Two Houses, one in negative equity. Can i hand it back?

amokach1

Hi,

I'm new to this forum.

Here is my problem. My wife and I have a house we live in and an Appartment. We have joint mortgages on both. But the appartment(which we have been renting) is £20 - £25,000 in negative equity.

Is it pointless to keep trying to rent. If we voluntarily hand the appartment back, is there a chance we will lose our house?

The stress is killing us. We were managing fine but now my wife is off work on maternity. What other options do we have?

maninthestreet

You will still be responsible for any shortfall on the apartment, even if you hand the keys back to the lender. Why is it pointless to keep trying to rent out the apartment?

harvey115

Generally handing back your home to the lender is a very BAD idea.

The problem is the lender will try to force sell it no matter how low the amount it gets. Once sold the lender will then come to you to fill the shortfall if any. The lender will also add all the costs involved in selling the house in your total debt, so the amount goes up even further.

The best thing would be to sell the apartment yourself and pay back the mortgage. You can then arrange the shortfalls to be repaid slowly (for this you should speak to your lender).

harvey115

+ The damage it (handing back keys to the lender) will do to your credit files

bigadaj

As ever quoting some numbers would be good, salaries, valuation of properties, equity in your house, rental income, once you've put all this. Down then more helpful advice may be forthcoming.

If the rent is covering your mortgage currently then just leave well be.

amokach1

Thanks for the replys.

The mortgage plus service charge and rates on the appartment is £750. We get £400 per month. So its costing us £350. The way we always looked at it if we rent it out for 10 years we could have equity in it again. It's just the stress. We've got the usual worry, interest rates going up, unable to get a tenant. I mean we kind of compare the £350 excess every month as putting money into the house as an investment.

harvey115

Looking at the numbers I would say it makes sense to sell it now or as soon as you possibly can with as best value as possible.

You should get in touch with some estate agents and see how it goes.

DannyboyMidlands

How much equity do you have in your house?

amokach1

I probably have £40-50k equity in my house.


If I sold the appartment how to I make up the difference(negative equity). I know maybe take it out of the house. Just selling the appartment might not be easy in the current climate. And then if I remOrtgage the house then because my mortgage goes up and financially I'm not much better off.

Is it viable to try to hold on to the app for 10 years tO see if I can get anything out of It.

I just want some opinions on what's options make the most sense.
I appreciate your responses.

Wh05apk

Personally I would hold onto the flat, prices will rise at some point, if you handed it back now, you would effectively rule yourself out of another mortgage (at decent rates and LTV's) for a long time, you would also be chased for any shortfall + costs, so would end up paying far more.

Is your mortgage on the flat a buy to let or consent to let? from the amount I assume you are on a repayment basis? if so at leastyou will be reducing the mortgage/reducing your negative equity.

Thrugelmir

Why not sell the house and live in the apartment for a while?

At least until such time as you get your finances back in order.