe as "hard-earned") to benefit others?

House price rises and falls are often down to luck and timing - in this case, you've been unlucky and it has cost you a fair bit. Equally, it could have worked out well for you, in which case most people would be congratulating themselves for buying at the right time. No-one forced you to buy, so you can't expect someone to bail you out. Sorry.

irishcol

Kitten-B wrote: »

Secondly we accepted the price we paid at the time and thought when we moved up the ladder (ie: to a 4 bed semi or detached in an passable area) it would cost around £350k. That sort of house now costs £200k. So if we ever find a way to move up we will actually end up better off than we first thought when we got on the property ladder. It's really just a question of financing - assuming you can afford the original mortgage and could afford to move up and pay a larger mortgage. The only issue is getting the capital.

That's a very pragmatic way of looking at it.

We've just managed to do something similar, and that's the way I've justified the maths to myself. We bought a flat in 2007 for £290k, when 4 bed semi-detached houses in the same area where £450k+ (which we obviously couldn't have afforded at the time). We've just sold at a loss, but have bought for £400k - so not only have we paid less than we would have done, but we've also spent less to pay off almost 5 years of a mortgage (due to borrowing less than we'd have had to borrow to get the 4 bed house, then overpaying when rates reduced).

michelle2008

It sucks. But unfortunately there is no magic solution. As long as your circumstances don't change you can afford to pay the mortgage - and you are chipping away at the debt. Make overpayments when you can afford to and try not to get obsessed with fluctuating house prices!!!

You will get out of negative equity eventually - but in the meantime enjoy your home.

ILW

Would have done better to have waited a few years before buying. Could have had a nice 4 bedder for less money.