About to go under...?

DC1981_2

Dear All,

I'm new to this site, in a bizarre situation and in need of some sound advice if you can help.

Where to begin...

I'm a Yorkshire lad originally however moved to the wrong side of the Pennines (!) for a new job and to be with my (now ex) girlfriend. I started the job and we rented a lovely little flat for a year. During that year she was keen for us to get on the housing ladder, me being 27 at the time and she being 25. We were both excited (and with hindsight foolish) and went ahead.

In November 2008 we bought a house for 155k on a 75/25 deal on a five year fixed mortgage at 6.18%. As we were short on money we had almost a 100% mortgage meaning we mortgaged just over 116k, the builder retained the rest of the equity.

Our repayments were, and still are, 657 a month, not massive, but a chuck out of each of our wages. The house, with every bill included costs 900 a month to run.

No sooner had we moved in and the relationship went down the toilet and I ended up moving out. Despite commuting to work from the parents house (in Yorkshire) for a long time I continued to pay my half.

The market obviously crashed, the house was and is still massively in negative equity so we hung onto it and had a spate of renting it informally to a friend and making up the rest.

Fast forward to now and my ex stopped paying her share months and months ago. Until now I had worked every hour that god sent and made the payments having nothing left for myself however its now at breaking point.

My car is paid, my student loan is close to being finished, I've got my credit cards right down but now I fear I'm about to go under regardless of how well I had been coping.

I no longer live in the house, the tenant (a girlfriend of a colleague so I cant live with her as a tenant) pays 500pcm and I pay the remaining 400 on top of my personal bills. I get 1500 net as a wage after crippling 'mandatory' deductions from my public service wage and essentially I'm living hand to mouth by the end of every month while my ex tweets about holidaying in Vegas etc. I do not live an extravagant life, far from it and I haven't had any time off for a holiday since 2008...

I can't live in the house alone as the bills are too high, they won't transfer the mortgage into just my name as I don't earn enough anyway, I can't live there and rent out a room as my ex wants her name off the mortgage and has said she wants to sell and will apparently force me to via solicitors... which I also can't afford.

I decided to get the house valued and it was worse than I thought. Down to 125k because of stamp duty. 30k lost in just over 4 years.

Bizarrely the tenant wants to buy the property and is happy with 125 which is the going rate on the estate. I can pay back the lender in full with no issues, it's the debt to the builder that I cannot cover.

Oddly I can make payments and progress on every other debt I have and the finish line is in sight for some, but to be put back at the starting line with all this looming debt is crushing.

What to do? If I sell what's going to happen? I can give the builder maybe 10k at best from the sale, but from an 'investment' of 38k I'm guessing they aren't going to be pleased. The lender has 'first call' on any money so they will be paid in full and I can continue with my payments to my other creditors so I'm in a strange situation.

The only debt I can't make is the enormous one that will be dropped on my toes a the end of the sale... and I suspect if my ex (who is flippant with money, has been advised of the consequences but continues to bleed me dry knowing I have done my best to avoid this debt for years) will not make any attempt to get a loan to pay the builder, so irrespective if I magically find someone to lend me 15k, she won't pay her half and I still default on the debt because its a 'joint responsibility'.

Money has been so tight I rang the lender and explained my situation. They couldn't really help and said I should approach my other creditors. They were equally unhelpful. I now just want rid of the millstone around my neck. I've cancelled the direct debit for the mortgage and will make a manual payment of what I can afford as opposed to the full amount as I simply cannot afford it. I wont default but I'll be in arrears.

I've told them I'm being backed into a corner and this is what I'm having to do.

I could pay every bill, but then literally have nothing left for the month - I would break even, meaning although every bill is paid, I'd have no money for food or to even fuel my car to get me to work.

Is this the right thing to do? Get in a few hundred pounds arrears for one month, push through the sale, then cry poverty to the builder?

I feel like the options are running out and emotionally it's draining. Especially when, in my line of work, you're supposed to be tough and a model citizen. It appears even though I'm trying really hard, denying myself a lot of things to try and get ahead, I'm still in a bad situation. It's like I've been in a time warp for 4 years and I need to get out, everyone else seems to be progressing with their lives but I'm in the same situation I was 4 years ago and all I've gotten from it is older and worried.

Any advice would be welcome.

DC1981

kingstreet

Will you be allowed to sell?

Can the builder block the sale if the proceeds aren't enough to cover all the secured debt?

Your solicitor has to give the purchaser unencumbered title to the property and can't do that if the second charge isn't discharged.

DC1981_2

I'll have to speak to the builder tomorrow to find that out.

If they do block the sale, yet I can't afford the payments alone, what options would that give? Or is it then a case of voluntary repossession?

It's got to the point where I'm no longer worried about my financial score, I just want to be free of the worry and struggle but be smart with it at the same time.

I hope that makes sense.

kingstreet

I can see no options, I'm afraid.

Is the rent the tenant is paying realistic for the property? It appears to be much lower than the mortgage cost. 4.8% isn't a yield likely to attract an investor, so is she paying enough?

DC1981_2

I did have two in there for a short time, each paying 410 so I only had to top up a little extra, but one moved out no long afterwards and I upped the payment to 500 in the interim whilst I found another tenant but as it was informal and there were no takers at work it's been like that for a number of months. Not a bad deal for the tenant.

I wanted to get it rented out properly but the ex doesn't want her name on it anymore, wants it sold and will not make an contributions (!)

I'll have to see what the builder says.