Jump to content
House Price Crash Forum
Sign in to follow this  
markyh

Will A Lender Allow You To Sell In Negitive Equity?

Recommended Posts

I have been pondering this. My sister got reposesed in about 1997 from the 89-95 crash and the bank sold her house and chased her for the difference for many years until she agreed to settle the debt with a Big Bruv loan (me) in 2001.

So if the bank can sell for less than the mortgage can you before you get reposesed? Or will the bank stop the solicitor form completing the sale if the sale price is not enough to clear the mortgage and you have no other funds to pay the difference?

M

Share this post


Link to post
Share on other sites
I have been pondering this. My sister got reposesed in about 1997 from the 89-95 crash and the bank sold her house and chased her for the difference for many years until she agreed to settle the debt with a Big Bruv loan (me) in 2001.

So if the bank can sell for less than the mortgage can you before you get reposesed? Or will the bank stop the solicitor form completing the sale if the sale price is not enough to clear the mortgage and you have no other funds to pay the difference?

You can't sell for less than the value of your outstanding mortgage without the permission of the lender. That's the whole point of the lender having a charge over the property! (Otherwise you could take out a stonking mortgage, buy a big house, sell the house to someone else & abscond with the cash...)

I believe in the last downturn, some banks did allow people to move & carry their negative equity with them, since they realised that it was the only way to get the market moving.

Phil

Share this post


Link to post
Share on other sites
I believe in the last downturn, some banks did allow people to move & carry their negative equity with them, since they realised that it was the only way to get the market moving.

How did they do that? It would mean buying a property with a 100% mortgage having already defaulted on your last one...

Edited by Extradry Martini

Share this post


Link to post
Share on other sites

last time round - i moved with neg eq of a few £1000's

halifax charged me about £1500 for an indemnity and added the neg eq to my new loan.

this was, however after the market had started to pick up.

doubt theyd be so willing to start anyone off in a new home in neg equity now.

Share this post


Link to post
Share on other sites
How did they do that? It would mean buying a property with a 100% mortgage having already defaulted on your last one...

It wasn't people who had defaulted; they were in negative equity, but still paying the mortgage, and presumably considered a good risk,

Peter.

Share this post


Link to post
Share on other sites
You can't sell for less than the value of your outstanding mortgage without the permission of the lender. That's the whole point of the lender having a charge over the property! (Otherwise you could take out a stonking mortgage, buy a big house, sell the house to someone else & abscond with the cash...)

I believe in the last downturn, some banks did allow people to move & carry their negative equity with them, since they realised that it was the only way to get the market moving.

Phil

I thought as much. So basically a lot of recently 100% bought (2004 onwards) or highly mewed vendors wont be able to except my -30% BMV offers because the sale wont cover the outstanding mortgage.

Is there a sneaky way to find out the value of the mortgage on a property. I got a Land Reg report on a house I want to rent the other day but it just told me purchase price, and that the charge was with Nationwide, but not the value of the "charge" against the property.

It would be very handy to know who had equity to give away when making offers.

M

Share this post


Link to post
Share on other sites

This one is going to be fun.

In the 90's it was a few thousand, now your looking at tens of thousands. A bigger hole and a bigger mess.

As before if the banks want to get the market moving again they'll have to let people do it. However I bet they won't let the biggest equity losers move.

Share this post


Link to post
Share on other sites
How did they do that? It would mean buying a property with a 100% mortgage having already defaulted on your last one...

There's no reason to suppose they defaulted just because they were in NE.

All the banks were doing was allowing the borrower to shift existing NE to a new house. The quality of the collateral in relation to the loan didn't have to change. In fact, the bank would have benefited from another set of fees. And by allowing the borrower to move (to a new job, presumably), they helped secure the income stream needed to service the debt.

Share this post


Link to post
Share on other sites
I thought as much. So basically a lot of recently 100% bought (2004 onwards) or highly mewed vendors wont be able to except my -30% BMV offers because the sale wont cover the outstanding mortgage.

Yes -- and that's why the advice of 'reduce the price, you idiot!' so often heard hereabouts, is not necessarily that useful ;)

Edit: a really distressed seller will just want out, and won't be able to take your offer. In this case your best bet is to wait for the house to be auctioned. A seller who wants to buy another house might be able to sell to you, if his lender agrees.

Edited by huw

Share this post


Link to post
Share on other sites

In 92, I moved abroad, and rented out my house here, in case new job did not work out etc etc. Renting it was a disaster, even though done through an agent and all that. They ruined the place, and then left after about four months. I decided to sell simply because I did not want the hassle of letting. I had bought for 48k in 88, with a 38k mortgage. Had the place valued, and that was 38 - 40 k. The building society would not sanction a sale, because they said I might get less than the outstanding mortgage. I told them that if this did happen, that it would probably be not very much short, and that I would pay the difference. Still no joy. After lots of talk and thought, I decided to post them the keys and take voluntary repo. They then sold it for 33K,( probably to someone they knew !), and chased me for the difference. They did not get it .

Share this post


Link to post
Share on other sites
I have been pondering this. My sister got reposesed in about 1997 from the 89-95 crash and the bank sold her house and chased her for the difference for many years until she agreed to settle the debt with a Big Bruv loan (me) in 2001.

So if the bank can sell for less than the mortgage can you before you get reposesed? Or will the bank stop the solicitor form completing the sale if the sale price is not enough to clear the mortgage and you have no other funds to pay the difference?

M

That's incredibly bad luck. Didn't property prices start increasing in 96/97 after the last crash? Still, whoever picked it up then is still laughing.

Share this post


Link to post
Share on other sites
How did they do that? It would mean buying a property with a 100% mortgage having already defaulted on your last one...

it does mean a greater than 100% mortgage as you say, but its not a default if you carry the negative equity onto the new loan.

Share this post


Link to post
Share on other sites

In 92, I moved abroad, and rented out my house here, in case new job did not work out etc etc. Renting it was a disaster, even though done through an agent and all that. They ruined the place, and then left after about four months. I decided to sell simply because I did not want the hassle of letting. I had bought for 48k in 88, with a 38k mortgage. Had the place valued, and that was 38 - 40 k. The building society would not sanction a sale, because they said I might get less than the outstanding mortgage. I told them that if this did happen, that it would probably be not very much short, and that I would pay the difference. Still no joy. After lots of talk and thought, I decided to post them the keys and take voluntary repo. They then sold it for 33K,( probably to someone they knew !), and chased me for the difference. They did not get it .
In 1994 handed back keys on a property, after the National Provincial sold it there was a short fall of £44,000 ,saw a program fronted by the late Adam Faith ( Buggie ) who told you how banks an building socities would negotiate debts to about 10% of there value.On this advise we negotiated the debt down to £3300 this was even less than the 10% and this resoved the debt in total, We could have been lucky beacause this was just before the Nat Pro was swallowed buy the Abbey Natonal

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.