Negative Equity... repossession

bigfoot1983

This is my first post here looking to a little guidance from im sure other people that may be in similar positions.

I live in a 1 bed flat which was purchased at the height of the boom in 2007 for £147k. My current mortgage value is £134k and I am on an interest only payment plan at present.

having lost one job since my purchase of this flat and having to gain new employment it is now a requirement for me to move.

My problem is this, my flat is now valued at around £79-£87k which puts me in a huge amount of negative equity and no credit rating to obtain any loans to dig my way out.

I have been towing with several ideas
- Rent my current flat out - poses me with the big problem that I am stuck on an interest only mortgage for at least twelve months so affording the mortgage on top of rent is going to be a problem before taking in to account management charges\ground rent and any mishaps.
- Sell....cant see how that would work?
-default and let the bank have the problem??(this admittedly is looking the most favourable option to force the lender to offer me suitable payment options to pay off the shortfall) as I am struggling to pay off the basic mortgage rate along with the costs of employment(fuel\ car etc) and try to plan for little feet.

does anyone else have any advice?

The_J

It's tough, renting the property would be my advice.

Selling is pretty pointless. Being repossessed will destroy your credit rating and pretty much rules you out of owning a home for the next decade.

Dave_Ham

Its hard to give useful pointers given understandably the minimum amount of information provided.

It would appear your current position is untenable and therefore something needs to give.

I would personally re-post this in the debt forum as you will get more suitably qualified solutions.

From a mortgage perspective, there is nowhere to go and even if you could get a loan this would just delay the inevitable.

I think either way your credit rating has already taken a whack and likely not to get better in the short term so maybe taking drastic action now may build a better future.

Would it be that bad to rent a suitable sized property?

If you are repossessed and you cannot (obviously) pay the difference back, you will be allowed to pay this monthly as part of plan.

I genuinely hope you can get some better advice than mine and with all the information to hand and can broker a solution that works for you and your family.

bigfoot1983

thanks for the responses and advice, agreed with both of you. renting is the idea. and as noted by Dave Ham my credit rating is (as you would probably expect in this age) less than useful.

Dave Ham, would you have an example of what sort of agreement could be arranged by a lender to repay the shortfall e.g. term and cost, as I presume that the shortfall would still gather interest?

Is there any government schemes to help with this sort of debt?

thanks in advance,

Dave_Ham

Sorry, not my area of knowledge. The ones I have seen seem to be totally different each time and it appears to be based upon income, expenditure and lender or debt agent lender uses...

Good luck - may be best to post similar in another sub forum where they deal with this more often..

HappyMJ

bigfoot1983 wrote: »

thanks for the responses and advice, agreed with both of you. renting is the idea. and as noted by Dave Ham my credit rating is (as you would probably expect in this age) less than useful.

Dave Ham, would you have an example of what sort of agreement could be arranged by a lender to repay the shortfall e.g. term and cost, as I presume that the shortfall would still gather interest?

Is there any government schemes to help with this sort of debt?

thanks in advance,

yes....bankruptcy and this is the ideal scenario for it.

bigfoot1983

Thanks Dave Ham appreciate the information.

HappyMJ, I have not fully looked into the bankruptcy area but my initial concern would be that I have heard that going bankrupt can have issues with my employer and terms of contract. Thanks for the advice.