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  • FIRST POST
    Breadsticks
    Need Loan Advice for Negative Equity
    • #1
    • 15th Jun 07, 8:48 PM
    Need Loan Advice for Negative Equity 15th Jun 07 at 8:48 PM
    Hi everyone

    We are in the process of selling our home and for several reasons we will be renting instead of buying. However our solicitor has advised us that we will be £10k short once everything is settled - there are 2 mortgages on the property.

    We have approached both of our mortgage lenders for an unsecured loan to cover the shortfall and neither can help us: One company doesn't do unsecured loans and the other won't lend for the purpose of negative equity. We could lie and say it's for a car but as my husband has CCJs we wouldn't be able to proceed with an application anyway.

    I've searched online for 'high-risk' unsecured loans and found 2 companies so far (Yes Loans and Panic Loans) but I don't know anything about them to be honest!

    Can anyone offer any advice to us in this situation or shed any more light on the companies I have mentioned.

    Edited to add that the loan has to be in hubby's name as I am not working.

    Thanks a million

    Breadsticks x

    P.S - REALLY PANICKING NOW!!!!
    Last edited by Breadsticks; 15-06-2007 at 8:57 PM. Reason: Providing additional information
Page 1
    • jonesMUFCforever
    • By jonesMUFCforever 15th Jun 07, 9:53 PM
    • 25,732 Posts
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    jonesMUFCforever
    • #2
    • 15th Jun 07, 9:53 PM
    • #2
    • 15th Jun 07, 9:53 PM
    Are you sure that the sale will take place if the 2nd mortgage holder will lose 10k?
    You could argue that it is their fault for lending when there was insufficent margin.
    I would go back to the company who lent you the money as 2 nd mortgage and say that if they won't give you a loan then they will lose their money.
    Once they release the charge over the property in order for the sale to proceed they become unsecured lenders.
    What goes around - comes around
    give lots and you will always receive lots
  • Breadsticks
    • #3
    • 15th Jun 07, 10:32 PM
    • #3
    • 15th Jun 07, 10:32 PM
    Ni I don't think it would take place, we asked them if we could move and then they could bill us for the difference and we'd then get a loan to pay them. They said they would need the full amount outstanding before we could move. So we're stuck. We could have put the house on the market for more but it wouldn't have sold, even the offer we accepted (full asking price) took a year!
    • jonesMUFCforever
    • By jonesMUFCforever 15th Jun 07, 10:58 PM
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    jonesMUFCforever
    • #4
    • 15th Jun 07, 10:58 PM
    • #4
    • 15th Jun 07, 10:58 PM
    In that case I think you will lose the sale.
    Sorry to be the bearer of bad news but I am suprised your solicitor has not advised you beter on this.
    What goes around - comes around
    give lots and you will always receive lots
  • Breadsticks
    • #5
    • 15th Jun 07, 11:25 PM
    • #5
    • 15th Jun 07, 11:25 PM
    The mortgage company have advised us to get a loan to meet the difference and then we can still sell. Do you not think this is an option for us? If not why not? (Just looking for as much info as possible and is much appreciated!).

    B x

    P.S - Our solicitor has said it is between us and our lender.
    • mightymouse
    • By mightymouse 16th Jun 07, 12:01 AM
    • 316 Posts
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    mightymouse
    • #6
    • 16th Jun 07, 12:01 AM
    • #6
    • 16th Jun 07, 12:01 AM
    Hi

    The two mortgages are secured against your property and the lenders permission is required before any sale can take place.

    Do you want to move or are there other factors i.e debt etc or mortgage arrears which are pushing you to sell your house.

    There are procedures in place for negative equity but these depend on what you want to do next re accommodation.

    Please confirm that you have a buyer in place who wants to go ahead subject
    to contract.

    The point here is that the lenders have to make a decision to let you sell your property or risk being restricted in their recovery against you if they make a bigger loss selling the property themselves.

    The negative equity could be turned into mortgage shortfall which you will be expected to repay at some future date depending on your ability to repay the debt sometime in the future.

    The point is you cannot pay what you cannot afford and as mortgage shortfall arises after the sale it is therefore unsecured. Yes interest continues but this is another issue and needs to be dealt with seperately.

    Getting a loan does not seem a good idea unless you have the means to repay.

    These are just my thoughts but should start the ball rolling in terms of what you might want to do next, sorry if its complicated
    Last edited by mightymouse; 16-06-2007 at 12:18 AM. Reason: changes
  • Breadsticks
    • #7
    • 16th Jun 07, 10:17 AM
    • #7
    • 16th Jun 07, 10:17 AM
    Hi mightymouse

    No your post was not complicated, I appreciate your response.

    We are moving to be closer to hubby's job and want to rent. We will be making so many savings by doing this so we'd have the means to pay a 10k loan over 5 years. This is what we panned for but because the mortgage company we are with don't do unsecured loans it's stumped us!!

    We have no mortgage arrears and we have a buyer all ready to go.

    Aaaarrrggghhh!

    Bx

    P.S - What are YES FINANCE like as a company?
    • jonesMUFCforever
    • By jonesMUFCforever 16th Jun 07, 10:29 AM
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    jonesMUFCforever
    • #8
    • 16th Jun 07, 10:29 AM
    • #8
    • 16th Jun 07, 10:29 AM
    The mortgage company have advised us to get a loan to meet the difference and then we can still sell. Do you not think this is an option for us? If not why not? (Just looking for as much info as possible and is much appreciated!).

    B x

    P.S - Our solicitor has said it is between us and our lender.
    Originally posted by Breadsticks
    It is because of your husband's CCJ's that a normal lender will not touch you. They will be on his credit file for 6 years even if satisfied.
    You may get a loan with a sub prime lender but you will pay through the nose for it and this will have to be sorted out (ie you will have to have a written offer/acceptance for the loan) before the sale can go through.
    If you do not pay off that second mortgage the sale will not proceed.
    What goes around - comes around
    give lots and you will always receive lots
    • mightymouse
    • By mightymouse 16th Jun 07, 12:45 PM
    • 316 Posts
    • 130 Thanks
    mightymouse
    • #9
    • 16th Jun 07, 12:45 PM
    • #9
    • 16th Jun 07, 12:45 PM
    The lenders have to make a decision to let you sell your property or risk being restricted in their recovery against you if they make a bigger loss selling the property themselves.

    This would seem to be your strength I.E. if there is a negative equity either you sell it or they do but with a buyer in tow I do not think for a minute that they will sell your house for as much as you can with all the costs they will incur.

    Get the 2nd mortgage company to sell at a loss and you will come to an arrangement with them to repay that loss.

    This is better than a traditional loan and whilst the interest is continuing you can argue over the amounts to try and reduce the repayment depending on your ability to pay.
    Last edited by mightymouse; 16-06-2007 at 12:48 PM. Reason: speeling
  • Breadsticks
    On paper it sounds like a good option but what do we actually word this to the second mortgage company in these circumstances? (It sounds like "If you don't let us come to an arrangement with the 10k then we'll hand the keys back and you'll lose more - so there )

    Bx
    • jonesMUFCforever
    • By jonesMUFCforever 16th Jun 07, 9:01 PM
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    jonesMUFCforever
    In the end the company will not lose out. They have a second mortgage and if you habd the keys back you will still owe the same amount of money. If the house is then sold at a 'loss' you will still owe the money with hundreds if not thousands added on in legal costs and your credit rating will fall through the floor.They will still come after you for the money.

    If that happens you can forget geting any mortgage for the forseeable future.
    What goes around - comes around
    give lots and you will always receive lots
    • mightymouse
    • By mightymouse 16th Jun 07, 9:03 PM
    • 316 Posts
    • 130 Thanks
    mightymouse
    Hi

    Mortgage shortfall i.e. 'if you hand the keys in' is an expensive business because most people 'won't' or 'can't' deal with it straight away.

    You are positive and you would be willing to borrow the money if you could.

    Therefore you are prepared to resolve all issues now, if you discuss this with the lender to accept the deal, make sure its someone who understands the problem at the lender.

    If THEY bury their heads to your situation then they will have to account for this after repossession.(If you decide to hand keys in / repossessed)

    It is useful if you make detailed notes (record the conversation if you can).

    There are many arguments in this area but the lenders have 12 years to recover mortgage shortfall (six for contact) so by keeping an accurate record of what happens now will be gold dust in negotiations later on.

    I do not mean to ramble but if you want to sell now what are your options or are you tied (bonded) to this house for as long as there is negative equity?

    There are many twists and turns depending on whether you keep your property or buy another or rent.
    Last edited by mightymouse; 17-06-2007 at 5:00 AM. Reason: add
    • mightymouse
    • By mightymouse 16th Jun 07, 9:19 PM
    • 316 Posts
    • 130 Thanks
    mightymouse
    Hi

    After reading my post I would have thought that if your solicitor was articulate he / she could sort this and agree on paperwork and of course charge you but wouldnt it be worth it.

    p.s. The lender may want a seperate valuation and I would expect that.
    Last edited by mightymouse; 17-06-2007 at 4:35 AM. Reason: add
    • mightymouse
    • By mightymouse 17th Jun 07, 9:44 AM
    • 316 Posts
    • 130 Thanks
    mightymouse
    Hi

    Just to let you know I have picked up on your other posts and also noted what you say re your solicitors.

    You might still consider an Individual Voluntary Arrangement and put the shortfall into it if the circumstances fit.

    good luck whatever you do.
    Last edited by mightymouse; 17-06-2007 at 9:50 AM. Reason: add
  • Hermione54
    What are YES FINANCE like as a company?

    I have no personal experience of them, but if you look at other posts on this board about Yes Finance you will discover that they are, to say the least, not highly regarded!
    • silvercar
    • By silvercar 17th Jun 07, 5:27 PM
    • 38,862 Posts
    • 162,320 Thanks
    silvercar
    You need to try to get the second mortgage company to understand that if they don't accept a reduced payment now, with an agreement to repay the remaining amount of the next few years, they will end up with nothing.

    If you try to get them to accept that you will be repossessed / hand keys in and they will be left with nothing they may be more helpful.

    This is extrordinary difficult to do because they almost work on the principle that they won't negotiate on a secured loan just because it is secured. Not only do they not see the bigger picture in terms of individual cases but they don't want to paint a pattern of negotiating on secured loans in case word gets out and everyone tries it!
    • mightymouse
    • By mightymouse 17th Jun 07, 6:44 PM
    • 316 Posts
    • 130 Thanks
    mightymouse
    Hi

    Just one more point to follow on from silvercar, the second mortgage company will have to continue to pay out fairly large sums to repossess your property protect and insure it and finally sell it (estate agents fee, solicitors fees etc) all out of their own pocket but if you did go bankrupt (always a nice threat) where do they recover their money from then?

    Also to be liable for (£1100 both) continuing interest in repect of the first mortgage as that debt will continue to grow with no interest being paid and depending on amounts being lent the first mortgage company may not want to take that risk so might insist on it being sold.

    What would your property fetch at an auction and how much would be lost then when added to the above. £20k - £40k?
    Last edited by mightymouse; 17-06-2007 at 7:53 PM. Reason: slight
  • Breadsticks
    Thanks everyone.

    Just want to clarify that I was asking about YES LOANS and not YES CAR CREDIT.

    Hubby has decided to apply for an unsecured loan with them to see what happens, I'm also going to try to negotiate again with the mortgage company and speak to our solicitor.

    If we are still short and can't get help anywhere then we'll just stay put, simple as that. It would make more sense to move but it's not the be all and end all.

    B x

    P.S - Just found the feedback about YES Loans and realised how poorly recommended they are so will have to look for another unsecured 'high risk' lender.
    Last edited by Breadsticks; 17-06-2007 at 10:46 PM. Reason: Addition
    • pinkshoes
    • By pinkshoes 19th Jun 07, 10:05 AM
    • 16,362 Posts
    • 22,565 Thanks
    pinkshoes
    I don't think there's many "High Risk" lenders that have a good recommendation!! They lend money to people in financial difficulty, then take great pleasure in making them pay for the rest of their lives!!

    Could you not stay put for a year, take in a lodger to help with mortgage payments, and THEN sell a year later?

    Can I ask how you ended up with negative equity on a property when prices have risen so much in the last 7 years?!?! Are you saying you bought a house with no deposit, have an interest only mortgage, and it's dropped in price by 10k in 7 years?!?! sorry, i'm blonde and get confused easily!
    • smileitconfusespeople
    • By smileitconfusespeople 19th Jun 07, 10:28 AM
    • 559 Posts
    • 431 Thanks
    smileitconfusespeople
    we used Norton finance and borrowed 40k and after 7 years owed nearly 70k neven ever never again we could never get the same settlement figgure quote it was only after we said we were going to take them to court we settled on a mutal amount!!
    Don't sweat the small stuff, Its all small stuff.
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