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  • Debt & Negative Equity

    Direction needed for -ve equity property ...

    Hello PTers,

    I have a property in Sunderland that I need to move on and unsure the best way to do this.

    It is in negative equity, average area and poor condition. Still 10 years on mortgage term.

    Do I sell and put Dept into my other b2l unsure how/ what mortgage company will look on this, would they push to sell both and demand payment of the balance.

    Any thoughts / ideas really needed.
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    James Wylie

    If you want to sell a property in negative equity you need to find the cash to pay the deficit. If you cannot do this the lender has the right to refuse the sale. Worse case is you default (bad for your credit record)  and the lenders pursues you fit the shortfall.

    Many people think that security means that's all lenders can get but the truth is the borrower is liable for the whole debt and the security just derisks this from the lenders perspective.

    Of course if you cannot pay it off then the lender needs to come to the table as part of a CVA, etc. But that's not good for you either.
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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022


    Are both mortgages with the same lender?

    What is the LTV on the second property?

    What will the LTV be if you transferred the negative equity to the second property?

    How much is the negative equity?

    Why do you have to move on the property in negative equity?

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    Thank you all to date.
    Essentially both properties ( same lender) are together In negative equity of 90k. One is still rented covering itself just. The problem property needs refurbished between 12 -17 k which I don't have to do this.
    My home is probably worth 190k mortgage of 55k I've a few health probs now that I hadn't when I purchased the BTL (2007-08) so looking for guidance.
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    James Wylie


    I’m not sure that the lender will allow you to transfer the negative equity if that property would also be in negative equity. 

    One of the posters who comments on this site specialises in negotiating settlements with lenders, Vanessa will probably be along in a while to advise who it is, if not I suggest you message her for details.

    The amount of money you say needs to be spent on refurbishment sounds high, does it really need this, could you accept a lower rent if the property was not refurbished?   I’ve just seen a flat in a block where I have a property in a condition that I didn’t think would rent, it has and the tenant is refurbishing it.   Also Jonathan Clarke often comments on this site that he lets property and his tenants carry out work whilst living at the property, again hopefully he will make some comments which may be helpful.

    It may be possible to transfer the negative equity to your own property but I think you should take advice from the specialist referred to above first - or somebody offering a similar service.


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    Basically if you want shot of the 2 BTLs in neg equity you need to remortgage your personal home to extract the £90k plus sale fees - is that viable - are you still working and could you service a £145k mortgage.

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    Lots of other landlords in the same situation and this is exactly the scenario that Landlord Debt Advisory help out with.  I'm sure it would be worth your while to get in touch with them.  Good luck!

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    All comments are made in good faith and are given to the best of my knowledge and experience but I would advise you to consult an expert before making important decisions and I accept no liability for comments made.

    As Annie suggests above, it would definitely be worth contacting Landlord Debt Advisory.

    They may be able to negotiate with the lender on your behalf to sell the property and write off some of the debt.

    The sooner you contact them, the more solutions you will have to solve this.

    As debt problems start to escalate, the methods of resolving them start to diminish.

    ​LDA have been very successful in getting debt write offs in these kind of cases, so give them a call.

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