hand back keys ???

[granndi]

can i hand keys back to bank even though a secured loan on it ?, it is in negative equity what would happen ?. or would i be better to rent out as not much selling in area

No advice I'm afraid but marking my place as we are in a similar position

if not being too nosy are you in negative too ? we defo don't want to go bankrupt or anything

The concept of 'jingle mail' sparang up in the last housing recession of the 1990s. People just posting their keys and walking away.

I would try and negotiate a lower mortgage. Banks are loathe to repossess if a house in negative equity. If you do decide to walk away - dont just hand back the keys. Do it formally via bankruptcy. You will come out with no liability after the bankruptcy is discharged. If you just post the keys back you will be pursued for 7 years (or more) with the debt being sold on to ever more aggressive debt collection firms.

Yes. It is DH's house but has been on the market for 2 years, price dropped by £20k and still no buyers.

We need to get rid as struggling to pay for 2 houses but will be in neg equity if it sells at current asking price.

We had thought about handing the keys back but, like you, we would like to know the consequences first

If you have no other assets and no income you will be better off declaring bankruptcy. If you are just in negative equity and have other assets and an income you will have to pay off the remaining debt.

The bankruptcy court will not just allow you to walk away because you have lost money.

we do have incomes and never missed any payments etc so don't want to go bankrupt, didnt know if we could still hand keys back pay off difference and move into rented, thanks for all replies

Problem is defining the current value of the house. A house near us has been repossessed. It was up for sale 5 years ago at £650k but they decided not to sell, bank have put it up for £300k which is so low people have been queueing up to view.

Sorry, what I meant by that was you could end up with a bigger debt than you expect if you just give keys back

Granndi, if you don't have to move and can afford the mortgage, then being in negative equity doesn't matter, and you have security of tenure.

If you hand back the keys, it is known as voluntary surrender, it is classed as a repossession on your credit file and stats on your credit file for life, unlike normal credit which clears after six years.

Just dealing with a squealing dc, will post a fuller reply later.

I would rent it out. That's what I had to do when my London flat was in negative equity in the 90s and I didn't want to live there.

Why can't you just rent it out? As long as you can cover the mortgage repayments it doesn't matter if you are in negative equity at the moment.

in some parts of the USA, you can cancel your mortgage by giving the keys back.

It doesn't work here.

If you take out a loan of e.g. £500,000, then you still owe it.

In the same way that, in the old days, when your house value increased to a milion, you still only owed the bank £500,000 and all the gain belonged to you, if the value falls to £250,000, you still owe the bank £500,000 and all the loss belongs to you.

wasn't sure i would be ableto get permission to rent out with negative equity will look into doing that as dont want to be left with credit rating completly ruined !!

If you hand the keys back you are voluntarily surrendering the house. The bank will then sell it, and all the costs associated with that sale (estate agents / auction house, solicitors costs, security until it sells, valuations, dealing with utilities etc) will be added to the mortgage account. The proceeds of sale will then be taken off the account, and your DH will still be liable for the balance.

It should be an absolute last resort since you have absolutely no control once you've surrendered it to what the bank will accept, and the charges they incur, and so the level of debt your DH will be left with.

We are renting out our house and rent a bigger one in a different area. We outgrew our house and decided to move nearer work. We are in negative equity by about £8k and the rent (just) covers the mortgage. Before deciding to rent it out we asked the mortgage company for permission to sell at a loss. They said we could as long as we paid for agency and solicitors. We also had to sign a repayment agreement for outstanding debt. In the end we decided against it. Could this be an option for you?

Off course you can rent out a house even though it's in negative equity. You just need your mortgage lender's agreement.

You may find that your mortgage rate increases slightly and will home insurance but that's better than walling away and leaving the lender to recoup what they can.

Handing back the keys does not mean you are handing back the debt.

Mandy21 has covered what I didn't have time to say earlier OP. Also, some lenders won't accept voluntary possession when you aren't in arrears.

Definitely speak to your lender about rental, NE doesn't mean it is an automatic no. It is much more favourable for your lender to allow you to rent the house out and continue to receive monthly payments, with the long-term view that the market will eventually (hopefully!) improve sufficiently to take you out of the negative equity situation, than say no, you default on payments and they repossess and they are left chasing you for a huge shortfall, the majority of which are never fully repaid.

Good luck OP.

Don't do it!

The concept of "handing the keys back" derives from flawed logic as Piglet John's reply explains.

You can't 'give the keys back' to the bank - because - the bank didn't give you the keys in the first place.

They gave you the money to buy the keys.

And that's what they want back - the money - not - the keys.

If you give them the keys they will sell the house to get - the money.

They will sell the house and if they do not get all the money they are owed - then they will pursue you for it - and they will do so until they get every penny they can.

Good luck!