To think the banks should shoulder some of the responsibility?

[dingdongthewitchisdead1]

I've NC'd for this.
We are in negative equity on an interest only mortgage. Bought the house just on the cusp of the property crash, paid top dollar for it.
Now we are in a position where we can't move and will have to pay back a mortgage which is almost double the value of the house.
When we bought it, we put down a 20% deposit.
I don't want to shy away from my responsibilities and I want to pay the mortgage, but I've had a niggling feeling for a while that the bank should also take some of the responsibility. They made a bad investment too! I'm not sure what a fair outcome is in this scenario, but I wanted your thoughts! Thanks!

[Gardencentregroupie]

It's only a bad investment on the banks part if you stop paying the mortgage, so from that angle, in your individual case, YABU. (Though you have my full sympathy). However irresponsible lending has definitely added to the housing issues the country is facing so on a large scale YANBU.

[harderandharder2breathe]

Yabu, you made a bad investment, they lent you money to do so

[Astoria7974]

You bought the house. If you didn't consider negative equity then it's your problem and you are culpable not the bank. Why, were you thinking of complaining to the regulator for compensation?

[meditrina]

The fair outcome is that you have to honour the terms of the mortgage.

The bank's responsibility is not to foreclose on you unless you default.

It wasn't up to them to decide which house you bought, just to offer you the mortgage loan that allowed you to buy. The house is not their investment, and so not their responsibility whether prices go down or up (if it had double in price, you wouldn't expect to be paying them a share of that).

Sorry, I'm sure that's not what you wanted to hear, but if you wanted a co-investor (sharing both profit and loss) you should looked for a different sort of backer.

[InTheDessert]

You have my sympathties too, but YABU.
Can you imagine in the good years, "Your house is worth soo much more than we lent you to buy it, we'd like an extra 20k when you sell, cheers muchly, Bank Manager"
Since you seem to feel you should continue to pay the mortgage, the bank have made an excellent decision. You are being responsible. A bad decision from the bank would he lending to people unable to repay the debt!

[ExcitedMamaToBe]

Literally everything InTheDessert said.
It's not the banks responsibilty at all

[ButteredToastAndStrawberryJam]

Surely you could still move house?
I can understand it must be annoying but imagine if there hadn't been the crash, you would still be paying the same mortgage you're now. In the long run you'll have a house completely paid for.
How many years do you have left? Could you knock a few years off and pay a bit more monthly.

[dingdongthewitchisdead1]

Thanks for the feedback! No I'm not interested in compensation... I just have a gut feeling that we shouldn't take sole responsibility for this situation.
We are in a good position in so much as it's our family home and we are happy here. We have great neighbours etc but something isn't sitting right with me re the bank's role. No one could have foreseen what was going to happen, I just feel that they could help pick up some of the pieces. Due to the negative equity we can't change lenders and are stuck on the banks SVR.

[scaryteacher]

You presumably knew what you were doing when you took out an interest only mortgage, as did we. We saw the writing on the wall some time ago, so switched to a repayment mortgage, which hurts, but the endowments were not going to cover the mortgage, so we had no option really.

What repayment vehicle did/do you have in place for repaying? There should have been one in place as a condition of the mortgage.

[dingdongthewitchisdead1]

Buttered can't move house.. mortgage is £200k, house is worth around £100k. Paid just shy of £250k before the crash.

[dingdongthewitchisdead1]

Plan is to switch to repayment this year. We are still only 30 so plenty of time...

[RandomMess]

I think it's frustrating that the banks are insured against non-payment of mortgages & negative equity on repossessed properties - so they literally NEVER lose out financially!!!!

[SillySongsWithLarry]

Negative equity is annoying but it isn't forever. I've been in negative equity as I bought in 2008 and prices dropped shortly after but prices have rose again and I have built up equity by paying off some of the mortgage. It's a horrible time but it's not forever. Can you go repayment this year as planned as then you will at least be paying off some of the debt. Interest only for the whole term without a repayment vehicle has always been a gamble.

[scaryteacher]

We switched and shortened the mortgage term, so it is all done by 2021, unless we chunk some off before. We did it when I was 40, so over 15 years not 25.

We weren't in negative equity, but wanted it clear. If it's your long term home, then the markets may well pick up again...we've had our place since 1992 and the markets have done a bit of up and down and up again since then.

[Costacoffeeplease]

Where are you that prices have more than halved?

I don't see why you think the bank is somehow culpable

[DustyMaiden]

Are you sure about that valuation?

[Fredmitten]

The banks have far from covered themselves in glory over recent years, but a decision to buy a house at x price with a set of mortgage terms and conditions, is solely that of the purchaser.
It's always a risk, and different people will have different risk appetites.
But it is solely your responsibility as competent adults.

[dingdongthewitchisdead1]

Northern Ireland... the rest of the uk is on the up again but we haven't quite got there.
Pretty sure re the valuation. Neighbour bought hers a year ago for £98k
I don't think the bank are culpable... I just don't feel it's fair that we are the only ones picking up the mess.

[maybeshesawomble]

Your gut feeling is completely wrong. Definitely not the bank's fault for once.

[RaspberryPi1]

Yabu. If the house price went up, you would solely profit. Unfortunately the house has fallen in value so you bear the loss..

[TheTantrumCometh]

One, the valuation doesn't sound right. As PP said, where are you in the country that house prices have halved?

Also, what were you planning on doing at the end of the interest only mortgage if you weren't in negative equity?


At the end of the day I have sympathy for you and your situation but you decided to borrow that amount. You decided to take an interest only mortgage. You took advantage of the lending opportunities available at the time and now you've got the consequences. Banks perhaps should not be lending that kind of amount to people but no one forced your hand, you applied for it and it was accepted.

[HerOtherHalf]

Nonsense. If it had gone the other way and you were sitting on a 100k profit you wouldn't give any of that to the bank, would you.

[ButteredToastAndStrawberryJam]

Glad that you're happy where you are, that's a good thing at least. I take it you aren't in the UK for that dramatic drop in prices. The thing is, all the house prices will be down won't they.
I could never see it being a good thing taking out an interest only mortgage, it didn't sit well with us when it was offered, too much of a gamble. I agree about switching to a repayment.

[dingdongthewitchisdead1]

As I've said in previous posts I'm not shying away from my responsibilities. Took the mortgage out aged 21 so plan was to switch to repayment at 30, which is this year. The mortgage will be repaid, without question!

[dingdongthewitchisdead1]

And no of course I wouldn't give the profit it the value increased! Like I said in my op I'm not sure what a fair outcome would looked like.. it's just a niggling feeling in my gut!