help!

else1979

we are trying to sell my partners house as we now live together and obviously don't need 2 houses. we have tried to rent out the property and got our fingers burnt ( a whole other nightmare!) so we are now desperate to sell as we just cannot afford payments on 2 properties, unfortunately I can now see this situation having a detrimental effect on my partners mental health. Anyway, we received an offer of £35k against a mortgage of £40k and are being told by our mortgage company that we cannot sell unless we can pay the shortfall in full - we cannot do this we just don't have the cash available. We assumed that we could pay off what we could from the sale and then would pay the shortfall off against some kind of loan?? Surely our mortgage company have a duty of care to their customers, I am honestly fearful for my partner as I just cannot see away out of this nightmare we're in.

Any advise is most welcome..................

Getting_greyer

It may be me but those numbers don't look right? 
Is it interest only mortgage or did you 125% mortgage or something?

hazyjo

How did you each afford payments before on your respective properties? Or did your partner have one, you had none, and you bought one together? 

You could take out a loan yourselves to pay the shortfall. Any family that might be in a position to lend it?

Take on an additional job? Sell stuff? Take in a lodger?

Could wait for a higher offer, but no idea how much you're spending each month so that might be false economy (and may never happen).

Have you asked the lender if they'll tie it in with a loan to meet the balance?

sal_III

Your mortgage company has a duty of care towards their shareholders, not customers. Changing a secured loan such as a mortgage to an unsecured loan is bad business.

Negative equity is not a good position to be in, but it's not your mortgage provider's fault. 

How much equity do you have in the other property, it might be an option to either release equity from it or ask the mortgage lender on the property you are selling if they will accept a second charge on your other property as security for the outstanding balance of the mortgage.

else1979

My partner & I now live in a rented property via my parents, we have a small family.

The house we are trying to sell is in a small North Eastern town which was named the 1st most worst town to live in 2019, property in surrounding areas are selling for as low as £11k. The council doesn't want (understandingly) property standing empty so increase the council tax.

When we rented out to a 3rd party we had to spend all of our savings paying to evict the tenant and totally renovating the property to a sellable state - or so we thought.

We are in no way trying to avoid paying the shortfall, we want to pay the shortfall we just cannot pay in full in one payment - I came on this forum as I didn't realise this was usual practise.

Retired_Mortgage_Adviser

Yes you can take a loan and use it to pay the shortfall if you can get one.

Depending on the specifics and how severely this is affecting your financial circumstances, your mortgage lender may be willing to write off the shortfall, as long as the sale price is similar to or more than they would eventually get if they repossessed the property. You have to get their agreement beforehand though.

I would recommend talking to Citizens Advice to look at the entirety of your circumstances and give relevant advice on your options. It is impossible to do that on a public forum.

AdrianC

Wow, I assumed you'd got a typo for £350k and £400k...

Sorry, but if you're in that kind of negative equity, the best bet really is to just accept there's a loss and crystallise it. If you can't find five grand to cover the mortgage shortfall, then running a residential lettings business is DEFINITELY not for you. What if the tenant does a runner leaving you with unpaid rent and a trashed house? What if the boiler just dies a death?

Is the lender for this property the same as the lender for your other property? I'm wondering if there could be some kind of cross-charge between the two. Or would the lender be willing to accept a second charge on your other property for the debt?

Retired_Mortgage_Adviser

AdrianC said:

Is the lender for this property the same as the lender for your other property? I'm wondering if there could be some kind of cross-charge between the two. Or would the lender be willing to accept a second charge on your other property for the debt?

The second property (the one they live in) is a rental.

else1979 said:

My partner & I now live in a rented property via my parents, we have a small family.

Fosterdog

Can you not give up the rental and move in to the owned property? 

Crashy_Time

else1979 said:

we are trying to sell my partners house as we now live together and obviously don't need 2 houses. we have tried to rent out the property and got our fingers burnt ( a whole other nightmare!) so we are now desperate to sell as we just cannot afford payments on 2 properties, unfortunately I can now see this situation having a detrimental effect on my partners mental health. Anyway, we received an offer of £35k against a mortgage of £40k and are being told by our mortgage company that we cannot sell unless we can pay the shortfall in full - we cannot do this we just don't have the cash available. We assumed that we could pay off what we could from the sale and then would pay the shortfall off against some kind of loan?? Surely our mortgage company have a duty of care to their customers, I am honestly fearful for my partner as I just cannot see away out of this nightmare we're in.

Any advise is most welcome..................

5k isn`t anything like a "nightmare", people are regularly knocking 50k off their house price to try and find buyers now, start thinking creatively instead of fearfully IMO, can you find cheaper rent for example, and/or an additional part time income as another poster suggested?

oystercatcher

Seconded as to why you can't live in this property?  With such a tiny mortgage can you not overpay and pay it off quickly or is the reason the house prices are so low that there is no work available? When you live in the overpriced south it's hard to imagine such cheap property being a problem. A garage would be 40K here!