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Shared Equity
cun562000
Posts: 3 Newbie
Need some advice if possible.
We currently own a 2 bedroom house which we bought in shared equity with the housebuilder. Bought for 115,000 and currently worth approximately 87,000. We owe the mortgage company £84,500 so selling for 87,000 would leave us with 2,500 for the house builder when in reality we owe them approx. 22,000. What could the housebuilder do if we sold it and had just 2,500 left for them? Or woiuld the money be split evenly between the two (would this be my choice)
Thanks
We currently own a 2 bedroom house which we bought in shared equity with the housebuilder. Bought for 115,000 and currently worth approximately 87,000. We owe the mortgage company £84,500 so selling for 87,000 would leave us with 2,500 for the house builder when in reality we owe them approx. 22,000. What could the housebuilder do if we sold it and had just 2,500 left for them? Or woiuld the money be split evenly between the two (would this be my choice)
Thanks
0
Comments
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It won't be split between the two. The mortgage lender has a first charge and will get all its money first. The builder will get whatever is left over.
However, if you do not contact the builder in advance of any sale, they can refuse to release their second charge preventing you from completing a sale.
A second charge puts them behind the mortgage lender in the pecking order, but they can stop you selling if you do not reach agreement with them over any potential shortfall.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Thanks for the reply
Any ideas of any options for us?
We are in a 2 bedroom with 2 children and one on the way. We HAVE to move and realise we are going to have to rent.
We have no ways of paying this shortfall and are really unsure what to do next.
Thanks0 -
The only suggestion I have concerning the equity loan is contact the builder.
As far as a mortgage for a new property is concerned, that would depend on income, deposit, credit history etc.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
I think regarding a mortgage, we are happy to rent for a while but cant get out of this.
What if we just moved out and contacted the builder and mortgage lender and said we cannot pay anymore?
I know this is extreme but we need to get out of this house and need more space.0 -
You will leave yourself open to pursuit for the increased debt after the property is sold at a much lower price than you can arrange, for a period of 12 years and trash your credit files for much of that time.I think regarding a mortgage, we are happy to rent for a while but cant get out of this.
What if we just moved out and contacted the builder and mortgage lender and said we cannot pay anymore?
I know this is extreme but we need to get out of this house and need more space.
Many lenders ill not lend to you at all, if you have a repossession in the past.
Contacting the builder to see if you can make an arrangement to pay after completion of the sale seems a much more sensible approach.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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