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Original poster

Adding onto the mortgage - negative equity

42 replies

Hamandcheesebaguette · 04/07/2018 18:58

Hey, would appreciate some advice please!

Long back story, not relevant to the question. Also it's somewhat hypothetical at the moment but trying to get my ducks in a row so to speak.

DP owns a flat. It is currently being renovated as the plan was to sell within the next few months and buy somewhere together. I rent a flat, where we both are living just now.

However, it is looking increasingly likely that we won't be able to sell the flat as it will be in negative equity.

Figures - flat bought for £97k, £84k left on mortgage, we could potentially be looking at a valuation of around £70k. The market in this area has absolutely plummeted however until we formally get it valued when it's finished this is am informed guess based on other similar properties in the area.

Inconvenient yes, but we thought we would just move there for a while and reassess, adding me onto the mortgage in the process.

However, now I've just had a thought-can I be added on with the flat when it is in negative equity?! Or will we have to pay the difference into the mortgage to do so?which we don't have.

If the above is true... is there any other options?! I am very reluctant to move into a property where I have no rights and no financial claim (related to the back story!!!) But we are both spending thousands a month On different property's and would each be about £1200 better off if we lived together.

Thanks in advance!

OP posts:

Dickybow321 · 04/07/2018 20:03

fabulous he won't be able to sell if he's in negative equity

43percentburnt · 04/07/2018 20:04

So 1200 a month saving for you (did you definitely mean each?) means a deposit in 6 months plus money for fees on a 70k place. I’d move in and pay board!

NeverTwerkNaked · 04/07/2018 20:05

I can’t understand why you would want to take on the debt? There’s no “equity” to share In the property, no £8k to “protect”. There’s c£14k debt to pay off before you break even.

C0untDucku1a · 04/07/2018 20:05

Move in. Pay half the bills, minus the mortgage. Save the difference in your own bank account.

Teenytinyvoice · 04/07/2018 20:07

I agree with 43percent. We have friends who have done this long term. They have lived together in a house own by one of them for more than 6 years. They are now looking to buy a bigger place together, and the none owner has a cash pot to put it. It would have been a deposit for them if things hadn’t worked out. And they have both leveraged the savings of 2 people in one property.

Original poster

Hamandcheesebaguette · 04/07/2018 20:09

Now you've all put it all like that I feel very stupid!!! I was looking at things backwards.

OP posts:

43percentburnt · 04/07/2018 20:09

Just read your update.

Would he really have given you money if it had increased in value?
Was a deed to trust drawn up to protect your interest for those years you contributed?

Save the £1200 a month each. 24k in 12 months. Buy a house in your name (you are not married so no higher rate stamp duty due to his rented flat). Then deed of trust to protect the hefty deposit he has just given you. He rents the flat out, hopefully covering his costs. Review annually.

FabulousSophie · 04/07/2018 20:11

Yes, if you paid half the mortgage (as rent) plus half the bills , he could save that money to start saving enough to pay of his negative equity (in time).

43percentburnt · 04/07/2018 20:14

You’re not stupid in the slightest. You just approached it a different way!

FabulousSophie · 04/07/2018 20:29

If he saved your rent (£600/month), it would only take him 23 months to save enough to pay off his negative equity, and then be able to sell the flat. In the meantime, you could also save £14k as a new deposit.

jemihap · 05/07/2018 06:34

Dickybow321 - Can you explain what's actually stopping him from selling despite being in NE?

You do realise that at one time it was quite common for houses to sell for no more or for less than what was paid for them?

Admittedly that was before the govt embarked on a ''protect home home owners and prop up the housing market at all costs'' policy

TheCrowFromBelow · 05/07/2018 06:49

You can’t just “go on the deeds”, the mortgage company will not let someone else gain an interest in the title without their approval, which means a remortgage.
He would need to pay the existing mortgage off to remortgage, and the mortgage company will only loan against current market value.
If this is a project for both of you then yes you pay board and save your money.
He can then either rent his flat and wait to see whether the market comes back, or take the loss, sell and in addition pay the mortgage company the difference.
But please think about your own financial security first especially as you are not married.

RiddleyW · 05/07/2018 07:09

I did it crow - mortgage company had to approve but no remortgage. And they approved even though DH was unemployed. That was about 15 years ago though I could believe it’s harder these days.

TheBlueDot · 05/07/2018 07:18

Echoing what others have said - you’d be taking on debt. Especially if he’s protecting his £8k which actually no longer exists. If he had to sell tomorrow, the bank would get all the money and he’d owe the bank the difference between the sale and mortgage amounts. All you’d be doing is giving the mortgage company another person to chase for the debt.

Move in and save. If things work out and the market improves, you can contribute to a new property. If things don’t work out, you are building up a deposit to buy your own place.

tentative3 · 05/07/2018 07:42

The figures are weird, if the flat is only worth 70k, or even if it was still worth 97k, how would you both be £1200 better off a month? Surely your rent can't be that high in an area where a flat is worth 70k?

If you have no money to pay down the negative equity then you don't have a deposit to buy somewhere new whether you can sell the flat or not so that's not really a consideration at the moment. I completely understand your feelings on effectively paying his mortgage but as long as there is a net gain for you in moving into the property then it seems worth it. So if you pay less once you move into his than you currently do on rent and bills you're still onto a winner, just make sure you put the extra away into savings.

reallybadidea · 05/07/2018 07:48

Personally I think that if you're not on the deeds/mortgage then you shouldn't be paying towards it. If you pay half of the bills and a proportion of the 'interest' but not the equity, then your dp is still saving money. You could then save up some money towards paying down some of the mortgage to get out of negative equity and then go on the mortgage.

SassitudeandSparkle · 05/07/2018 07:58

What did you do when you lived in it before? Did you pay half then?

Agree that it may not be possible to be put on the deeds, depends on the mortgage company.

There is no rush to sort things out, it doesn't seem long since you got back together. Also agree with the posters who have pointed out that you would be taking on a debt, not an asset! If you think the flat is only worth 70K and he wants to keep 8K of that, it's only worth 62K.

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