Guys im 26 and need serious help!

jamesd

k0108356, if you can manage to fund it, holding the property for ten years or more may get you out with a profit. Would take at least 4% a year plus inflation property price increases to get you out with no capital loss (comparing your 220k to 150k) plus any subsidising payments you make over the years. Long term property price growth averages around 8% (deduct inflation for real value increase) so this is not impossible even though prices may take a while to move up.

Or if you can raise the difference between sale price and mortgage balance owed you could sell. You'll have to pay this difference to the lender when you sell or they will block the sale, as is their legal right.

Or you could stop paying, be repossessed, get a very nasty black mark on your credit record and be hounded by the mortgage lender until you've repaid the 50-100k difference between repossession auction sale price and mortgage value plus their legal and sales costs. Probably nearer 100k than 50k.

Your best bet if you can afford it is to wait for inflation. That'll eventually decrease the real value of the mortgage capital and monthly subsidy and property prices will eventually increase to cover the difference in value. But it'll probably take that ten years or more to get out without a loss. After ten years inflation at 3% would have reduced the real cost of the mortgage payments and real balance owed to 75% of the current levels. Wage inflation is more likely to be 5% and that means it'd take more like 61% of what it takes now to pay the bills. So hanging on becomes more and more practical the longer you're able to manage it.

Rents may have risen enough to cover the mortgage in five years. Maybe. It'll happen eventually, just can't predict when.

In the shorter term, you will not be able to remortgage this property unless you can raise the difference between a current valuation and the mortgage amount needed. So you should either try to raise that money or be prepared to pay whatever rate your mortgage changes to after any deal period ends. This may be what breaks you and forces you to accept repossession if you can't handle these higher payments.

Be very, very nice to your tenants. It looks like a market where you could have trouble replacing one and having a vacant property would be even worse news. You might consider seeking insurance to cover void periods but it may prove impossible to get in your situation - but worth trying to protect you from this potential disaster.

chappers

As jamesd points out I think the only way you can come out of this ahead is to hang in there but the big question is how well are you managing at the moment to cover your rent shortfall, how well are you likely to manage once you are married and need to either rent or buy a place of your own with it's own bills etc. how will you cope at the end of your mortgage deal, particularly if left on your lenders SVR.

As has been said several times already you need to get the property valued and actually asses the situation, particularly with regards to the points I made above, it may be you can just sell up cut your losses and move on, or you may have to seriously consider your options, could your parents help you out in anyway, with regards to the shortfall you have on the property.
Either way I'm afraid you are going to feeling the effect of this purchase for a while to come yet.

Good luck I hope your valuation surprises you.

MissMoneypenny

Nothing to add that can help you, but just wanted to say that my sister lost about 30k in the crash in the early 90s. I can't remember the exact figure now. Most of it was their own money. Money that they had made doing up the houses they lived in and moving on and upwards. It was hard at the time, but they have caught up now and had a family. So try to lose too much sleep over this.

sine270

Go for bankruptcy but postpone your wedding long enough so your future wife can buy a property for the two of you to live in as you wont be able to borrow any money. Better still, just go bankrupt and live in sin so her credit rating wont be affected and the two of you can still borrow money. Dont put your name on the electoral register or any bills otherwise her credit will be affected too. Good luck.
I dont suppose she will go for this though.

heathcote123

HeadInSand wrote: »

I trust that was a joke!!

(i.e. don't do that)

No thats true, try to get 50k's worth

blahdog

What is it with people these days who can't be arsed to actually pay their debts off?

In debt? Ahhh no worries, just write it off and let everyone else sort out my mess.

zag2me

When you get a valuation report from your mortgage company they list similar properties in the block usually. Have you tried looking back at this?

Its in the lenders interest to value a property correctly and is very rare for them to overvalue something by so much.

Conrad

Given the head of steam building under sureyors and thier mis valuations on new build flats, it might be worth contacting the RICS. As this area is a developing story you might find you come up against people who will tell you, you are wasting your time complaining, but I'm not so sure.

I was a lone voice in the 1990s predicting the endowment and pensions misselling, people thought me a bit mad.

I would just pile the pressure on the valuer to exactly justify his valuation as your decision to proceed was influenced heavily by his litteral underwriting your confidence.

Sure you did not have a legal contract. however this is the point; The surveying firm may be concerned you could end up whistle blowing and exposing a deep hornets nest of misvaluations that lenders have also relied upon. I would go for the jugular of the MD of the surveyors - use special delivery post and deal with no one else.

Want you will essentialy convey is that if he somehow compensates you, the whole thing can go away quietly. Obviously I make no judgement here, but £220000 for a 1 bed in that location!1 I smell the scent of developer inducements that massaged the surveyors mind.

jimmyay

Conrad wrote: »

Given the head of steam building under sureyors and thier mis valuations on new build flats, it might be worth contacting the RICS. As this area is a developing story you might find you come up against people who will tell you, you are wasting your time complaining, but I'm not so sure.

I was a lone voice in the 1990s predicting the endowment and pensions misselling, people thought me a bit mad.

I would just pile the pressure on the valuer to exactly justify his valuation as your decision to proceed was influenced heavily by his litteral underwriting your confidence.

Sure you did not have a legal contract. however this is the point; The surveying firm may be concerned you could end up whistle blowing and exposing a deep hornets nest of misvaluations that lenders have also relied upon. I would go for the jugular of the MD of the surveyors - use special delivery post and deal with no one else.

Want you will essentialy convey is that if he somehow compensates you, the whole thing can go away quietly. Obviously I make no judgement here, but £220000 for a 1 bed in that location!1 I smell the scent of developer inducements that massaged the surveyors mind.

that's bad advice. the op has already admitted in writing on here that they didnt know anything about prices. the fact that they've been caught with their pants down or not done their homework on prices is their own fault. buyer beware. these kinds of price "falls" are just what is happening as demand for the flats on resale plummets. new flats always lose value the first few years - its always been like this and what do you expect when you get all the furniture thrown in , deposits paid and stamp duty inducements etc. instantly you can be down £20k, not even accounting for a weak market or oversaturation of the same thing in an area where everyone actually wants family homes.

most of these new developments are going to end up as housing association fodder and the council houses of the future. luxury apartments.........hmmm.

dunstonh

Your flat isnt Swan Court by any chance is it? A little digging shows that as wimpey built development.

Some flats have sold recently with small gains or small loses on their original price.
http://www.houseprices.co.uk/e.php?q=gu17+swan+court&n=50

If it is, then it is possible to identify your flat due to price but then the registry does show the price you paid was the price recorded.

Things may not be as bad as you think as long as the extra amount you paid means you got one of the better flats in the development.