HELP - Shared Ownership Negative Equity

Ben_Hargreaves

I own a 1 bed flat that I paid £60,000 for 50% shared ownership 10 years ago. It is not anywhere near worth the price I paid for it then. I owe £45,000 on my mortgage and the property has been valued at £62,500. If I sold it and got £60,000 (for example), I would need to give back £30,000 to the housing association, then £30,000 to the mortgage company. Leaving me with £15,000 to pluck out of thin air. The remaining £15,000 I could actually pay off over 12 months but I’m not sure if mortgage companies do this.

On the other hand, I would like to keep the property and continue to rent it out. Currently I pay £500 mortgage per month and £300 in rent and service charge whilst only getting £450 in rent per month. It doesn’t make sense to keep losing £350 per month. I don’t have the best credit to get a loan to pay off the negative equity or I would but if anyone knows of the best option or has experienced something similar then I’m all ears!!! Thanks in advance

diggingdude

Get a second job and overpay the mortgage?

Ben_Hargreaves

Ok thanks diggindude massive help, not thought of that one

General_Applause

Are you saying that the whole property has been valued at £62,500 or just the 50% that you own?


If you were to sell your share today for £60,000, you would need to pay the mortgage people £45,000, leaving you with £15,000 profit. Why do you think you need to give the HA £30,000?

sal_III

Can you even let out a shared ownership property? Pretty sure it's against the lease.

Ben_Hargreaves

The whole property is valued at £62,500, I own 50% and the HA own 50% and they take half of whatever the sale of the property is. So if I sell for 60, I give 30 to them and 30 to the mortgage. The other 15 is negative equity.

Ben_Hargreaves

Actually Sal I have permission from both the mortgage company and the HA

Bossypants

Ben_Hargreaves wrote: »

Ok thanks diggindude massive help, not thought of that one

Can't tell if you're being sarcastic, but honestly that's one of the few ways out of negative equity. You either wait patiently for prices to rise enough to lift you out (could take a while, especially in this climate), or you start putting more equity into the property until you no longer have a negative figure. It's frustrating, but that's the thing about property, it can go down as well as up. If you aren't in a position to ride out the rough parts, you might just need to take the hit and chalk it up to experience.

silvercar

Ben_Hargreaves wrote: »

Actually Sal I have permission from both the mortgage company and the HA

Then let it out - if you think it's value will increase.

No point realising the loss if you don't need to.

General_Applause

What has happened to the flat / area to cause it to lose half its value?

theartfullodger

1. Declare yourself bankrupt (do you have any other debts, including informal to friends or family??) then start again with a blank sheet.

2. Or, as suggested, get additional job/whatever and clear the difference: Will take years ... and even then , if prices drop further as they may well do, more years than you thought...


3. I have no magic wand.


Sorry but...
a) Property prices go up & down: They always have, notwithstanding all the "gurus" who only bang on about prices always going up and.. price drops and negative equity are a risk all property owners run.
b) Shared ownership has a fairly bad reputation for being bad value: Presumably you were aware of this when you started?


Hope things get better.