Negative Equity trapped- really long

[Turquoisetamborine]

We bought a house at the height of the market for 80k, it needed improvements and northern rock offered us a Secured loan for 11k so we have that too. Were on interest only mortgage for many years so the total outstanding now is 91k.

House is worth about 65k.

We knew from 2010 we were in negative equity but had business debts from my ex so concentrated paying those and am now down to around 13k of those debts left. We also owe my parents for our car but that will be paid off in July. No interest charged.

Come July we will be able to start throwing money at out negative equity which will be about £950 a month. This is money freed up by other commitments that will end then. We should be on our way out of negative equity within two years. We have very few luxuries apart from those provided by our lovely parents. We don't mind this, it's our debt so we will pay it.

So, two years ago when I had a three year old my next door neighbour started making malicious calls to Social Services. It started over a leaking down comer that we couldn't afford to fix straight away. She became abusive to us and we had the police called to the house weekly for weeks. The Police even checked my naked child for bruises and woke him up one night when I had allegedly been heard beating him. There was of course not a mark on him. There was no abuse. She was just making us pay. We were visited by social services three times and three times they said they had no concerns but the last time they contacted out child's nursery to enquire about his welfare.

Nursery said child was fine, no concerns. Word somehow got out about this though to the other parents. I was ostracised. No smoke without fire etc.

My son was traumatised by this point and was regressing with toileting, refusing to sleep alone. Neighbour shouted to him in the street that he would be taken away from us soon. I was also in a bad state mentally and have since been diagnosed with PTSD. Even now my son dreams hysterically if we drive past her.

My dad is a landlord and at that point decided enough was enough when he found me suicidal one day. He had recently bought a lovely property and moved us into it quickly. Charging no rent. He found tenants for our house quickly who pay a low rent for the market to him. He manages the property for us. We have landlord insurance. We fix repairs needed promptly.

We are so happy now in this new house and he's happy to sell it to us for 100k which is about 20k less than it's worth. We hope to do this when our first property is sold.

Then last night, I read that mortgage lenders are cracking down on houses let without permission from the lender. I've been up all night since. We didn't even try for permission as we are in negative equity so they would just refuse us.

So, should we go back to the other house and lose our happiness and possibly risk having our son taken into care or risk it and hope for the best? What would you do?

[LilyBlossom14]

you need to speak to your mortgage provider - if they find out they could recall the mortgage. Couldn't your father buy the old house from you - or do a swap as it were?

[Prawntoast]

before, you speak to your lender, do you have all the paperwork regarding the mortgage - the terms and conditions - you can look in there to see what the lender could do?

Even if they could recall the mortgage, given that you are in negative equity I don't think it's a very likely course of action and lenders have to be very careful about repossession these days. Mostly likely they would give you permission to lend, especially if the rent is covering the mortgage and maybe move you to a higher rate of interest.

If you do feel that you need to move back, if your neighbour starts up again I would get legal advice, it's harassment and they shouldn't have driven you out of your home.

[Prawntoast]

I meant permission to rent not lend!

[SuzanneUK]

You certainly seem to have had a dreadful time in your old house but things might not be quite as bad as bad you imagine as far as your mortgage lender is concerned.

The fact is that if there is a residential mortgage attached to your property, you must tell the lender immediately you cease to reside in that property.

Your lender may allow it but they will need to be reassured that the property was not purchased originally as an investment property and that you've moved out and let the property for genuinely non-commercial reasons.

There are no guarantees here but your mortgage arrangement might remain the same and your lender might give you ‘consent to let’ without any additional charges - or they might make extra charges of some sort. It's up to them.

You can take some comfort from the fact that the rules were not put in place to prevent people like you moving away from a Hellish existence: they were designed to stop wily property investors running a 'buy to let' business on the cheap.

Also, you can be sure your lenders will not be happy should news of your situation reach their ears from a third party rather than from you. Given your relationship with your ex-neighbour, that seems quite likely to happen sooner or later if you decide to keep quiet, wouldn't you say?

All in all, your best bet is to tell your lender what's happened and hope for a helpful response.

It might also be better to tell your local manager face to face rather than in a letter as people are often more sympathetic in a face-to-face situation than they are when everything is on cold, hard paper.

Of course, the ultimate decision won't lie with your local manager but it'll be him (or her) that passes the information up the line and a little goodwill at local level can do no harm.

Good luck!

[Turquoisetamborine]

Thanks you for replying. I through to would get flamed. I don't mind paying more interest to the lender for renting it out. We can easily afford the mortgage and have insurance to cover it too.

I'm just worried that if we contact the lender and ask for permission to let it that they will say no then investigate us anyway which would mean we were forced to move back. I will look at the mortgage paperwork today to see what the terms and conditions are.

[Turquoisetamborine]

Good idea to tell them in person. Will speak to H tonight. I feel sick with this and I need it sorted.

My dad is now 60 and doesn't want to buy anymore properties so he can't buy ours. I don't think he would get a mortgage at his age.

[LilyBlossom14]

I think the fear of not knowing may be the worst thing about this - at the end of the day your lender can only say no - and if they do, you put the house on the market. You can't move back there that is for sure - no amount of money is worth that stress and upset. And worrying about not having a buy to let mortgage is giving yourself more stress - bite the bullet and tell them and it will feel a weight has been lifted. Then you can get on with enjoying life in your new home.

[bbcessex]

Bless you, what a huge amount of stress.

To me, you are super-worried because you're in an anxious state anyway.

It's not as bad as it sounds. What are the lender going to do? Repossess the house? I doubt it, they won't make money from as house in negative equity.. they may charge you extra for XYZ but it sounds sortable.

Personally - I'd get yourself settled in your new home, and sort it out with your lender but don't fret over it. It's the least of your worries, it's an admin thing which will get fixed one way or the other.

What an evil cow your ex-neighbour is.. this is minor compared to that, but because your stress levels are so high you are over-worrying.

Don't - it will get sorted and by the sounds of it, you've sorted far more difficult things that this

xxxxxxxxxxxxxxx

[Turquoisetamborine]

Thanks so much for all the comments. I feel much better writing it down. Problem shared is a problem halved and all that. I have no one else to share our full financial situation with. I don't want my parents knowing we have so
much negative equity.

It doesn't feel so bad now!