Negative Equity and Selling

silvercar

£25k at 11% over 25 years is £236 a month.

JimmyTheWig

Simon_gloster wrote: »

It is possible to sell in this situation. Only the secured element is taken into account and this is where the lenders legal charge is secured against. The £25K unsecured...well it's a personal loan. If you do split the 2 up, ie pay secured off and keep the loa, expect NR to increase the rate to around 8-10%.

This is what I thought the deal was.
As long as you pay off the secured part you can move. But you will no longer get preferential treatment on the loan.

So I'd say your first task is to find out (from NR or by checking your paperwork) what will happen to the rate on the unsecured part of the loan.
What rate are you currently paying on the mortgage?

Have you thought about renting the place out?
Have you got anything of value that you can sell (i.e. if you borrowed more than the value of the house, what did you spend the rest on)?

Simon_gloster

angeljay wrote: »

I currently live in a house which I am considering maybe selling, mortgage is an NR together mortgage 75K secured, 25k unsecured with an outstanding balance of around 97K

If The house sold for around 85K (price a house two doors down is currently for sale at) would NR let me sell the house or force the sale to stop?

From what I understand they would they expect me to pay the over part of the mortgage would this be as loan payments or in full?

WHat about other fees such as estate agents, solictors etc can these come out of the house sale? I have no savings to help pay for the sale of the house. Want to move away and start a fresh.

angeljay wrote: »

Yes I understand that the amount would go up by 8% on top of their SVR.

Really?....*just puked in my chair*

So lets say £24k, 22 years remaining. 4.79% + 8% = 12.79%

Monthly payment of £270 ish a month. Nurse, the polaroid.

Simon_gloster

silvercar wrote: »

£25k at 11% over 25 years is £236 a month.

you beat me to it.

JimmyTheWig

angeljay wrote: »

Yes I understand that the amount would go up by 8% on top of their SVR.

Sorry, saw this after my last reply.

OP, don't sell!

I'll tell you why...
From what you've said, the chances are you'll have very little left after selling once you've covered fees and the secured mortgage. So you'll still have the unsecured loan outstanding.
Your outstanding debt will go down from £100k to £25k.
But your interest rate will go up from 4.79% to 12.79%.

So the interest on what you owe will only go down by a third. And you won't have the property any more!!

if you have to move then let it out. Whatever happens, and whatever agency fees you have to pay, you must be able to recoup a third of the mortgage in rent.

Can you afford to do that, I don't know. But if you can't then you can't afford to sell.

RenovationMan

Agree with Simon and Silvercar. The unsecured part of the debt is nothing to do with your mortgage, apart from the higher interest rate once you sell and you might be able to get a better loan with a different lender anyway.

You just need to make sure that your mortgage and house sale costs are covered by the house sale (remember to add in any mortgage redemption fees/penalties).

You will end up with £25k of debt while trying to start a new job in London. Not the best way to start a new life. What was the £25k spent on? Is there anything you bought with it that can be sold to reduce the outstanding balance?

angeljay

In response to everyone asking what the extra money was spent on, the house was purchased for 84k however northern rock must change the amounts to make it look better for their file therefore some of the unsecured part would have been used to pay for the house.

The house needed a lot of renovation, so the rest of the money was spent on a new kitchen, damp proofing, re plastering and flooring, furniture needed as well as any other fees which came up from this.

I completly understand what everyone is saying about not moving, but the house is in mine and an ex's name I am now with someone new and we both want a new start. I also don't see the point of owning a property when I have no one to leave it too.

If i rent then I may not get enough to cover mortgage payments, have to pay landlord insurance I think ......

angeljay

silvercar wrote: »

£25k at 11% over 25 years is £236 a month.

there is a house 2 doors down from me up for sale at 85K it needs a lot more work doing to it then mine does so I would expect mine to sell for around the same which would mean only about 15K left of unsecured loan to pay.

richardw

Perhaps do a bit of a forecast of what financial position you'd be in next year say 6th April 2013, if you just rented it out and kept repayments up.

angeljay

richardw wrote: »

Perhaps do a bit of a forecast of what financial position you'd be in next year say 6th April 2013, if you just rented it out and kept repayments up.

Yes could rent it out, but don't think Northern Rock would agree to this anyway.

It could take a year for the house to sell so we will work on paying off other debts as well as saving to move.