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Negative Equity on an Interest Free Mortgage
davrostavros
Posts: 10 Forumite
Hello,
This feels like an ongoing weight around my neck.
I bought a property, new build in 2007 on an interest only mortgage, which I didnt have any concerns about as the market was great, then it crashed. I then changed jobs, got divorced and as this was draining me financially and hadnt sold after 18 months on the market I was able to change the mortgage to a buy to let with NRAM.
The property is in North Yorkshire and I am now on the SVR which costs me around £605/month. I get £519 income from the tenants so with insurances etc I am losing about £100/month. The tenents have been in long term so this has been a steady offset. The problem is that it is not only in negative equity (owing £165k with rough property valuation of £150k) but am paying off none of the capital as it is interest free. I dont have any excess income to make overpayments or savings to bridge the equity gap.
ANy help or advice most appreciated.
This feels like an ongoing weight around my neck.
I bought a property, new build in 2007 on an interest only mortgage, which I didnt have any concerns about as the market was great, then it crashed. I then changed jobs, got divorced and as this was draining me financially and hadnt sold after 18 months on the market I was able to change the mortgage to a buy to let with NRAM.
The property is in North Yorkshire and I am now on the SVR which costs me around £605/month. I get £519 income from the tenants so with insurances etc I am losing about £100/month. The tenents have been in long term so this has been a steady offset. The problem is that it is not only in negative equity (owing £165k with rough property valuation of £150k) but am paying off none of the capital as it is interest free. I dont have any excess income to make overpayments or savings to bridge the equity gap.
ANy help or advice most appreciated.
0
Comments
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When you initially took out your interest only mortgage you took out a repayment vehicle as part of the mortgage conditions. How much is repayment vehicle worth and will it cover the negative equity?
Are you also aware of the section 24 tax changes in April because it could make your loses worse.
Seriously if you lied on your mortgage application not having a repayment vehicle I would seek professional financial advice ASAP. With the tax changes and possible 2017 house price falls you need proper advice.:exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.
Save our Savers
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Why don't you live in the property?0
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The rent that you are receiving looks very low for a property valued at £150K."When the people fear the government there is tyranny, when the government fears the people there is liberty." - Thomas Jefferson0
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MacMickster wrote: »The rent that you are receiving looks very low for a property valued at £150K.
A property's market value doesn't dictate it's rental value.
It seems perfectly reasonable for some parts of North Yorkshire to me. Depends where it is.0 -
When you initially took out your interest only mortgage you took out a repayment vehicle as part of the mortgage conditions. How much is repayment vehicle worth and will it cover the negative equity?
Are you also aware of the section 24 tax changes in April because it could make your loses worse.
Seriously if you lied on your mortgage application not having a repayment vehicle I would seek professional financial advice ASAP. With the tax changes and possible 2017 house price falls you need proper advice.
Maybe OP's repayment vehicle would have been to downsize, perfectly reasonable."It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
G_M/ Bowlhead99 RIP0
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