Help - Ridiculous Temporary Consent to Let rules

agentvamp

Hi, I'm due to give birth in late summer and therefore want to move out of my 1-bed flat into a larger place.
I tried to sell my flat for 6 months but didn't receive 1 offer. EAs explained that lots of repossessions had come onto the market and therefore asking prices had dropped by £30k. They said that if I dropped my price my £30k then someone _might_ buy but this would put me in negative equity :-(

Therefore I sought temporary consent to let. I rang the customer services at my mortgage provider (Northern Rock groan) and they made it sound like it was totally straight forward and I just needed to fill in a form and pay a £100 admin fee for 12 month's consent.

I did so, and showed a detailed breakdown of my financial situtation showing that I could more than afford the mortgage plus rent on a bigger place.

They have just sent me a letter saying they will only provide temporary consent to let where the LTV is less than 75%. However, they will permit me to make a 'capital payment' to bring my current 95% LTV mortgage down to under 74%. Oh great, so I only have to find £37,500 in loose change in this time of credit crunch. My best bet is down the back of the sofa but unsurprisingly it hasn't yielded more than £0.57p so far.

They are effectively presenting me with NO reasonable option?? Does anyone have any advice / comments?

owitemisermusa

Are you in a position to change lenders?

SquatNow

You are in negative equity.

There is no way out.

Go bankrupt while you still can.

The option wont be there forever.

PasturesNew

Is there anything actually wrong with your flat?

It seems to me the following:
- little babies take up little room
- certainly won't need a room of its own for a couple of years

If you can put up with it for 1-2 years, you could save all that extra/spare cash that you'd have spent on the extra insurance, agent fees, voids/paying both rent and mortgage, etc and shovel it into paying off some capital on your mortgage, then see where you're at. During this time you can put your flat up for sale if you want (which you can't do easily if it's rented out), plus (with a new baby) you won't have the stress and worry if your tenant turns out to be a bad 'un that doesn't pay the rent or mucks it up or refuses to move out.

SquatNow

PasturesNew wrote: »

- little babies take up little room
- certainly won't need a room of its own for a couple of years

Little babies get big very quickly.

Sharing a bedroom with a baby is not a good situation... especially for your sanity, and will quickly become problematic.

The negative equity isn't going to go away... it's going to increase. the government now expect house prices to fall AT LEAST 10% from current levels THIS YEAR alone.

Even if prices didn't drop, it is unlikely that a couple with a new baby will be able to save up £37k plus costs in 2 years.

You now have a choice - go bankrupt, (get reposessed and get a council place), or spend at least the next 10 years living in that flat.

Don't assume that the bankrupcy option will be there for long... once volume increase the government will pull the plug to prevent it destabilising the banking system.

What this comes down to is that anyone in £40k negative equity is a fool to keep trying to pay it off. Prices arn't going to skyrocket again anytime soon. You'll simply have to keep paying the debt and living in the house until the next House Price cycle peaks at the same level, and given how OTT prices went this time, it could be 2 cycles before prices return to current levels... that's 36 years. So basically you'll have paid off your mortgage before your house is worth as much again.

People have spent the last 10 years running up debt and enjoying spending the money. They now have to spend the next 20 years not spending any money so they can pay the debt back.

olly300

SquatNow - do you go out of your way to be nasty to every other poster?

SquatNow

olly300 wrote: »

SquatNow - do you go out of your way to be nasty to every other poster?

I'm sorry... I wasn't being nasty was I? I didn't intend to offend anyone... what did I say wrong? Have I missed something?

agentvamp

Squat Now - well put it like this you've not exactly made a 6-months pregnant woman feel any better.
Ever heard of sweetening a bitter pill?

hev_2

Congratulations on the baby - having DS was the best thing I ever did.

I know NOTHING about housing but out of experience of having a baby...

You do not want to move now, honest. At six months pregnant I could barely walk, and while everyone is different, moving house is a very stressful experience which you really do not need at the moment.

You are not compelled to make vital decisions about where you live, how you manage your finances, what you need to do when your system is flooded with hormones.

You do not need all the stuff in mothercare. Pare it down to the bare essentials.

You can sleep in the same room as a baby, I did so for over a year. In fact, the latest recommendations are that you spend at least the first six months sleeping in the same room as your little one to help protect against cot death. Be tough and clear about routines and you will be able to manage. If your partner grumbles get a comfortable sofa for him.

If you do move, would you be able to stay near familiar midwives, gps, hospitals? How about your support network - you need one with a newborn even if it is just a friendly HV.

How about similar flats near you that have just been sold? Are they going at a good price or less than you need? The regulars on here are fantastic so if you give a bit more information about the type of flat, area, links to rightmove etc they will do wonders if you do decide you need to sell.

BTW if you do stay, get a really small pushchair that you can carry with one hand up and down steps - vital for me and my front steps.

3under3

You could lower the price of your flat till it sells. How much negative equity are you looking at? Not a great option I know but might be worth cutting your losses now. What were your plans at the end of the 12 month consent to let period? If you swap lenders BTL mortgages quite often have high fees and you might have to find the 37k in a years time anyway, or even more if as expected the price of property has fallen further.

agentvamp

Thank you so much for your positive contribution Hev, thats so much more helpful and greatly appreciated.
Would you still not recommend moving even if my partner was offering to do the move without any help from me?!
I take your point re having the baby in with you for at least 6 months anyway and will consider staying here.
On the other hand I could drop the price in order to sell but what happens if you end up not being able to pay off all the mortgage with what you receive - does the remainder continue as a debt that you service?
thanks again