Negative Equity battles to mortgage-free wannabe plans

reliva

So where do I start.... I have been reading on here for a while now, keeping me sane while going through the selling process. I thought my story might give a bit of hope to those in negative equity or struggling to sell.

I was one of 'those' who bought my first place just before the 2007 crash, so bought at the top of the market and was plunged into negative equity within 6 months of buying.

I managed to get a consent to lease to rent it out while I moved elsewhere - I couldn't stand being at the property and I was fortunate to be able to save money from a new job to put a deposit down on a cheap house elsewhere. I rented the flat out, and broke even just about but never made any money as it was on a consent to lease mortgage as I couldn't get a buy to let as was in negative equity.

I tried selling it 4 years ago and didn't get one viewing in a year of being on the market at less than the original price I paid. (I paid 98 in 2007, and put it on for about 90)

2 years ago my tenants moved out and I put it back on the market at 80 with the view to pay off the difference between mortgage balance and sale price with savings. Long story short - the flat was only on the proper market for about a month in total over that time, the rest of the time it was in the process of being sold - but it fell through FOUR times.

2 times were on or the day before exchange. It has been soul destroying. I have been paying out the full mortgage for 2 years on the property whilst it's been empty and going through sale after sale. 3 of the 4 times the reasons for sale falling through were that they were cash buyers and swapped at the last minute, or got back together with ex-wife, or one because he didn't like some contents of the lease which didn't apply to my lease at all so don't know where he got that from.....anyway.

After 2 years, and 4 fall throughs it finally completed last week. It is done. I did have to pay a short fall of £9k of negative equity, which I know I am very lucky to be able to do - believe me, I thank the stars I have been able to as I didn't want it around my neck any longer. The more financially minded told me I should have kept it until it was out of negative equi, rented it etc etc. But until you're in that position, you really don't know the emotional cost of being completely stuck.

I couldn't find anything online about people having their property fall through so many times so I thought I would share to keep the hopes up of anyone struggling, more things could not go wrong than in my case and it still happened.

I am now focused on paying down what I can on my current mortgage.

A few things I learnt from this 'experience':

If I'd not had the flat in negative equity to start with, I'd have got a much bigger mortgage on a house eventually compared to the cheap house I bought out of necessity of having another mortgage on the flat. This has meant I don't have a huge mortgage, I love my house and I'm glad I have something I can easily afford each month.

I'll never buy a property that has something even vaguely strange connected to it; i.e. commercial property nearby, funny access, blah blah. I'm leaving that to people braver than me after what I went through.

I really appreciate that I am lucky to have been able to save up the short fall to get rid of the flat, compared with many people who are still in negative equity and are stuck. It's a horrible feeling and even if you save up the difference to the market value, you can't always sell it, like in my case for many years.

So it has been a difficult 10 years but I'm finally 'free' of it and going to focus on the Mortgage-Free-Wannabe forum for a while for my current mortgage.

Crashy_Time

Why couldn`t you find tenants?

PField

I am guessing you have made some money ( on paper) on the house you bought which has gone towards covering your loss on the flat. So its not all doom and gloom.

reliva

I could find tenants but it barely covered the mortgage cost and then costs of upkeep etc. It was a hassle doing all of that, for a place I really had become sick of - so was an emotional decision over a financial decision.

We were selling it, so didn't want to have tenants while selling it to keep it as nice and tidy as possible.

Also, the mortgage company had given me a consent to lease mortgage and said it was only valid for a year and wouldn't let me keep renting out, and said they don't do buy to let mortgages (nor would I have got one without finding a 25% deposit).

reliva

Yes I have, and I in no way think it's doom and gloom, I'm glad to be free of the place. It's one thing dealing with tenants and renting out etc when you choose to, but not when you're forced into it because of a negative equity position and then can't make any money on it because of consent to lease mortgages. I would have needed to find circa 40k to be able to get a buy to let as I was in negative equity and the mortgage company said I could only rent out for one year.

ermine

reliva wrote: »

I did have to pay a short fall of £9k of negative equity,

You lucky devil. I was young and stupid enough to buy a house in 1989 and sold it nine years later still with a shortfall of more than that - and 9k was worth more in those days.

I have always hated Britain's favourite asset class since then. After roughly twenty years of house ownership I broke even on what I would have paid if I'd rented, though I do appreciate the 20 years free of Britain's loathsome army of BTL landlords. As an asset class the stock market was far kinder to me over my working life and vastly preferable to housing.

When I bought my recent house I paid cash because I am mortgage free, but as a general rule I'd avoid cash buyers as a vendor. They tend to mess you around at the last moment, sometimes they are fronts for a builder or something, so they don't actually need to move in. Sell your house to real people with skin in the game who actually want to live in the house you're selling.