Negative equity – forced to repay mortgage

by Readers Question

12:56 PM, 4th October 2013
About 6 years ago

Negative equity – forced to repay mortgage

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Negative equity – forced to repay mortgage

I have a buy to let mortgage with Mortgage Express. This mortgage finishes in April 2015. The value at present of the property is around £50000. I paid £126,000 for it 6 years ago with a mortgage of £113,500. There is now negative equity in the property in the region of £76,000.

I have paid the interest on the mortgage consistently and the property has been let at a fair rent allowing the mortgage payments to be met.

I have asked Mortgage Express for an extension of the term to allow equity to build in the apartment so as to give me a chance to sell it and redeem the mortgage. Negative equity - forced to repay mortgage

I have asked Mortgage Express to allow me to overpay and they have agreed, however I don’t want to overpay to find that I am made bankrupt due to their unwillingness to extend the mortgage in April 2015. There will be a shortfall of £45000 even if I over pay £1000 a month.

I earn a good wage and can afford to overpay by over a £1000 per month.

I have also written to the Prime Minister who has given the treasury my letter who in turn have responded. They say tackle the case with the Financial Ombudsman. My past dealings with them seem to be that they are weak to say the least.

It seems unfair that due to no fault of my own, indeed the financial crisis of the country being the cause and the disastrous dealings of the banks being responsible, I have to be responsible and accountable instead of the perpetrators.

Any suggestions?

Regards

David



Comments

Steven Burnell

18:14 PM, 4th October 2013
About 6 years ago

David
Is there no equity in either of the other 2 mortgaged properties that another lender might be able to re-mortgage, especially the one coming up in just 4 years - sounds like you could stand the extra outgoing cash flow?
Are you absolutely certain that the drop in equity is as big as you fear - it is hard to imagine such a sustained drop? Is it a wreck / is it a flat in a block with structural problems - or can you do anything to the property to create more [realisable] value cost effectively?
I'd be very cautious & very fearful of overpaying every month; might it be wiser to put that money to one side for any future potential negotiation?
Given you have some time to execute a 'damage limitation' plan, could you in the meantime sell your own house, clear its mortgage, downsize, and then pay MX off? A hard 'hit' but might be less bad than taking a hit to your professional standing & future earning power?
Sorry if these sound too analytical (its the accountant in me), but sometimes I find someone being willing to ask 'daft' questions is what I've needed to plan a way forward.
Good luck & I hope Mark's contacts can give you the advice you need.

Colin Childs

19:03 PM, 4th October 2013
About 6 years ago

Perhaps realise the equity from one of the other properties in your portfolio to reduce your indebtedness.

Puzzler

12:04 PM, 7th October 2013
About 6 years ago

I see other posters have asked but there is no reply:

1) how and why did you only have an 8 year term, that is an odd length?

2) how has your property devalued by over half? I know the market has dropped but that is really severe!

I have a MX mortgage and I expect the terms will remain the same. I would try to sell the property yourself rather than let them do it as you would probably get a better price. I don't know whether they would agree to that. Or try for an unsecured loan for at least part of the debt, they are very reasonably priced at the moment.

You don't say how much cash flow you would lose, but as you are an accountant I presume you earn good money so you might have to use a bit of your income.

Please answer the two questions though because there might be other factors based on your replies.

DAVID KNIPE

13:24 PM, 7th October 2013
About 6 years ago

Reply to the comment left by "Puzzler " at "07/10/2013 - 12:04":

I than you and all the kind people who have responded to my dilemma.

I assure you that no one has offered anything that has not been given or been thought of before now.

I really appreciate everyone's concern..........

DAVID KNIPE

16:02 PM, 7th October 2013
About 6 years ago

Reply to the comment left by "Puzzler " at "07/10/2013 - 12:04":

Thanks for your support

DAVID KNIPE

16:03 PM, 7th October 2013
About 6 years ago

Reply to the comment left by "Theodore Brown Property Management" at "04/10/2013 - 14:13":

Thanks for your support

DAVID KNIPE

16:04 PM, 7th October 2013
About 6 years ago

Reply to the comment left by "Darrell C" at "04/10/2013 - 14:37":

Thanks for your support

DAVID KNIPE

16:05 PM, 7th October 2013
About 6 years ago

Reply to the comment left by "Annette Stone" at "04/10/2013 - 15:05":

Thanks for your support

DAVID KNIPE

16:06 PM, 7th October 2013
About 6 years ago

Reply to the comment left by "Steven Burnell" at "04/10/2013 - 18:14":

Thanks for your support

DAVID KNIPE

16:07 PM, 7th October 2013
About 6 years ago

Reply to the comment left by "Colin Childs" at "04/10/2013 - 19:03":

Thanks for your support

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