Negative Equity problem

westmids29

Evening all looking for some help and information, firstly i will describe my situation that has got out of hand due to marital separation and moving from 2 incomes to 1 but trying to maintain same life.

Current Home- worth £300k mortgage £280k ERC's till Nov 09, looking to keep this as can afford if something I can do with my BTL which is hitting me hard

BTL- worth £150k owe £190k split between 150k mortgage and £40k 2nd charge loan. Cost per month £1250 rent £595.

If I was to let BTL get repossessed as it is the only option I can possibly think of have, the banks with charges the ability to come after my residential home and is it worth their while seen as there is little equity after the ERC's would be added?

Or has anyone else better options, i will get myself in trouble very quickly although yet to miss any payments on anything, due to fact outgoings are now outweighing income substantially.

Look forward to all suggested advice

Thanks in advance.

aah

sounds like you are seriously overstretched. I would dump the btl if you can

silvercar

How did you manage to get a 100% mortgage on a BTL and then a second loan on it??????

If you allowed the BTL to get repossessed (poor tenants), the lender would put a charge on your main home. As soon as you get beyond the ERCs you will find that you can't remortgage as your outstanding loans exceed the valuation.

westmids29

thanks so far, it used to be our own residential home and switched to BTL when we moved house, was only overstretched once lost wife's income. The tenants would be fine as clearly i would give them notice to ensure they were out prior to repossession. Really just need to somehow reduce outgoings but also want to keep main residence, has been on market but unable to sell so have decided to keep

Thanks

westmids29

sorry meant to say was not 100% at time but house price falling in mids has meant it is now

silvercar

You need professional advice but I would suggest the following:

The BTL is costing you money so let it go. Give notice to your tenants (Polite but not necessary as the lender will have to acknowledge the tenancy). Do a voluntary repossession on it ie hand the keys back. The lender will then sort out a sale. After the sale they will look to you to pay the difference between the mortgage and secured loan and the price obtained.

You then negotiate, either a one off payment of less than the total to a make them go away or a schedule of repayment that effectively turns the old mortgage/ loan into an unsecured debt.

The lender(s) may or may not pursue a charging order on your home. This doesn't mean you automatically lose your home, but that when you sell they get their money.

The risks are that the lender(s) may get aggresive and try to get possesion of your home. This would be a year down the line at least so would give you a breather. How well you can afford your current home I don't know, but if you can't afford either you may have to walk away.