Is this a bad idea?

Sami_x

My OH and I are desperate to move. We have 60% mortgage on a shared ownership flat (cringe I know).

We have 15k saved for a deposit
Combined income 54k
6.5k credit card debt (on 0% interest) dont need to change till late next year
4k on graduate loans
OH has good credit rating
Mine is okay
Looking for a place about £150-165k ( flat is likely to be in 6k NegE)

My cleared mbna card is offering a cash transfer 0% till next oct. would it be financial suicide to borrow this to put towards 15k deposit (can borrow up to 4k) as we really want to move ASAP?

martinsurrey

so, £6k negative equity, £6.5k current credit card debt, say £2k selling fees + £1.5k stamp duty + £1k legal + £16k deposit totals to £33k, or £26.5k needed to move ignoring the current credit card debt.

I would just save harder and for longer, you wont be able to move without more cash.

kingstreet

Have you got a buyer?

Can we cut out the "60% mortgage" thing before we go any further? That means you have a £60k mortgage on a property worth £100k. You can't have a 60% mortgage and be in £6k negative equity.

What percentage of the flat do you own? What is the HA's estimate of the market value? How much is outstanding on your existing mortgage?

... and yes, the credit card thing would be daft!

Sami_x

Thanks for the quick replies. No we don't have a buyer. We have a 60% mortgage on a 110k flat. We had an estate agent look at it 6 months ago and he said its likely to sell at 95k we've had the 3.9% mortgage for 4.5 years playing about £360 a month to that (for info we pay about £180 a month rent ). Not sure how much we have paid off.

We may rent the property- as this can be allowed but we really want rid of it.

A side note a friend has offered as a pay whenever interest free loan ( OH is very much against this)

We have saving power of about £700 a month it's all going towards deposit and not credit cards (credit cards are costing about £100 a month).

Any advice greatly appreciated but go easy as I know what the Internet is like

kingstreet

I'm sorry.

I must be really dense. If you have a 60% mortgage on a flat worth £110k (or is it £95k?) that means you can't be in negative equity.

Would you be kind enough to answer the questions;-

What percentage of the flat do you own? What is the HA's estimate of the market value? How much is outstanding on your existing mortgage?

to ensure accurate information can be provided.

Sami_x

We own 60% of a 110k flat which has decreased in value to 95k. I think we have paid off 7k off the 66k mortage

kingstreet

I think I've got it now.

You own 60%, the HA owns 40% and you pay rent of £180 per month on that 40%.

You put down no deposit? £66k mortgage would have meant 100% of your share. I can't remember a lender offering 100% on shared ownership. Please clarify.

You think your 60% share has fallen to £57k because the value of the flat has fallen to £95k? If you did borrow £66k and you now owe £59k, you'd only be £2k in negative equity, not £6k as you suggested.

Have you spoken to your lender about the negative equity? Some lenders will allow you to take it with you to your next property. Halifax is the one which comes readily to mind, where you can get a mortgage for 120% of the new purchase price to cover that negative equity.

You mention letting the flat. Have you asked permission of the HA and discussed consent to let with your existing lender?

Have you been through the requirements of the HA to sell your share, or did they permit you to go straight to open market via an agent?

Sami_x

I will do my research and get back to you. Thank you

Moose_Kitty

I can confirm that previously lenders offered 100% LTV mortgages on shared ownership properties, previously it was standard.

Kent Reliance Building Society was the last lender I was aware of that would offer this, and that was in 2008

kingstreet

I vaguely remember the Leeds (& Holbeck as it was then) used to do 100% back in the late 90s, now I think about it...

Sami_x

Right, got some more details for your:)

OH got a 100 % mortage of 66k for a 60% share of a 110k flat
He has paid off all the interest and now has a balance of 62k

So if the flat is in negE from 110k to 95k it's around about -9k we have paid off 4k so need to find and additional 5k on top of deposit and fees.

So far we have 15.5k saved, should be 16.5 k at the end of the month. Looking to buy a 160k property.

We pay £357 a month to the mortage. Teachers are the mortage providers and they are phoning us back about taking the negE to another property.

Also OH is putting my name on this current mortage so is that likely to help my credit score ( which is okay)?