Selling Open Market Homebuy & Negative Equity

chesca05

Can anyone please offer some advice as I'm finding it hard to find any information on this as the scheme is no longer available. I bought my house in 2008 for £100k, £75k mortgage & £25k through my4walls and hopefully want to sell my house. My outstanding mortgage is £71k and looking at various sales in my area i reckon my house value is currently around £80k although this is just a guess I can't see it selling for any more than this.

If I get permission to sell my house how does it work when it comes to re-paying? If I managed to sell for £80k does the £71k get paid off my mortgage and the remaining £9k go back to the scheme or is it a case of I get 75% of the sale price and have to find the remaining funds to pay off my mortgage meaning I would get £60k to help pay mortgage and scheme would get £20k.

Any help would be great thanks

nic_santorini

My sister is in the same boat, you will have to contact the provider to check out your terms and conditions. My sister's homebuy takes the brunt of the loss, but the scheme I was under was different and I took 75% of the loss and they took 25%. However, my scheme was an !!! and I had to get permission from them to sell and they refused to let me sell a long time!! Hope you are on the first scheme. No one can help you really because they are all different and you need to seek advice.

poppy10_2

Depends on the individual scheme. Some lenders will share the fall in value, others won't Example from the Open Market Homebuy brochure:

If your home has gone down in value

Home purchased for £200,000 (£150,000 mortgage, £25,000 lender equity loan, £25,000 Homebuy Agent loan)

Example where the lender shares in any fall:

• Home sold for £180,000
• Repay your mortgage £150,000 (or less if you have already paid off some of your mortgage)
• Partially repay lender’s equity loan £22,500 (12.5% of the sale price of your home)
• Partially repay HBA’s equity loan £7,500 (up to 12.5% of the new
• value of your home – less if there are insufficient proceeds from the sale)
• Total to pay back on sale £180,000

Example where the lender doesn’t share in any fall:

• Home sold for £180,000
• Repay your mortgage £150,000 (or less if you have paid off
• some of your mortgage)
• Repay lender’s equity loan £25,000
• Partially repay HBA’s equity loan £5,000 (up to 12.5% of the new value of your home – less if there are insufficient proceeds from the sale)
• Total to pay back on sale £180,000

kingstreet

Your mortgage lender has a first charge, so it would be cleared in full from the sale proceeds.

The equity loan is a second charge, so the "lender" gets the residue and you still owe the remainder. You need to check the T&Cs to see if you have to ask permission of the second charge holder to sell for this amount and whether you have to repay the outstanding balance, or whether it's written-off in such circumstances.