Risk losing new home can't get permission to let old one

mariadingbat

Hi,

I'm wondering if anyone has any advice about the situation my husband and I have found ourselves in. I bought a tiny house in my mid 20s just before the crash with an interest only mortgage. Unfortunately the house value dropped and it's still in about £30,000 in negative equity. We now want to start a family and have had an offer accepted on a new house that would suit a family but as the old house is in negative equity, I can't sell it and would prefer to rent it out for a few years to give us breathing space to pay down the negative equity. I've asked my current mortgage supplier to give us consent to let, but they are a building society who don't provide buy to let mortgages and won't provide a letter of consent. They are happy that I let the property and will move me onto the standard rate but they won't provide anything in writing to state this. This means that we can't get a mortgage for the new house as 2 banks have already refused to give one without the letter! We don't know what to do. Any ideas?

kingstreet

I can think of lenders who don't ask for a CTL letter on a LTB.

Spend more time on research; or get a decent broker to do it for you.

Comms69

mariadingbat wrote: »

Hi,

I'm wondering if anyone has any advice about the situation my husband and I have found ourselves in. I bought a tiny house in my mid 20s just before the crash with an interest only mortgage. Unfortunately the house value dropped and it's still in about £30,000 in negative equity. We now want to start a family and have had an offer accepted on a new house that would suit a family but as the old house is in negative equity, I can't sell it and would prefer to rent it out for a few years to give us breathing space to pay down the negative equity. - can you afford both properties, if not then this is a moot point. I've asked my current mortgage supplier to give us consent to let, but they are a building society who don't provide buy to let mortgages and won't provide a letter of consent. They are happy that I let the property and will move me onto the standard rate but they won't provide anything in writing to state this. - well that's that then. This means that we can't get a mortgage for the new house as 2 banks have already refused to give one without the letter! We don't know what to do. Any ideas?

Speak to a specialist broker, but in fairness you owe £100k + without the assets to cover that debt.


Failing that rent somewhere.

mariadingbat

Unfortunately, the problem only came to light through our broker. He's spoken directly to two banks who refused outright and one who wanted a 15% deposit when we only have a 10% one.

We can afford the two properties, we both went back to college to retrain so weren't in a strong financial position until we got job in our new fields. We've been working and saving the last few years and are now in a position to buy. We can afford our new mortgage comfortably and plan to overpay the interest only one over the next few years to remove the negative equity.

Comms69

mariadingbat wrote: »

Unfortunately, the problem only came to light through our broker. He's spoken directly to two banks who refused outright and one who wanted a 15% deposit when we only have a 10% one.

We can afford the two properties, we both went back to college to retrain so weren't in a strong financial position until we got job in our new fields. We've been working and saving the last few years and are now in a position to buy. We can afford our new mortgage comfortably and plan to overpay the interest only one over the next few years to remove the negative equity.

So you need to rent somewhere in that case

theartfullodger

mariadingbat wrote: »

..................We now want to start a family and have had an offer accepted on a new house that would suit a family but as the old house is in negative equity, I can't sell it...............

Uummnnn... you CAN sell it, but at a significant loss. Sorry for you but many of us have been there in the past ...



Property prices have always bounced up & down...



Good luck, best wishes & hope things improve.

Carrot007

mariadingbat wrote: »

We can afford the two properties

Maybe but can you afford to be a landlord. Without a backup of £10K at least I would say no.


Otherwise you are just hoping to be lucky.


Sell and take the loss. (and if you cannot afford to do that you cannot afford to be a landlord).

[Deleted User]

How long have you been earning more but not paying more off the house you own presently? If you can't do that, it seems risky to consider buying another house.

Its quite unusual to have a house bought some time ago (how long ago?) still in such a large amount of negative equity. Is there something wrong with it that you could sort to make it a more attractive purchase (and therefore attract a higher price)?

[Deleted User]

God knows who your broker is going to but this shouldn't be a difficult case to place. 10% deposit with a retained property on ctl, no letter for ctl. Should be fairly easy

What lenders have you been dealing with?

Comms69

Deleted_User wrote: »

God knows who your broker is going to but this shouldn't be a difficult case to place. 10% deposit with a retained property on ctl, no letter for ctl. Should be fairly easy

What lenders have you been dealing with?

It's the negative equity that's going to cause the issues

AdrianC

mariadingbat wrote: »

but as the old house is in negative equity, I can't sell it

Yes, you can.
You would just need to crystallise what's currently a paper loss. You sell it, pay off as much of the mortgage as you can, and the rest becomes a debt to repay.

and would prefer to rent it out for a few years to give us breathing space to pay down the negative equity. I've asked my current mortgage supplier to give us consent to let, but they are a building society who don't provide buy to let mortgages and won't provide a letter of consent.

And, of course, there is no way on this earth that you will get any lender to go near 100% LtV on a BtL mortgage, even if you repaid that negative equity.

They are happy that I let the property and will move me onto the standard rate but they won't provide anything in writing to state this. This means that we can't get a mortgage for the new house as 2 banks have already refused to give one without the letter! We don't know what to do. Any ideas?

There is an obvious solution.

Live in this house, change the mortgage to repayment (why didn't you do this at some point in the last decade plus since the crash?), and use the saved equity you would be using for your purchase to eat into the negative equity until you're in a position to be able to simply sell and by as normal.

As Carrot says - can you afford to be a landlord? Not much savings, not much income headroom, two mortgages, and planning to start a family...?