Trapped in negative equity

Hi John,

If you mean you are at the end of a mortgage deal that is best case scenario as you will simply transfer onto the lender’s Reversion or Standard Variable Rate.

If you are coming to the end of the term of the mortgage ie maximum number of years this is more difficult. Can you raise the money to pay the loan off?

Reply to the comment left by “Neil Patterson” at “14/07/2015 – 08:56“:

I am coming to the end of the mortgage and they do not offer buy to let the negative equity is £130,000 I do have 4 others properties but they do not have a lot of equity in them will the mortgage company make me bankrupt

Reply to the comment left by “John Waites” at “14/07/2015 – 10:51“:

I think you need to re-negotiate with your current mortgage provider as they stand to lose in this situation too and may be open to discussion. It could be possible that they can write a clause into a mortgage that allows you to rent the flat. Providing the rental you receive covers the mortgage you may be able to keep going until things improve. If you have equity available in other properties, you could consider remortgaging them and reducing the debt on this property? Good luck and I hope that you find a satisfactory solution..

Hi John,

It is unclear whether you are living in this flat or renting it currently?

However, don’t be too disheartened yet.
I know landlords who have successfully renegotiated an extension on their mortgages while in considerable negative equity as they had a viable business plan and rental income coming in from all properties.
The banks don’t want to lose money either so it’s not in their interest to repossess and lose so much.
If you explain your position to them and see what they say first, they may just extend the mortgage on the same terms as I’ve seen done before.
If you need to put in a proposal then work out what you can afford eg;
If they can offer to extend the mortgage for a further 10 years and you pay an extra £500 per month repayment, that would pay off £60k of the debt over the term and hopefully the value of all your property will rise over the next 10 years and you will be much closer to where you need to be.
It all depends on how your portfolio is doing and how much you can pay. Be aware that interest rates will rise and don’t overstretch yourself with repayments. Show them you are being realistic and don’t sign up to something you can’t afford.

Good Luck
Yvonne