Empty house with negative equity

New to the forum on a recommendation from family. 

We bought our first home in 2007 a few days before northern rock collapsed. The sale price was just under £90k, advertised at £100k - I have £74k outstanding on interest only mortgage. I thought I had got a good deal getting 10% off. 

We never planned to be there forever as it was pretty run down area but at the time was all we could afford. Our neighbours house was repossessed and sold for around £40k which immediately effected our price for remortgaging and selling. We decided to let it out while we started a new life where we needed to be for family and work. The tenant has now moved out and I need to get the property out of my life. The stress of being a landlord isn’t one I like and now it’s empty I can’t afford the mortgage to keep it on. The tenant has left it needing probs £10k spending on it to re let too. Which I don’t have and wouldn’t earn back. 

What are my options with regards the shortfall if I sell at auction for £40k? 

Should I hand it back to the mortgage company and let them worry about it and chase me? 

I do have a house we live in with about £90k equity but remortgaging right now when I have another 2.5 years left on a fixed rate seems stupid but if I screw this mortgage on the empty house I’m not sure that means for the future of my live in house or getting a mortgage in the future? 

Any advice or anyone been in similar situation? 


  • london21
    london21 Forumite Posts: 1,971
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    Can you get it valued by estate agents?

    If you sold it for 40k at auction, the bank will still come for the balance unless you declared bankrupt.

    But then your other asset has equity so not sure what happens there. 
  • RelievedSheff
    RelievedSheff Forumite Posts: 10,534
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    We were in a similar situation when we bought our first house in 2007 with similar property values.

    Have you had the property valued recently?

    I only ask because we finally managed to escape our NRAM "hell" in 2019 as the property had increased enough in value that we had enough equity to fund an onward move.

    Could it be that the property is now worth more than you think it is?

    If not then certainly get advice on what to do next. You don't want to do anything that will jeopardise your credit file for when you come to remortgage the property you live in now. 
  • MWT
    MWT Forumite Posts: 8,884
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    Our neighbours house was repossessed and sold for around £40k which immediately effected our price for remortgaging and selling.
    When did that happen?
    The way you list the events it feels like it was along time ago, if so then check for any other more recent sales in the area of similar property as a better guide to the current value...

  • theoretica
    theoretica Forumite Posts: 12,069
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    Talking with a couple of local estate agents does seem to be the starting point.  Once you have a firmer idea of any likely shortfall you will be in a better position to work out a realistic course of action.  You will also want to talk to the lender, because they are able to object to a sale if they won't be paid off in full at the time of the sale.
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
  • user1977
    user1977 Forumite Posts: 11,782
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    edited 24 July at 12:55PM

    What are my options with regards the shortfall if I sell at auction for £40k? 
    Nobody (unless they're crazy) is going to buy at auction unless you're redeeming the mortgage, so you can't sell at auction unless you're putting in the shortfall to complete the sale (or the lender agrees to discharge their mortgage and change the shortfall to an unsecured loan, but given the figures I suspect that's unlikely).
  • Hard_up_dad
    Hard_up_dad Forumite Posts: 4
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    Thanks - yes it was a long time ago it was repossessed. House prices on the estate don’t seem to have moved up to anywhere near what I paid though. 

    I have asked for an agent to value it. 

    Is there any government support for over valued/reckless lending in 2007 or would I have any way of negotiating my way out of some of the shortfall? I feel I haven’t done anything wrong on the mortgage but have been leant too much and other variables around me have impacted the loan. I haven’t ever missed a payment. 


  • ACG
    ACG Forumite Posts: 23,242
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    Get an agent in. 
    See what they would value it at. 

    You say it needs £10k spending on it, but what is that £10k being spent on? Does it need £10k to tart it up? As an example, you could probably redecorate/carpet a couple of rooms for maybe £800. 

    If you need a new kitchen, could you just replace the doors and give it a lick of paint? You might be surprised at how far maybe £1,500 and a couple of weekends work would get you. Maybe also see what they would value it at if you redecorated a couple of rooms. 

    Its a £100k house, nobody is expecting it be done up like a country estate. When I bought my first home for £85k in 2012, I had to gut it. I spent £15k on a kitchen (second hand), bathroom, carpets, rewire and installing GCH (although admittedly I only had to pay for the boiler and radiators). 
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • naf123
    naf123 Forumite Posts: 1,662
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    What is the rental income when let?
  • penners324
    penners324 Forumite Posts: 2,240
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    Have you looked at RightMove for similar properties?

    I would think it's virtually impossible a house worth £100k in 2007 is worth £40k in 2023.

    More likely £150k
  • Hard_up_dad
    Hard_up_dad Forumite Posts: 4
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    I love everyones hope but you haven’t been to this estate between Durham and Sunderland 😂 - rental income would be about £550 - £600 per month once sorted I think. Fingers crossed I get the amount the mortgage company need. 

    I guess I came here to see if there’s a way to get a mortgage company to move on the shortfall amount 
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