Desperate for some advice on my mortgage situation

mm93fm

Dear all,

I am turning to this forum in sheer desperation and frustration at my financial situation. I have racked my brains out thinking about it, and would be grateful to know if anyone has been in a similar situation / or has any suggestions. :j

I bought a new-build dream house in Rotherham in 2006 (just before the big crash) for £176,500 with a 95% HSBC Amanah mortgage. It is a so-called "Islamic mortgage" run by HSBC.

In 2009 I moved to London on work. I asked HSBC about consent to let. They refused, saying that the only option with these mortgages is to remortgage to another provider. They could not change to a HSBC buy-to-let mortgage, or offer anything else at all.

So for 2 years while I was away a friend lived in the house rent-free. On paper I was still living there, and the friend was staying there as a guest. That arrangement ended (amicably) last August because my big plan was to remortgage to a buy-to-let mortgage and get tenants in there asap.

I have approached Lloyds TSB for a buy-to-let re-mortgage. There is still £140,000 remaining on the mortgage. The re-mortgage valuation happened this week, and has said the value of the house is £120,000. The estimated rent is £600/month. Lloyds TSB will only give 75% i.e. £90,000, leaving me with a shortfall of £50,000 which I do not have.

The house has been on the market for several years, currently at £130,000, along with other almost identical houses on the street which are priced even higher (& equally unsold.)

Every month the empty house is haemorrhaging £800 in mortgage & insurance and I can no longer afford it.

WHAT DO I DO....??? :mad:

1) Grin and bear it, and forget about the £800/month I am losing? That could pay for shoes and food for the kids. :A
2) Lower the price even further and hope someone in the area can get a mortgage to buy it? If I sell for £100,000, I will have to accept that I lost £76,500 on the house.
3) Beg, borrow or steal £50,000 and become a landlord (which I have absolutely no interest in becoming)? :eek:

Please help!!! Some words of wisdom please...

ACG

Another alternative would be to extend the mortgage term - this reduces your monthly repayments. It will cost you more in the long run but it will help you in your current situation.

SouthCoast

The house has been on the market for several years, currently at £130,000, along with other almost identical houses on the street which are priced even higher (& equally unsold.)

Chasing the market down.
Undercut the competition or put it up for auction.

ruggedtoast

Your best base scenario here would appear to be selling it for £120k and "only" owing £20k to the bank. That's a massive loss of equity and there doesnt seem to be any realistic prospect of the house regaining it for the foreseeable future.

Alternatively could you officially move back in there, but not actually really ever be there, and take in a lodger, a lodger who lives there on their own most of the time. Not sure if that would get around the legalities of renting it out, and you'd obviously have to be pretty careful who you had.

temba

What a horrible situation. Is there any way you can borrow 50K or get a family member to help you out here? Seems such a terrible loss of money to lose so much money if you are forced to sell it, and if you could rent it then at least you could get through this time and maybe in the future you would have better options.
Good luck.