Wednesday, October 5, 2011

Won’t somebody please think of the children

Negative equity is back: House price falls leave thousands unable to move

Gemma Watkins is now snared by negative equity. The 27-year-old nurse bought her home in Gloucestershire for £92,500 at the top of the market in 2007. She borrowed £100,500 from Northern Rock on one of its now notorious Together mortgages. This loan allowed you to borrow up to 125 per cent of the value of the house. Miss Watkins used some cash to pay off a £12,500 personal loan and the rest to buy her flat. Her fixed rate comes to an end in May and she is struggling to find another lender. Miss Watkins believes this is because the value of her home has fallen by more than £7,000, and due to the structure of the mortgage, which combines a personal and home loan.

Posted by little professor @ 11:14 AM (2256 views)
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8 thoughts on “Won’t somebody please think of the children

  • wasnt she in negative equity at the point she bought with a 100%+ mortgage

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  • There is something that doesn’t add up here.

    If she’s been regularly making payments at the fixed rate of 6.9%, they will surely be delighted to let her carry on at that very profitable rate, or at their current variable rate of 4.8%. They wouldn’t chuck out a reliable paying customer

    I’m guessing that her payments have been sporadic and that she is campaigning for a much, much lower rate. If she’s in negative equity and has missed payments, then she has no chance of a better deal. She has to either bite the bullet and hand back the keys or get married.

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  • Her repayments are only about £500 per month. If she can’t afford that, then she’ll struggle to pay rent.

    In America people usually save themselves some money by handing back the keys and renting. In this country, people (like this bird) are generally much better off fighting to stay in their homes. This suggests to me that UK house rental prices are even more out of kilter than house prices.

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  • Flash Im not sure you are alluding to this as well but if you hand back the keys you are liable for the difference between the (distressed) sale price e.g. through repo, and the mortgage. If you can hide for six years (or is it 12??) it might just be a cunning plan!!

    In SOME states in the good ‘ol you can just walk away scott (parker) free. God Bless America!

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  • It doesn’t actually say she wants to move, she just wants a new mortgage. She’s already going to get a reduction by going to their SVR, but she presumably has seen all the fixed rate deals on offer and wants one of those. But it’s always been the case that the bigger your deposit, the lower your interest rate – what exactly did she expect when she took out a mortgage bigger than the value of the house? “She admits: ‘I was naive when I took on the mortgage.’” Hmmm – I could think of other, slightly stronger words…

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  • techieman it depends on the local state law some states will not allow the bank to chase the difference, also in some states such as Nevada the banks have so many properties they cant be bothered to chase for the debt although they can up to so many years after, a friend of mine was given cash from the bank to hand over the keys, this is common too so people dont trash the house.

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  • The Daily Mail have been trawling for bad-luck stories and this was the worst they could find? Low interest rates really have saved every homeowner.

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  • Presumably she had visited Coleford before she bought, and still she paid that much.
    I despair.

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