Negative equity shared ownership

Kelwaah

Here goes, it has taken a lot of courage to post on here as I am feeling rather silly about the whole situation....


In 2007 I had nowhere to live and took out a shared ownership mortgage of 25%. The apartment was valued at 140k. I put down a 5% share of my mortgage, I have plodded along with an interest only mortgage (this was all set up by a mortgage advisor I worked with, not sure it was good advice) My salary was low at the time so I am shocked I got anything!!
I have debt which I am trying to clear and my partner now has a decent job, along with me working for a new company with a much better salary.
Sorry I babble!!
I have looked at the properties around me and they appear to be around 100k, so a drop of 40k! So my question is will I have to pay the 10k difference to the mortgage company if I sell, I can buy 100% share of the property and hopefully will get a mortgage for this amount once my debts are sorted.
I am just wondering the best way out really or has anyone had the same issue?
Thanks in advance for your help!!
And to not burying my head in the sand
xxxxx

pinkteapot

Short answer: Yes. On completion day you will need to pay the mortgage off in full. If the sale proceeds aren't enough (negative equity) then you have to pay the rest yourself. In addition, on completion you normally pay your estate agent selling fee and solicitor fee.

Some lenders may be able to offer you an unsecured (personal loan) or other form of borrowing to cover it, if you don't have savings available to pay it. Speak to your lender to find out if they have any options for you.

I sold in negative equity a few years ago and wiped out my savings paying it off.

Kelwaah

Thank you for responding, it would only be my share, so if it sold for 40k less i would owe 10k?

I may have to try and buy more shares and increase the mortage, better than paying rent to the housing association!

PasturesNew

I had a SO once - and when I sold it was in negative equity. Yes, I had to pay the full negative amount as part of the sales/completion process.

You only pay the shortfall on your percentage, not the whole price, just your bit.

Kelwaah

Sorry the full negative amount not just your share?

TrickyDicky101

Kelwaah wrote: »

Sorry the full negative amount not just your share?

Just your share hence:

You owe £35k on your mortgage.

House sells for £100k and you receive £25k of this (as you own 25%).

Thus you have a £10 k shortfall (35 - 10) which you must pay to the lender to satisfy the mortgage.

pathtofreedom

double check the terms of the so, a friend of mine had a 30% share but it was in the contract if they sold it they only got 25% back, as the ha kept 5% for remarketing it etc.