Can we even consider moving?

alfadaz

I am after a bit of advice to whether we can even consider moving?

We currently have a mortgage as well as a secured load (shows as 2nd mortgage on Experian) on our house.

We bought our house when prices were high and now our house is worth significantly less and we are currently in negative equity.

Our latest numbers are
NRAM Main mortgage - £77k
NRAM Loan - £9.3k (We couldn't get the full mortgage amount required, so we were given an unsecured loan at the same rate)
Secured Load (2nd Mort) - £28.6k

Our houses market value has dropped to around £90k.

Do we have any options?

Thanks in advance...

Darren

andyfromotley

Hi alfa,

assuming that you have had no massive increase in earnings or savings then you are 25k in debt on this house if you sold it for 90k (not including selling fees say £1500)

In which case you can really i suspect only hope to move to rented accom if you can find that £26.5k. You would then need to save for a deposit and buying fees in the normal manner.

You may be able to do it for less if you don't settle the unsecured loan which takes £9.3k off these figures. But of course that will impact on affordability of new mortgage. (and you're ability to save a deposit)

Without knowing all of the ins and outs it looks to me as if you are stuck. As a survivor of the great housing crash of the 80's all i can advise is that time and rising house prices usually solve these problems. I lived in a flat i bought the month before the crash and sold it 10 years later for a £500 profit!! (no i haven't missed a zero off. five hundred quid after 10 years!!!)

I suspect the days of negative equity mortgages and the like which may have helped you are so long gone to be barely even remembered! Sorry if this isn't what you hoped to hear but to this untrained eye, thats where you are at.

My only advice is to get an EA to value your house. At least then you will know exactly where you are starting from.

alfadaz

Hi Andy,

Thanks for your insight. No need to apologise, it is, what it is!

What you've said is unfortunatly exactly what i thought. I was hoping there may have been a way out via one of the Help to Buy schemes or similar, but probably not.

I haven't had a massive increase in wages, but i have increased from £25k to £30k at the end of last year.

My initial plan to help to improve my situation is to start making overpayments on the secured loan as its the one with the highest interest rate.

I am just waiting on a response to them with regards to how much i can overpay. I should be able to afford to consistanly overpay by £200-£250 a month which I am hoping is my best course of action. I checked with them a few years ago, they had a limit of 10% on overpayments, but i believe there is no limit now.

Darren

enthusiasticsaver

Your choices are limited to overpaying really or waiting for the house price to increase. That is a comparatively large negative equity bill on the value of your house. What part of the country do you live and have you had a few valuations done?

alfadaz

We live in South Wales.

We don't get a lot of luck...
When we bought our house it was around £94k. I had to change jobs early on in the mortgage and took a loan out for a 'newish' 2nd hand car as i needed something reliable for my job which involved a lot of driving. After 6 months (following endless problems) the engine blew up (outside of warranty).

As the house price had rose to around £125k I extended the loan to cover the replacement engine (circa another 2.5k). This car was then written off approx a month later by some youth with no insurance etc. I did get some money back from the insurance, but a lot less than what it was worth (about 1/3rd).

It was also at this time my grandmother sadly passed away. We were due to have some inheritance (circa £35k), so lent my father the money i had from my insurance and some of my savings to pay for all the funeral costs ect, expecting to get it back (as promised). I wont go into the details too much, but it was known all along withing our family that my grandmothers money was to be split equally between my father and myself, she had written it in letters etc, but not declared it formally. My father took all the inheritance along with the money lent to hm and left me with nothing. I ended up extending the loan again to get another 2nd hand car to get me by for a year or so.

I did start to have some savings left, but that all went on replacing our boiler and also replacing the half of my kitchen and appliances when my bathroom sprung a leak and half the ceiling came down while i was away for a week. :huh:

Since then the price has dropped from circa £125k to £90k. We havent had any valuations done at present, we have only taken the prices in the area from Rightmove and Zoopla. I didn't see the point in getting a current valuation as i was pretty sure we couldn't contemplate moving yet and even if the option was available, we wouldn't be looking to move for around a year anyway.

Apart from that, we are great :rotfl:

There is a new development starting early next year closer to work with circa 1200 homes being built and from initial contact there will be some homes that will be on sale from £125-£150k (off plan and avilable via the Help to Buy scheme), so we were looking into whether it would be an option for us or not.

Darren