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Property/DIY

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Original poster

Selling with negative equity

11 replies

Scotmum83 · 19/11/2015 19:22

Just wondering what people's experience of selling a house with negative equity has been. We bought a house in 2007 and due to family circumstance and job changes we moved out in 2009. The house has been rented out since then and we have decided to sell. We have 109k left on the mortgage but are likely to get around 100k for it.

Basically I want to understand what happens to the 9k that we would still owe on the mortgage. Do mortgage companies help with this by allowing you to pay back as a loan or is down to us to get a loan from elsewhere to cover the shortfall. I asked our mortgage company and they said if we get an offer to phone to discuss as we need their permission if the value doesn't cover it but didn't go into detail at this point,

Any similar experiences out there? TIA

OP posts:

lalalonglegs · 19/11/2015 20:35

Are you planning another purchase? You may be able to port the outstanding amount to your new home if you have adequate equity. Remember the loan will be more than £9k once you pay estate agency commission, solicitor fees, redemption fees etc but you might be able to have it put into a personal loan if you have a decent credit record.

Tbh, if it were me, and assuming it's not on an interest-only mortgage, I'd be tempted to hold onto it a bit longer until the loan is paid down so that it will cover it's costs when sold.

Out of curiosity, if it's on a repayment mortgage, have you had a recent redemption statement to find out how much exactly is outstanding. You might be surprised...

Original poster

Scotmum83 · 19/11/2015 21:07

We have bought our own house now so we just need to get rid of this as it just a burden to us. We have been renting it out for nearly 6 years in the hope prices would go up but it's just not happened that way so we have decided to cut our losses now. It's been nothing but stress with one bad tenant after another and rent doesn't cover the mortgage. We also have to apply for permission to let as we can't change to a buy to let. It is a repayment mortgage. And yes I know there will be fees etc on top of the loss we make. Sigh.......

OP posts:

LIZS · 19/11/2015 21:11

You are liable to fund the difference. Can you add to your other mortgage or take a loan if you don't have any cash in the bank.

Original poster

Scotmum83 · 19/11/2015 21:18

Yes we can take a loan out, I just wondered if the mortgage company offered any help regarding re-financing the remaining amount or is it best to shop around for the best personal loan. When we come to remortgage our own house I think we will try to cover this.

OP posts:

LIZS · 19/11/2015 21:20

No they won't as it then is unsecured.

Original poster

Scotmum83 · 19/11/2015 21:23

Ok thanks Lizs.

OP posts:

lalalonglegs · 19/11/2015 21:34

When does your current house have to be remortgaged? I agree, adding the outstanding amount onto your residential mortgage would be the cheapest way of doing this. If you have any savings, obviously it would be even cheaper - albeit demoralising - to just use them paying off the balance. Sorry for your troubles - it sounds as if it would be best just to get rid of the rental house as soon as you feasibly can.

Original poster

Scotmum83 · 19/11/2015 21:57

We can remortgage in June so not too long.

OP posts:

Bearbehind · 19/11/2015 22:14

Speak to a broker before you take out a loan or do anything OP.

Depending on your circumstances, having a loan for the negative equity might hinder your chances or remortgaging.

Likewise, not all lenders will fund refinancing of debt, which is essentially what the negative equity is.

The mortgage provider for the property with negative equity won't agree to the sale until they can see you can repay them in full and are not very like
to offer much in the way if help unfortunately.

A good broker will advise you on the best options.

Original poster

Scotmum83 · 19/11/2015 22:35

Thanks for that advice Bear, I will email our broker and see what he advises. When I spoke to the mortgage company about the situation they did say that they have to give permission for the sale to go through so I imagine we will have to prove that we have the money in the bank for the sale to go through.

OP posts:

Sunnyshores · 20/11/2015 10:12

Yes unfortunately the mortgage company wont care a bit they'll just want their £109k paid off and will refuse to let you sell if you cant show them you have the missing £9k plus all the sales fees already in your account.

Agreed the cheapest way is to extend your mortgage. Dont take out any other sort of loan before checking it doesnt affect your remortgage affordability.

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