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  • Debt & Negative Equity

    -ve equity + interest only = deadly combo

    In the North East we have had a lot of properties unfortunately in negative equity for the past 10 yrs.

    The mortgages are coming to an end or Im wanting out to enjoy life and fortunately I can pay the mortgages off with savings. They must be thousands of other investors in a similar position regarding negative equity especially in the North and Scotland. Its a time bomb ticking away who may not have savings to pay the mortgages off.

    What about people in similar situation, how are you managing with this issue?

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    Certainly this is a far worse issue in locations where capital growth may be very low/absent since the property was acquired - either by investor/owner occupier - latter potentially being in dire straits if needing to refinance.

    Elsewhere and esp in SE capital values are up in SE by 5 fold in past 20 yrs and 10 fold in parts of London - hence plenty of equity.

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    Have exactly this issue. Bought 2017 £110k now worth £70 k in South Yorkshire. Mortgage doesn't need paying off yet and will have made enough on rent to break even but disappointing

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    Hi Gordon,

    I am sure you are not alone in this and you are fortunate that you have the savings to solve the problem.

    We had another thread recently on a similar topic:

    Buy to Let mortgage term expiring - options? 

    I recommend anyone in this situation contact Landlord Debt Advisory on 0161 222 4311 and they may be able to negotiate on your behalf to extend the term of your mortgage a little bit to give you more time to find a solution.

    Otherwise, you will have to sell the properties, and end up with an unsecured debt to the lenders, which they may secure against your own home, if there is equity in it.  Again, Landlord Debt Advisory may be able to negotiate a debt write-down or payment plan.

    The sooner you contact them, the more options you will have, and the more favourable the outcome, so get in touch with them as soon as you can.  They are an excellent company who have developed very good relationships with lenders and achieve a very high customer satisfaction rating.

    ​I hope that helps and good luck.

    See - Distressed landlord Case Settlement & Process

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    Thanks for the reply Vanessa, fortunately not all the properties are in neg equity and I am ale to pay off the relevant mortgages with savings or the sale of other houses. On a national level they must/will be thousands of investors and owner occupiers in the same position without the means to pay off the balance of the mortgage.

    Worrying times ahead, particulary in the north or away from the S.E or London

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    Realistically probably millions of properties with IOMs - and further North they are the more likely that neg equity is also involved.

    Also flags that being heavily leveraged is fantastic in a rising market and potentially disaster in a falling market.

    Owner occupiers who are needing to claim SMI are now given an interest bearing loan for each mortgage instalment - rather than State just paying it - so over time that just leeches equity esp in stagnant/falling market.

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    HI Gordon,

    We (https://www.landlorddebtadvisory.com/) specialise in this field and yes there are many 1000s of homeowners and Landlords still reeling from the property market crash. I'm glad to read that you are in the fortunate position to repay these mortgages in full. In many cases we're dealing with clients who are not, and many that are facing some very difficult decisions, particularly those approaching retirement.

    In my experience most mortgage lenders will extend these mortgages (where full repayment of the debt is a realistic proposition at a later date) or agree to negotiate debt reduction (full and final settlement) for shortfalls following sale of the asset without the need for insolvency.

    We've negotiated 100s of settlements with the likes of Barclays, Leeds Building Society,  MX, UCB/Nationwide, BM/TMB/Lloyds, Santander (A+L/Abbey), Accord, Engage, Kensington, NRAM etc, a number of these for Property Tribes members.

    The scope of debt reduction varies but  settlements of 15%-40% of the eventual shortfall are common providing

    (a) the case is viable (depends on the client's precise circumstances and how the lender perceives these),

    (b) the representative holds the necessary regulation for this type of work (FCA, CARB) and most importantly

    © there is a proven track record and relationship between representative and lender/mortgage company.

    I hope you find this useful.

    Tom Cardwell
    Landlord Debt Advisory

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    If you can refinance at a low rate why pay it off? Parents have been offered 150k on an unemcumbered house at 300pm for 15 years up until the ripe old age of 80! Must have good equity though to make it happen

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    Assume rate is not fixed at 2.4% for the 15 yr mortgage term though?

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    Hi LandyLordy

    fixed for 5 years just like my other mortgages

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