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  • Debt & Negative Equity

    Redeeming part of a portfolio mortgage

    Hello all.

    I'd be interested if anyone can shed any light on this. I have a 5 properties that are mortgaged individually with Birmingham Midshires, and I'm looking at the repercussions of selling one or two.

    Three have negative equity, including the 2 I'm looking to sell. I've accepted that if I sell properties with negative equity, I'll have to stump up the shortfall, but it could be a bigger problem if they start looking at the other properties I'm not currently selling.

    Anyone any idea how likely it is that they will review the whole portfolio? Do they have any scope to start demanding I pay down the mortgages of one's I'm not currently selling?

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    I am not aware of any reason why the lender would look at the other mortgages, as each will have been granted based on their rental income criteria. This assumes that all the mortgages are being properly serviced.

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    The properties may be subject to a cross charge or a right to consolidate.

     I suggest you speak to BM and tell them they you are thinking of selling the particular property and ask what their requirements are.

    They are more likely to have an issue if you wished to sell one of the properties that was not in negative equity.

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    Hi John,

    I would recommend that you speak to the team at Landlord Debt Advisory.  Click the banner for details above.

    They may be able to assist you in re-structuring your portfolio or negotiate a way out with your lender.  They have a very strong track record of assisting landlords with these challenging situations.

    ​The sooner you contact them, the more options they will have at their disposal to assist you.

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    [Image: 4995468760_6be86655d4_t.jpg]
    general operations director, site owner and moderator - propertytribes.com


    boble000: The mortgages are fully up-to-date and have never been in arrears.

    EssexLL: I'm in a bit of a catch 22 situation here. I don't want to start making enquiries to BM unless I'm confident that I won't stir a hornets nest. The mortgages are golden in that they are mostly lifetime trackers at BoE base + 0.39%. I seem to remember that BM can be aggressive in finding reasons to foreclose on mortgages. I also seem to remember that in the past they controversially and arbitrarily added 2 or 3% to the tracker (I don't remember exactly how much), citing "exceptional circumstances". I think I only escaped at the time because I had a salaried day job, and therefore wasn't a "professional landlord", whereas now I'm retired and it's my main income.

    nick tadd: Thanks, but these are such good deals that I want to avoid refinancing if I can, and I'm solvent overall so an IVA or bankruptcy would not be appropriate.

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    LDA are not only about bankruptcy or IVA.  They were set up to assist landlords in exactly your situation.  They are definitely worth calling to see if they can assist. They may be able to negotiate a debt write down or something of that nature.

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    Hi John, I'm not sure if you know, but there are a variety of solutions for properties in negative equity (wish I'd known the solutions years ago). 

    I bought my old home in 2006, and my partner bought in 2008, both of which dropped to a fraction of the price in 2009, so we were forced to rent them out when we moved to our new home together as we couldn't have sold them as we didn't have the money for the shortfall.  But now we've completely turned that around as we buy, sell, and help others that are in the same situation that we were all those years ago, so that they aren't loosing a fortune. 

    I live (& invest) in the North East of England where an awful lot of the people/landlords are still in negative equity.  (*Moderator note:  Rest of comment removed for being a "pied piper" post)..

    Debbie

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    Dear Moderator, there was no need to class my post as Pied Piper, I merely asked John to PM me as I didn't think it appropriate to ask him to broadcast his financials to the world.  He's in negative equity, which means he's probably been in negative equity for about 10 years, and he's taking control and asking for solutions.  I am really sorry if I broke any rules, I didn't mean to, please accept my apologies, he is on here asking for advice, and that's all I was trying to do. 

    Sorry 

    Deb

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    Hi Debbie,

    Thanks and no worries.  Moderation is not a personal attack.

    Advising people about debt management is a specialist area, and people would be better off contacting FCA regulated companies for it as they can give bespoke, professional, and insured advice.

    If you have experience of overcoming such problems, then please do share it in the public domain.  We don't need John's financials to discuss such issues.  There are many remedies, and these can be openly and generically discussed.

    Please remember the forum is there for the knowledge base of all, not a singularity or individual.  Much as John's personal/financial details should remain private, talking a conversation into the private realm does not foster the education of the wider community.

    With the greatest of respect, moderation is made on certain protocols although, on this occasion, I do not believe there was malicious intent behind your request to go private.

    My apologies for any misunderstanding.

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    [Image: 4995468760_6be86655d4_t.jpg]
    general operations director, site owner and moderator - propertytribes.com

    Just a reminder. The crux of my question is:

    Anyone any idea how likely it is that they (BM) will review the whole portfolio? Do they have any scope to start demanding I pay down the mortgages of one's I'm not currently selling?

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    The answer will be in the Terms and Conditions of your original mortgage offer.  There may or may not be a clause about "right to consolidate".

    My personal belief is that, if you are not in arrears, they are unlikely to undertake a portfolio review.

    As a general rule, borrowers who pay on time, maintain their properties, and generally stick to T & C's stay under the lender's radar imho.

    Should you be challenged, Landlord Debt Advisory have been fighting for landlords to have similar consumer rights as homeowners when it comes to redress, so they would be able to fight your cause with BM.  You could also complain to the Financial Ombudsman, who I found to be very helpful and supportive on the one occasion I used them when my bank cancelled my business bank account by mistake and then took an age to re-instate it.

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