Need Loan Advice for Negative Equity

Breadsticks_2

Hi everyone

We are in the process of selling our home and for several reasons we will be renting instead of buying. However our solicitor has advised us that we will be £10k short once everything is settled - there are 2 mortgages on the property.

We have approached both of our mortgage lenders for an unsecured loan to cover the shortfall and neither can help us: One company doesn't do unsecured loans and the other won't lend for the purpose of negative equity. We could lie and say it's for a car but as my husband has CCJs we wouldn't be able to proceed with an application anyway.

I've searched online for 'high-risk' unsecured loans and found 2 companies so far (Yes Loans and Panic Loans) but I don't know anything about them to be honest!

Can anyone offer any advice to us in this situation or shed any more light on the companies I have mentioned.

Edited to add that the loan has to be in hubby's name as I am not working.

Thanks a million

Breadsticks x

P.S - REALLY PANICKING NOW!!!!

jonesMUFCforever

Are you sure that the sale will take place if the 2nd mortgage holder will lose £10k?
You could argue that it is their fault for lending when there was insufficent margin.
I would go back to the company who lent you the money as 2 nd mortgage and say that if they won't give you a loan then they will lose their money.
Once they release the charge over the property in order for the sale to proceed they become unsecured lenders.

Breadsticks_2

Ni I don't think it would take place, we asked them if we could move and then they could bill us for the difference and we'd then get a loan to pay them. They said they would need the full amount outstanding before we could move. So we're stuck. We could have put the house on the market for more but it wouldn't have sold, even the offer we accepted (full asking price) took a year!

jonesMUFCforever

In that case I think you will lose the sale.
Sorry to be the bearer of bad news but I am suprised your solicitor has not advised you beter on this.

Breadsticks_2

The mortgage company have advised us to get a loan to meet the difference and then we can still sell. Do you not think this is an option for us? If not why not? (Just looking for as much info as possible and is much appreciated!).

B x

P.S - Our solicitor has said it is between us and our lender.

mightymouse

Hi

The two mortgages are secured against your property and the lenders permission is required before any sale can take place.

Do you want to move or are there other factors i.e debt etc or mortgage arrears which are pushing you to sell your house.

There are procedures in place for negative equity but these depend on what you want to do next re accommodation.

Please confirm that you have a buyer in place who wants to go ahead subject
to contract.

The point here is that the lenders have to make a decision to let you sell your property or risk being restricted in their recovery against you if they make a bigger loss selling the property themselves.

The negative equity could be turned into mortgage shortfall which you will be expected to repay at some future date depending on your ability to repay the debt sometime in the future.

The point is you cannot pay what you cannot afford and as mortgage shortfall arises after the sale it is therefore unsecured. Yes interest continues but this is another issue and needs to be dealt with seperately.

Getting a loan does not seem a good idea unless you have the means to repay.

These are just my thoughts but should start the ball rolling in terms of what you might want to do next, sorry if its complicated

Breadsticks_2

Hi mightymouse

No your post was not complicated, I appreciate your response.

We are moving to be closer to hubby's job and want to rent. We will be making so many savings by doing this so we'd have the means to pay a £10k loan over 5 years. This is what we panned for but because the mortgage company we are with don't do unsecured loans it's stumped us!!

We have no mortgage arrears and we have a buyer all ready to go.

Aaaarrrggghhh!

Bx

P.S - What are YES FINANCE like as a company?

jonesMUFCforever

Breadsticks wrote: »

The mortgage company have advised us to get a loan to meet the difference and then we can still sell. Do you not think this is an option for us? If not why not? (Just looking for as much info as possible and is much appreciated!).

B x

P.S - Our solicitor has said it is between us and our lender.

It is because of your husband's CCJ's that a normal lender will not touch you. They will be on his credit file for 6 years even if satisfied.
You may get a loan with a sub prime lender but you will pay through the nose for it and this will have to be sorted out (ie you will have to have a written offer/acceptance for the loan) before the sale can go through.
If you do not pay off that second mortgage the sale will not proceed.

mightymouse

The lenders have to make a decision to let you sell your property or risk being restricted in their recovery against you if they make a bigger loss selling the property themselves.

This would seem to be your strength I.E. if there is a negative equity either you sell it or they do but with a buyer in tow I do not think for a minute that they will sell your house for as much as you can with all the costs they will incur.

Get the 2nd mortgage company to sell at a loss and you will come to an arrangement with them to repay that loss.

This is better than a traditional loan and whilst the interest is continuing you can argue over the amounts to try and reduce the repayment depending on your ability to pay.

Breadsticks_2

On paper it sounds like a good option but what do we actually word this to the second mortgage company in these circumstances? (It sounds like "If you don't let us come to an arrangement with the £10k then we'll hand the keys back and you'll lose more - so there )

Bx

jonesMUFCforever

In the end the company will not lose out. They have a second mortgage and if you habd the keys back you will still owe the same amount of money. If the house is then sold at a 'loss' you will still owe the money with hundreds if not thousands added on in legal costs and your credit rating will fall through the floor.They will still come after you for the money.

If that happens you can forget geting any mortgage for the forseeable future.