least impact on credit rating

samara

 Ive a rental property im in the process of selling,and its in negative equity by 20k.
I don t believe this will ever recover its price (bought 2007),enough to clear the mortgage of 118k.
I ve spoken to my lender and the only option they have offered me is to go into a negative equity agreement,which means there is a payment plan in place which would enable me to complete on a sale.
Being the only option they offered,and i could not think of a better one,I was and still am thinking its the only way out.

I was wondering what would have the least effect on my credit score,using this type of agreement,or getting a loan for part of it,and paying some off in savings?

Obviously,its going to impact me for a long time,and make it difficult/impossible to do certain things in life,ie,change rental properties,phone contracts etc,so am trying to figure out the kindest option for me.


Thanks in advance for any opinions.

K_S

@samara What is the nature of the agreement? I don't think there's a standard format it takes.

It could be that they convert the 20k balance into a loan secured against your main home, or another property you own, etc.

If you can make up the shortfall through a separate loan + savings, I'd imagine that would likely have the least impact on your credit history. But again that would depend on the specifics of what 'payment plan' is being offered by the lender.

goldieandblackie

Why don't you carry on renting out the property until the mortgage is cleared off.