Forced buy to let on interest only

davrostavros

I feel very stuck like I have a bit of a millstone around my neck with this one. I'll try to keep this short.
In 2007 I bought a new build house on an interest only mortgage. It was in North Yorkshire (I was in the Army). That was back in the days when things couldn't go wrong with the property.

Fast forward a bit and I moved back to Scotland about 6 months later with work and put the house on the market with no takers (the market was crashing). I left the Army and was also going through a divorce and couldn't afford to keep paying the mortgage so turned thre mortgage into a buy to let.

Details on the mortgage:
Provider: Landmark (following on from Northen ROck and NRAM)
Rate: 5.5% and interest only
Cost: £657/month
Rent: £519 after agents fees
Property value: around £150,000
Capital owed c.£165,000

I have no idea what I should do and this is something that I feel any time I want o do something I cant, LTV means I am unlikely (impossible?) to get a better rate. I'm also loathe to just put the house on the market as I don't really want to lose the tenants that have been in the house for a while (they aren't looking to buy).
I'm in quite a lot of debt outside of this (though it is manageable).

Help please - this is a constant stressor - I would like to just get rid but cant take the £10k+ hit to sell (plus more if the tenants decide to move out).

AnotherJoe

The choices may not be palatable but at least are clear and there aren't many.
Sell it and add to your debt.
Overpay the mortgage until you get to a point where selling won't put you in more debt.
Carry on as you are and reduce the other debts (if they are at a higher interest rate than the house which is likely?) until selling the house would mean a manageable debt overall.
And I suppose, though it's the nuclear option,go bankrupt.
Try the debt free forum for suggestions.
Where are you currently living? Rented?

PasturesNew

Are you sure of the valuation? It's a rare area/property that, these days, still can't achieve a 2007 price!

foxy-stoat

Any scope to put the rent up, choice another agent with less fees, or manage it yourself?

Your losing money each month just to postpone the inevitable, having to fund the negative equity when you sell to repay the mortgage, assuming your term was 25 years back in 2007.

If the property value doesn't increase by £35,000 in the next 11-12 years you will of lost another £20,000 just to keep the property in your ownership (assuming you have tenants with no voids)....not to mention the income tax implications with the rental payments.

Have you done anything since your other post a couple of years ago?

https://forums.moneysavingexpert.com/discussion/5580924/negative-equity-on-an-interest-free-mortgage

davidmcn

PasturesNew wrote: »

Are you sure of the valuation? It's a rare area/property that, these days, still can't achieve a 2007 price!

I don't think it's that rare - plenty of newbuilds bought off-plan which have never been worth their original price.

davrostavros

I forgot I had already posted in here.

I can contact the agent to see if it is time to put the rent up - I have been fairly easy going and only put the rent up a couple of times so can maybe recoup a bit that way.

If I could guarantee a sale then I would probably do so (and find the money from somewhere) but have the fear that the tenants might move out.

I moved into rented when I left the house and didn't think too much of a repayment vehicle (stupid I know but then again hindsight is wonderful). I also had a decent amount of spare cash then (pre-divorce and children) - so much that I was able to absorb the mortgage (and the rate was higher then as well).

I think I might contact an estate agent near there as well to have a chat about valuing the house and to see what I might get for it - I may be surprised...

Marvel1

PasturesNew wrote: »

Are you sure of the valuation? It's a rare area/property that, these days, still can't achieve a 2007 price!

Not that rare, I myself bought in 2007 and latest sales in the street is cheaper than what I paid and my house is one of the smallest.