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Can't afford mortgage so need to sell - but negative equity... :-(

(17 Posts)
mortgagewoes100 Sat 03-Jan-15 13:29:12

Message withdrawn at poster's request.

Rangirl Sat 03-Jan-15 14:00:02

You will need to clear the mortgage at the point of sale to give a clear title to the purchaser Can you borrow the shortfall from family ?You could speak to NRAM to see if they will clear the title fora lesser payment with you then paying off the balance but I doubt they will

Mrscog Sat 03-Jan-15 14:01:30

How much is the shortfall?

AnotherEmma Sat 03-Jan-15 14:03:30

Can you remortgage? Get a lodger?

TeWiSavesTheDay Sat 03-Jan-15 14:07:08

How is it that you can no longer afford the mortgage - sorry if that seems a bit personal but you might be eligible for some government help depending on the circumstances.

Have you any other debt? What are your other expenses like?

Is it just you living in the home?

avocadotoast Sat 03-Jan-15 14:10:12

You won't necessarily have to go bankrupt. NRAM will accept a token offer for a time but might not forever.

You need some advice on dealing with the debt once you know how much it will be. Contact StepChange Debt Charity. They'll go through a budget with you (I suppose for you it would mean you'd need to know what your living costs will be when you move) and show what you can afford to pay towards the debt.

Depending on how much it is and how much you can pay, you may be able to clear it month by month and pay it off in full. Otherwise, it may be better to look at other, more formal, solutions. But they'll advise you fully.

Also, if you don't want to go through selling the house yourself, you can hand the keys back to the mortgage provider and let them deal with it. The only thing with that is that they'll likely sell it at auction and get less than market value, so the shortfall will be bigger.

avocadotoast Sat 03-Jan-15 14:11:25

Actually, just to check - is it just a mortgage you have with NRAM or is it a together loan (where you have the mortgage and an unsecured loan running side by side?) That could change things somewhat.

Micah Sat 03-Jan-15 14:12:07

Have you spoken to your bank? What's your interest rate?

Your bank may be happy if you agree to pay interest only for a few years until you find your feet or the market recovers. It's not really in yours, or their best interest to sell in negative equity. If you can't pay, the bank will lose.

mortgagewoes100 Sat 03-Jan-15 14:17:25

Message withdrawn at poster's request.

AnotherEmma Sat 03-Jan-15 14:21:49

You could also contact the Money Advice Service or one of the other debt advice services they recommend: https://www.moneyadviceservice.org.uk/en/tools/debt-advice-locator

TalkinPeace Sat 03-Jan-15 14:53:00

One of my clients is still paying off the shortfall on his mortgage from the 1991 crash. He pays £50 a month and it does not interfere with his life at all.

Why do you think they will repossess - lenders are under huge pressure not to.

Can you get a "rent a room" lodger to make finances easier?

TotallySociallyInep Sat 03-Jan-15 14:57:21

How much have you spoken to them about your situation? NRAM can pull strings to help. They cannot offer you a different product but they are willing to offer help in extreme circumstances. Things like letting you rent it out even if the rent is estimated lower then your mortgage you would have to pay the short fall. They also can offer you interest only for a short period 12 months max. If non of these are do-able. Then voluntary surrender may be better then repossession. It will still be on your credit record as a repossession. But you don't pay the legal and estate agent fees.
Any outstanding money can be turned into type of a loan agreement. But that is mainly done through a debt management company. Payplan is a well known charity, and are there to help and advise and organise your debts. There are a lot of good debt management companys out there. Never use one if they ask you for money.
If you haven't already get intouch with one of them. once they are involved you get help and support off them, their are various options depending on your financial state.

mrsnec Sat 03-Jan-15 15:11:49

This happened to us. It was very difficult at the time because our lender was reluctant to discuss a plan with us. We wanted to negotiate a figure first but they wouldn't do it until we had an offer in place.

We thought that selling for a lower price and having a bigger shortfall might shift the place quickly. In the end the shortfall was 3k and we borrowed it from our parents just to make it easier. I didn't know there were organisations that could have helped negotiate so that's great advice. On reflection it could have been a lot worse.

avocadotoast Sat 03-Jan-15 16:59:08

Is it the whole amount you're struggling to pay each month or just the mortgage element?

If it's the whole lot, you could look at splitting the payment as its only the mortgage that's secured on your property.

Either way, I'd look at getting advice now. If you can put a budget together it might be possible to just reduce to token payments on the unsecured part, which would mean you could stay in the property.

SoonToBeSix Sat 03-Jan-15 17:01:24

Get some advice to do anything other than sell. Could you list your mortgage and income outgoings?

busyteachermummy Sun 04-Jan-15 20:25:44

This happened to us in 2012. We needed to move due to work. Our mortgage was with NRAm - an altogether one. They would not negotiate interest only or allow us to rent the house out as it wouldn't have covered the mortgage.
We ended up discussing things with national debtline - (an independent charity). They talked us through our options. As the shortfall was so big, we were advised to go down the voluntary repossession route. We then took out an IVA - this means we will pay back some of the shortfall but not all of it - we would never have been able to pay back all of the huge shortfall. IVA's are not for everyone, they last 6 years and ruin your credit rating for those 6 years but we honestly couldn't keep the house so it was the best option for us.
My advice would be to talk to one of the debt charities and don't expect NRAm to help you - they just want you off their books

mandy214 Mon 05-Jan-15 13:08:37

If at all possible, and you can't afford to keep the house, try to sell it yourself before you surrender it or before repossession. If you surrender / the lender takes possession, you have no control over the purchase price, which estate agent they use, other costs they incur in maintaining / cleaning etc - all of which will be deducted from your mortgage account (and increase the shortfall).

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