Selling when in negative equity

[Bigbadgeorge]

Hi I'm not sure if anyone can offer any help but maybe there might be someone out there that can say they've been there and survived.
In my mid 20s I made a poor decision to buy a one bed flat to get on the property ladder. Unfortunately it was at the very peak of the housing price boom, and emboldened by my solicitor and on the back of a Northern Rock 120% mortgage I paid way over the value of the property. My own stupid fault!!
Two years later I had to move city with work and tried to sell up but it wouldn't budge as the market was utterly dead. I had to drop to an interest only mortgage and rent. The rent still fell short of mortgage payment.
As the market is picking up I have decided to put the flat on the market again. Trouble is I am still in negative equity and will be £15k in debt if we get the asking price. I want to sell so I can move on with my life, I have a family and live in a different city and cannot buy a home for us.
Is there anything I can do? Will the mortgage company allow us to pay a loan for the remaining amount? Over the phone they said they would but does this happen in reality?
Sorry for the long post. Feel free to tell me what an idiot I've been, I know!

Don't blame yourself You did what you thought was the right thing in getting on the ladder Impossible to predict when the bubble bursts Is the negative equity part of an unsecured loan with NR The 120 % loans they did normally consisted of part secured and part unsecured

Thanks for your reply! Yes it was an unsecured loan top up. Does this mean I should be able to paying this part off?

I think it might yes Depends on exactly what you signed up to of course Ask NR for written redemption statement as a first step Good luck

Is there any chance the market might rise? Could you hold onto it for a while as will lose money if you sell anyway?

I don't think it will rise enough (if ever!) for me to ever not make a loss. I feel my best option is to cut my losses now. Even if I rent I loose money every month

I do feel your pain, sold a house in 1998 for 20k less than we bought it. It did all come right in the end, but its been a long haul and other people we knew all seemed so much more switched on than us too. I cant give you any advice, apart from hang on and I know how you feel. Some people are just born to know what to do, when to buy and sell and so on and we never did. I think there are lots of us out there, I hope things pick up for you soon. Sorry I cant give you any financial advice. Its a real minefield, things will look up I am sure of it.

Thanks the80s, your post helped to reassure me that we will get through it. I've never had any financial acumen and probably never will but hopefully I'll make better decisions in the future!

Bigbadgeorge- I feel for you!!! We did exactly the same thing in 2007 after taking advice from a independent financial advisor. Bought a house that needed lots of work and used the extra money for home improvements, property prices nose dived and the market stagnated. I have spent many nights led awake thinking of a way out. So here's how we did it:

NRAM will allow you to delink your together morgage so you would pay off the secured part and perhaps some of the unsecured from the proceeds of your sale. You can then continue to pay your unsecured loan back over the original term agreed (ie 20 years!) or over pay (there is a limit but its like thousands a month!) All sounds great but... Upon delinking your morgate they will increase the Intrest by 8/9% ON TOP of the already 4/5%, so ultimately you would be paying ~14% Intrest, making it extortionate.

Desparate to move on into a bigger home/ nicer area we worked hard to get deposit together for a new home, then obtained a unsecured loan to pay off the short fall on the unsecured part of the morgate at around 4% APR over 5 years. The day we handed the keys over I was elated. No longer did I have to worry about being unable to get another morgate deal, interest rates rising ridiculously and being able to do nothing about it and being trapped there forever!

We had an element of luck on our side- quick sale for asking price being one of them. Sparkling credit ratings helped. We both have very good jobs with decent incomes and silly decisions and carelessness whilst in our very early 20's has had a negative impact on were we should be financially- but in a few years we will be straight and can put this all behind us.

Talk to your bank- they had dealt with these situations before and were not phased by our situation. We have a few friends who were in the same position and wiggled out similar to us. Nram are generally helpful as they want you off there books. Just clarify your Intrest rates.

Good luck with it all- it's a minefield but there is a way out, albeit a 5 year plan xxx

By the way we still managed to get another morgate. We used an independent advisor again who we sat down with for ages and she guided us to a solution. You could perhaps take advantage of help to buy schemes to get you back on the ladder with your family if you have >5% deposit. Good luck with everything- there's always a way x

Wow pippa, thank you your post was really helpful. I'm glad that you have managed to pull through. I guess the key is not to panic and be open like you say with NRAM and hopefully we can find a solution