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  • Debt & Negative Equity

    Remortgage when in negative equity

    I have a friend that has a portfolio in negative equity and terms expired with MX. 

    He would like to save some of the portfolio rather than let an LPA take over and leave him with huge bill. 

    Is it possible for him to remortgage part of the portfolio to 75% LTV when the balance is still negative, assuming MX agree?  This would allow him to maintain an income from which to repay the balance owed to MX when the remains of the portfolio are sold off.

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    Hi Paul,

    I am sorry to say that your friend is in a bad situation and it will only get worse if they do not seek professional debt advice.

    It is very unlikely imho that your friend will be able to re-mortgage to 75% LTV with the situation he is in combined with the PRA.  Lenders look at an aggregate LTV across a portfolio now, not just at individual properties.

    Your friend would be very well advised to contact Landlord Debt Advisory at his earliest convenience.  They may be able to assist in re-structuring his portfolio or working with MX to reach a solution, such as extending the mortgage term to allow him to sort himself out.

    The team at LDA are the only FCA-regulated company in the UK undertaking this work and they are forging strong relationships with MX and creating more favourable outcomes for landlords in your friend's situation.

    They can be contacted by clicking on the banner above or calling 0161 222 4311.

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    HI Paul,
    As Vanessa has said refinancing at 75% LTV with the properties in negative equity is very unlikely to work. MX will require open market sales of the properties, either at their behest via receivership or "borrower-led". Any residual debt can be looked at separately; we've completed 100s of case of this type (all lenders) resulting in significant debt reduction (50%-90% of the shortfall for qualifying clients).

    I hope this helps. Happy to discuss. 
    Tom

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    Sorry to hear about your friend. Firstly is he in negative equity according to market value or just according to MX?

    i have noticed that sometimes the market can be higher than the increase in value the mortgage provider have on their system.

    Also it could be interesting to hear how your friend managed to get into negative equity as generally you only hear one story about LL and many could learn that negative equity is possible, even after most properties are back at pre 2008 level.

    it is also interesting to think that if your friend was a limited company he would most likely be in breach of the mortgage t&c and the mortgage company could call in the loan.


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    Thanks for all the helpful comments.  He is in the NE so not had much HPI. Bought and mortgaged at 85% LTV with many not recovering from the crash so leaving negative to genuine market value.

    Seems he may need to sell as many as possible himself to make sure he gets genuine value rather than letting an LPA run up their bills and then negotiate with MX over the shortfall on the balance.  I will suggest he gets professional help with this.

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    Hi Paul, I am sorry to hear your friend has some properties in negative equity. Negative equity tends to be at no fault of our own! If you want some expert advice on the topic Landlord Debt Advisory have free consultations. If your friend has any question we would be happy to help!

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