Barratts dream start help desperately needed - we may be forced to sell our home

elizabethdane

Hi folks, I'll keep this as simple as possible and stick to the facts.

We purchased our home eight years ago with a mortgage of £120k and a dreamstart offset of £40k. We were told at the time that the £40k would be repayable either upon sale of the property or after ten years, and that the figure would be adjusted in line with the value of the house.

We were assured repeatedly that in any event we would be able to remortgage should we need to, and absorb the 40k into our existing mortgage.

As there's only two years to go and with the house in negative equity I decided to get the situation under control and started the process of remortgaging only to find that there is not one bank willing to give us the finance. We have been informed that the repayable figure adjusted for current market value is a little over 37.5k and if we don't come up with it then we have to sell the house. This will leave us renting and absolutely unable to get back on the property ladder.

We have a combined income of 46k but we've always been on a repayment mortgage and now have a son, so there's been no money left to save. We had no idea that this could happen and are now facing a life of paying somebody else's mortgage for them. I am devastated. Has anybody got absolutely any suggestion at all for how we should proceed? Any advice is greatly appreciated. There must be many, many people in this position.

Many thanks. Vic.

Thrugelmir

How much negative equity are you in?

If you are unable to save. How do you proposing the increased mortgage?

Dave_Ham

You need to speak to them.

Offer them monthly payments, as they sold you an over-priced house(ok that part may be a bit strong)

Explain that if they enforce this timescale and amount, you will have to be repossessed and that they will get nothing, as you will be re-housed by local authority.

Either that option or do a deal on the amount for settlement.

My opinion is Barratts will be open minded to doing some sort of deal..

Good luck

elizabethdane

We're about 12 grand into negative equity, and the house was certainly overpriced!

Increasing the mortgage by 40k wouldn't make a great difference on a monthly basis as we regularly overpay anyway, we just didn't imagine we'd need to come up with such a large sum of money so we didn't make allowances for it. We have contacted Barratts several times and all they would offer is a 20% discount if we pay it back in full within 28 days! Bizarre.

There must be some solution to this, I just can't put my finger on it.

kingstreet

What is the current value of the property? £150,000?

What is the outstanding balance of your mortgage?

Is the discount 20% of £40k, meaning £32,000 payable or 20% of£37.5k, meaning £30,000 needed?

elizabethdane

It's 20% of the 37.5, and the mortgage balance is 112k. We asked our mortgage provider (Santander) for assistance and they put us through to an accounts manager who said there would be absolutely no possibility of any additional finance.

We tried talking to a mortgage adviser about options but she just said if we don't have any significant cash to put up then nobody would assist us. Bummer.

Thrugelmir

Have you calculated how much you'll reduce the mortgage by in the next 24 months?

kingstreet

£142k on £150k is unlikely to be possible at the moment. You simply have insufficient equity to be able to remortgage.

To borrow £142k, you ideally need a valuation of £158k+.

Yorkie1

elizabethdane wrote: »

We're about 12 grand into negative equity, and the house was certainly overpriced!

Increasing the mortgage by 40k wouldn't make a great difference on a monthly basis as we regularly overpay anyway, we just didn't imagine we'd need to come up with such a large sum of money so we didn't make allowances for it. We have contacted Barratts several times and all they would offer is a 20% discount if we pay it back in full within 28 days! Bizarre.

There must be some solution to this, I just can't put my finger on it.

Any chance of getting your overpayments back? Would that make much of a difference if you could?

elizabethdane

Honestly I really don't know! I'm going to have to start thinking outside the box I reckon. Hmmm....

joolsyp

Hi Vic.

I don't have any answers but I'm in a similar position to you. Purchased my Barratts flat for circa £143k back in 2005 under the 'Dream Start' scheme (what a misnomer that is). I got a 95% mortgage for £108k from Santander and the balance was the 25% 10 year loan from Barratts.

The flat was massively overpriced and I have since found out that they were selling similar flats in the same complex to buy to let landlords for £20-30k less. I have nobody but myself to blame for paying well over the odds, but I was desperate to get on the housing ladder and fell for Barratts slick marketing. I remember them telling me just before we exchanged that "the value of the flat would probably dip for a couple of years but would then recover." Well, 7 years later its value is between £100-110k, leaving me £30-40 in negative equity.

I had the same offer from Barratts as you recently, so decided to contact them to discuss my options. In 2.5 years time I will have to pay them 25% of the value of the flat which is probably around £25-28k. I am on an interest-only mortgage with Santander (another mistake on my part which I realise now) and as they have stuck their rates up recently I haven't been able to save much to offset the amount I will owe Barratts. I did ask them whether they would be prepared to extend the loan beyond the 10 years and they said I would have to apply on a month by month basis to have it extended, and that I could only do so closer to the due date.

I have since rented my flat out with the agreement of Santander (£295 flat fee) and Barratts. This has left me in a slightly better position but because of Santander's interest rate and the fees associated with the upkeep of the flat (ground rent, service fees) I am only really breaking even.

I have even considered one of those no-risk "mis-sold mortgages" companies but they all seem a bit dodgy to be honest. Bankruptcy is another option, particularly if Barratts are not flexible over repayment when the amount is due.

Good luck and I think you are right - I'm sure there are many others in a similar situation to us. I was thinking I was the only person who had fallen for Barratts 'dream' but its nice to know there are others in a similar situation, even though I wouldn't wish it on anybody!

best

J