Potential house in negative equity

lesta_lad

After all the waiting and worrying about mortgages and survey we are finally in a position to exchange. My solicitor has today found out that the house is in negative equity. My solicitor has said that the sellers are trying to sort it out and that she'll let me know when she hears something.

Me and my wife are panicking now as we have spent money on survey and solicitors. It's been 11 weeks since we had the offer accepted and nothing was mentioned about negative equity.

Anybody been in a similar situation?

Any reassuring words?

Tom

pinkteapot

The sellers will need to come up with a cash lump sum to pay off the negative equity. Unless their bank agrees to convert it into a non-secured loan or similar.

From the sounds of it the sellers were unaware that they were in negative equity. Not sure how they managed that though!

G_M

Either the sellers will find the required cash to pay off their mortgage or

they will increase the price of the property so as to cover their mortgage repayment
or

they will be unable to sell.

DVardysShadow

pinkteapot wrote: »

.... From the sounds of it the sellers were unaware that they were in negative equity. Not sure how they managed that though!

[SellingPrice - MortgageOwing < 0]

Even if they knew how much they owed, it would take Einstein to take it away from the selling price and work out whether they were in negative equity.

If I were buying, I would have some choice words.

G_M

DVardysShadow wrote: »

[SellingPrice - MortgageOwing < 0]

Even if they knew how much they owed, it would take Einstein to take it away from the selling price and work out whether they were in negative equity.

If I were buying, I would have some choice words.

To be fair (or anyway give the benefit of the doubt..) it's slightly more complex..

SellingPrice - MortgageOwing - EA fees - legal costs - moving costs < 0

BitterAndTwisted

I wouldn't buy from these idiots on principle now. What bloody time-waster numpties they are. That money you spent on the survey may turn out to have been a good investment

clark24

How can anyone seriously not know how much is still owed on their mortgage? I mean within a few grand anyway! Don't they look at their statements ever? I would find it hard to believe that they didn't know they were, maybe they thought if they found a buyer then a miracle would happen and they'd find a way of sorting it out, but as for not knowing their mortgage balance compared to their selling price til now, nope don't believe it, I'd be inclined to think they hoped exchange would happen before anyone noticed (ok so maybe they are a bit stupid but I'd bet they knew all along).

DVardysShadow

G_M wrote: »

To be fair (or anyway give the benefit of the doubt..) it's slightly more complex..

SellingPrice - MortgageOwing - EA fees - legal costs - moving costs < 0

The 2 extra items are a difficulty. But they are not part of the negative equity calculation which allows the lender to block the sale.

The seller will of course be responsible to pay these fees now, because both the solicitor and the agent have done their jobs. Sit tight and wait for the house to come back as a repo?

lesta_lad

Thanks for all the comments people. I spoke to the seller and basically had a bit of a go at him. He said the lender was going to turn the deficit into a loan. He has no idea how long this is going to take. Me and my wife are absolutely gutted at the state of affairs but we are going to wait it out for a week and see what happens.

Tom

pinkteapot

Worth giving it a week or two to see how they get on. If you went back to square one now you'd have to find a new place, go through the process again... You wouldn't be exchanging for at least a month and you'd have some of your costs to pay again.

If it all goes through this delay won't seem like a big deal. We were frustrated when we bought our place as the sellers dragged things out for a few months (I think the house sold quicker than they were expecting). In retrospect, a couple of years down the line, it was no big deal. Frustrating at the time but soon forgotten once you get the keys and walk in the door.

lesta_lad

A little update: Vendor has agreed with his bank to take an unsecured loan for £23,000. Everything is ready from both sides except one thing. His solicitor is waiting for a letter from Bank of Scotland giving him consent to sell. Don't know how long this is going to take.

Me and my wife have our fingers crossed that this is the last hurdle.

Tom.