Major problem with property I'm letting out (advice needed)

Jsuk

Hi, I lived in a one bedroom flat with my wife and our daughter. About 6 years ago we got an offer to buy a 3 bed house from a friend for what at the time was a good price. As I still had 6 months on my mortgage and a lot to pay to get out of it a mortgage adviser told us to keep it and pay interest only for 6 months then we would easily sell it. Within those 6 months the housing market went tits up and for years we were trying to sell, paying 2 mortgages and getting into a lot of debt. We are now in negitive equity on the flat and have someone renting it, although we make a loss each month with the payments.

Recently we got into arrears but have agreed payments to pay them off, however we have just revived a letter saying that we are due a review for our mortgage and they will not agree to letting us rent it out unless we pay off the arrears (around 2000) within a month. If we cannot do this we will have to give our tenant notice and re occupy the property.
We have 3 children and a dog and could not
Move back in. We have no equity in the house we live in and if our tennant moves out we will not be able to pay the mortgage
On the flat which is twice the ammount of the house even without the arrears. We Have no savings and quite a lot of debt which my wife has been wonderful about and sorted payments for etc. we are paying intrest only on both mortgages. any advice on what to do would help. Thankyou Js

Simon_gloster

Not many posts on thos thread.

I'm not in a position to critisise, however it seems your heavily indebted, both secured and unsecured lending. Ideally you have to sell all properties unless you can sustain the payments.

Interest only, negative equity and unsecured debt that is uncontrollable. Sell, arrange payments on the outstanding amounts from the sales and rent until your in position to buy again on a REPAYMENT basis.

You may not have been in this poop by having to force sell your home had you been paying it off.

ACG

Speak to the lender, ask them how they expect you to clear the arrears on an empty property that is worth less than the outstanding loan.

To be brutal...its not their problem but if you ask the question they may come up with a solution.

It could just be a generic letter they have sent you, in which case nothing to worry about.
Personally, i would probably take the risk and carry on letting it out and tell them its now empty or ask if you can let a relative move into the property... but thats only to avoid getting into a worse position its obviously not something i suggesting you do - its just what i would do in your position.

I would suggest selling up totally and renting somewhere cheaper until you can save up a deposit again, but rent at the minute would probably cost more than your interest only mortgage.
It would maybe make sense to sell the flat and sort out a payment plan with them but i suppose that depends how much negative equity the property is in.

Voyager2002

I am puzzled by the OP: surely you can take a mortgage with you when you move house?

Anyway: you really need to agree a repayment plan with the mortgage lender that will persuade them to give 'consent to let'. Find someone with sufficient seniority to negotiate, and get some kind of deal.

bigadaj

Voyager2002 wrote: »

I am puzzled by the OP: surely you can take a mortgage with you when you move house?

Anyway: you really need to agree a repayment plan with the mortgage lender that will persuade them to give 'consent to let'. Find someone with sufficient seniority to negotiate, and get some kind of deal.

I think you've misunderstood the thread.OP has negative equity and arrears on two properties, can move put of house and possibly break even but cannot afford mortgage on more expensive flat which has been rented. Consent to let has run out, particularly as arrears have accrued, and there is no repayment vehicle in place, as the OP I'd interest only on both mortgages. Therefore little or no negotiating room, likely outcome is repossession and having the negative equity around their necks for 12 years.