negative equity advics please

[Tangointhenight]

I'm looking for some advice regarding a potential move. My husband and I bought our house in 2007 during the height of the property boom, its a three bedroom ex council house that we paid £130,000 for. Nearly 5 years later we are drastically out growing it, as we have a DD and DH now has a business from home.

Another reason we need to move is that we live 20 miles from my parents who will be looking after DD when I return to work so it makes sense that we are closer to them for schools etc.

We haven't yet had our house valued but a house of not as good standard (we totally renovated ours) down the street went for £100k a month ago.

So if we got the same we would be in £30k negative equity. Would the bank even consider letting us move, I have it in my head I want to move so much, I'm scared to speak to the bank incase they laugh in my face, has anyone else managed to move despite being in negative equity? We couldn't possibly save 30k to pay it off....

Advice is appreciated.

Do you have any savings, Tango? If so, use them to pay off as much of the mortgage as possible. Get your house valued by three local estate agents, but also pay attention to the actual (not asking) sold prices for similar houses close to you. How old is your dd and when do you need to apply for schools? If you can wait it out for a big longer whilst saving as hard as you can, I would - unless houses in your parents' area are less expensive than in your own.

We have some but probably only about £10k at the most. DD is only 9 months but a lot of schools in mums area.start taking applications at 1, same goes for nurseries etc. I just feel so trapped where we are, being so far from my family in terms of convenience, I know its not a million miles but its rural NI so very little buses/trains and petrol is so expensive its going to add another 40 miles to my daily commute.

I really regret buying a house here but at the time it was the only area we could afford. We could probably get a decent sized house in mums area for £100k, house prices there have really come down.

Is it worth speaking to the bank about?

Are you in negative equity? How much is your mortgage? Assuming your house is worth 100K, you will only be in negative equity if your mortgage is more than this.

Yes we are, we took 100% mortgage for £130000, we were getting married and didnt have any spare money to put down as a deposit :(

sorry if this is an obvious question - but how much is your outstanding mortgage? if you actually paid £130k then unless you took a 100% mortgage then less would be outstanding to the bank.

Also it depends what type of mortgage you took at the time you bought your house. If it was a capital and interest (or repayment mortgage) then you would have been paying off the mortgage over the years and might have less outstanding than the original amount of the mortgage.

finally, even if the worst happens and you are in negative equity then some builders will buy your property off you if you buy a new build of theirs. might not be a great option but worth considering.

the bank will never laugh in your face - all they are about is the mortgage either being paid off or the monthly repayments being met.

(used to work for a bank, in negative equity myself!!)

If you find a house whose bank valuation is higher than what you offer, the bank may transfer your existing mortgage. £30k is an unrealistic amount, however.

If you have one DD who is still a baby, you do not need to move urgently for schools for a while. You should just make do with what you have. It will be cheaper in the long run to stay put until you are able to move to the right long-term house.

We have been in a similar position, having bought at the peak of the 1989 market. We had valuations after our DCs were born, but it wasn't until DC3 when our valuation matched our mortgage (not taking into account our deposit and home improvement expenditure).

In those years, we became ruthless with storage, and continually added shelves, etc, to maximise the potential of every tiny space.

It was fairly tough at the time, but with hindsight, it was good that we didn't move early to what would have been an in-between house. We waited and now have a house that will do us while we still have children living with us.

We managed fine with 3DCs in an ex-LA 3-bed house, btw. Thousands of families do.

Inlove thanks for posting I really appreciate your advice, being in the trade an' all. Yes we took 100%, stupid in hindsight but we were desperate to get on the ladder young and foolish I have thought about a new build but they tend to be quite expensive, for 100k we would probably only get a 2 bedroom house whereas we have seen older detached properties for the same.

We took a repayment mortgage so we have probably paid off about 5k if even that, in 4.5 years, which along with our savings still leaves us in substantial negative equity. Me and my DH now earn a lot more than we did when we took the mortgage, and at the time they were offering us £200k, but I'm so Glad we didn't take it. We haven't missed a payment.

Do you think they would consider swapping our mortgage to a different property?

Thanks Clare, I'm not saying we are desperate as yet, we still have room to move around :o but dhs business is really taking off and he needs mote space for stock etc, we don't have a garage and I'm loathe to spend more money on this house when its not adding value let alone getting us out of negative equity. Our house was a labour of love, we did all the work to a high standard, and moving from it will break my heart.

But I'm thinking about childcare, nursery, schools, help with my children from my parents who have to travel 20 miles to babysit for an hour, that sort of thing.

I'm really just sussing out our options iykwim, if we need to sit tight for a few years so be it but I'd like to know if we have options

You ain't stupid tango...or if you are, no stupider than anyone else in this country who have been stung (we paid WAY too much for our property...simply can't afford to move).

a lot might depend who your mortgage is with. also will depend how much more you are earning. lenders have different ways of working out how much you can afford each month - and are way more stringent than they used to be. also might also depend on how depressed your area is - if they think it is likely to improve soon they might be more happy about it.

if it was me, I would phone your lender on monday and explain and see what they can do for you. you could ask to speak to their underwriters directly - they must be asked this all the time.

I hate this flipping recession!!

Some Right to buy properties have a clause whereby the local authority has first option on repurchase if it is within 10 years of sale from them (and it may since you purchased post 2005).

The local authority will do a market valuation to agree a purchase price so may not solve your negative equity problem (depending on what it is valued at) and you need to also check whether you could end up paying a proportion of the discount you got from right to buy at the time of your purchase (timeframe for repayment of discount is sale within 5 years of purchase),

Can you put your DH's business in a shed? You can get very high spec home offices for around £5000. You would be able to take it with you, minus the concrete plinth (£1000).

Thanks inlove I will ring the bank on Monday, we took our mortgage with Northern Bank here in NI.

Jcee I'm not sure what a right to buy property is?

Claire yes that's definitely an option, though even 5k would sting since that's all we have paid off our mortgage in about 4.5 years, plus it doesn't solve the childcare arrangements etc, I'm looking too far into the futures I know but when my DD goes to nurse or school, my mum will have to drive 20 miles in the morning to take her, drive home again, then drive 20 miles to pick her up and home again...she has a few commitments at home so she wouldn't be able to look after DD in my house iykwim...

I know I'm overthinking this but I feel so trapped here, its a village and I can't even walk with DD in her pram without driving somewhere first, growing up in a large town I find that so suffocating,also they are starting to build a huge bonfire near our house and I hate the thought of DD being around all that, we really thought our stay here would be brief, but the recession thought otherwise.

Tango - sorry I may have misunderstood your OP beer had been consumed. You say your house is an ex council property - if were you a council tenant and you bought your property off the council, then it's a right to buy property. If not, then ignore my ramblings

You said a house less well done up than yours went for 100k. So let's say you could get £110k. You owe £125k. Difference is £15k and you have £10k in savings so you are not far off. ( just 5 k plus the cost of buying and selling) only you will not have any deposit for next house. How much do you think you could save in a year?
Another alternative would be to let out current house, and use your 10k savings as a deposit on a £100k house near your mum.

Or your lender may allow you to port your mortgage to the new house.

financialwizard that's exactly what I was hoping for, do you reckon that's possible?

googlenut I was hoping we wouldn't need a deposit because we already had the mortgage, Tbh I thought we could swap the mortgage onto a different property.

I'm not sure whether they cover N. Ireland, but I would recommend London and Country (mortgage brokers) for great advice on your options.

Re deposit, when you're moving house that doesn't necessarily mean being able to put cash down upfront, but that the size of your new mortgage should be less than the value of the house you're buying. In effect that means you have a deposit. Unless you move to a substantially cheaper property, with your negative equity on top of the mortgage for a new house, you're going to have a very high LTV - possibly more than 100% which will make it extremely difficult to find a lender willing to give you a mortgage IMO.

No advice on the negative equity, but please don't worry about schools in your mum's area 'taking names down from 1' - unless they are private schools, then that is just not true. You apply for primary schools in the December before your child starts school in September of the following year. That is a national policy - no exceptions. So you really do have a few years' grace in that respect. Nurseries are a different question obviously.

OP, I would think it highly unlikely that you would be able to port your mortgage in the circumstances you have outlined. That is principally because you will owe more than the value of the house you move to (you indicated that you could get a cheaper house in your mum's area). No lender would be prepared to port a mortgage on that basis in the current economic climate - the minimum you would have to do is to pay back the mortgage to the level of that required to buy the new house, but it's just as unlikely that the lender would be prepared to allow you to port to a new house on a 100% mortgage basis.

Looking at the bare facts (sorry):

• you took a 100% mortgage
• you are (you believe) in NE
• you have only paid off 5k capital in 4.5 years
• you want to move, but don't need to and can still pay the mortgage (i.e. still have an income & aren't declaring yourselves bankrupt).

I think you should talk to the bank to explore your options, but I wouldn't expect them to consider letting you sell up in NE and move. I suspect (as per people who bought in the last property boom) you'll need to stay where you are for a while, whilst doing everything you can to pay down more capital on the loan, until you can sell for at least the same as the outstanding balance.

However, you're in a really common situation so don't feel like you're unusual in raising this with the bank.

Unfortunately, it's not the case that we're in a recession and therefore in a little while house prices will return to a 2007 "normal". The reality is that house prices over the last 8 or 9 years were fuelled by a massive credit bubble with easy/irresponsible lending. It's fair to say that the vast majority of people who bought in that period are in a similar boat - they simply paid far too much for the house by buying at an unfortunate time.

I got lucky with my last flat, buying in 2003 and selling in 2011 and breaking even. Anyone who bought another flat in that block in 2006/2007 would find the current 'value'about 50k less than they paid.

Firstly get a statement on the mortgage outstanding and see if you can find a way to overpay mortgage - even a little every month will really help. Get your house valued and then speak to the bank and see what options there are.

If you could really focus on saving/overpaying mortgage and your house is valued above £100k you might be able to move in a couple of years (which is a relatively short period of time), especially when you have a goal and know there is an end date.

Also could your dh rent a garage somewhere - it may reduce capital outlay (£5k shed) and the costs would be a business expense.

Lots of people are in a similar position - it's not all doom and gloom, lower house prices are actually better for most people as today we have to spend such a significant proportion of our income on housing. If your house is lower in value so will your 2nd house which means in real terms you will be paying less over the long term.

Also in NI, if ur rural its quite a high poss a nearby farm or house on farm land wud rent a cheap shed for storage of stock. Have done this via local paper, paid about fifty quid a week for what wud have commercially been 150 or 200.

It probs depends on where u are moving etc. I know NB have got a lot tighter - no interest only mort etc

You’re interested in buying a house in negative equity that someone has mentioned on the Internet six years ago, without even giving her general area? You sound legit.