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Help & Advice greatly needed!!!

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  • Help & Advice greatly needed!!!

    Hi,

    If anyone can advise in this situation I would be greatly appreciative.

    My partner and I are basically a product of the credit crunch, we had a mortgage with Northern Rock which in retrospect we shouldn’t have taken (or rather they shouldn’t have given us) and we managed to re-mortgage last year onto a three year fixed deal with the Halifax that ends in Summer 2011. Since this time our financial situation has worsened with my partner’s recent redundancy from work we anticipate that within a month or two our finances will be stretched to the limit and defaulting on our mortgage payments will begin.

    We have the option of moving back to my parents house but the problems with this are what to do with the flat, originally we bought a two bed flat for £138K, at the time of remortgaging it was valued at £160K by Halifax and we took a £150K mortgage, as property prices have dropped over the year we are either narrowly missing or already in negative equity at around the £150K mark. I have never sold a property before so I am a bit bemused at how to do this, plus I am not 100% sure if trying to sell is the best option. We can’t rent it out legitimately with our mortgage lenders knowledge as they will charge massive amounts to exit our current deal (and won’t guarantee that there would be a deal for us anyway on a buy-to-let), renting out without their knowledge would mean making a loss every month to cover the mortgage and other associated costs (management fee, insurances etc).

    I love the sound of going back to my parents as I will be able to clear debts that we have accumulated and start fresh, getting a sizeable deposit together for a house and doing it properly rather than having people (NR) throw money at us! Other options people have mentioned to me are simply handing the keys back to the Halifax although I now understand this also carries huge risks. I just want to make sure that whatever route I choose to go down it is the best for us financially in the long run.

    Help!

  • #2
    Best bet would be to see a financial advisor.

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    • #3
      Re: Help & Advice greatly needed!!!

      Hi Kensam,

      Sorry to hear about your situation. You may want to have a look at Let to Buy mortgages - they work in a kind of opposite way to Buy To Lets: they give you the option of renting out your current property without looking at what your current debts are seeing as they are presumed to be covered by the rental income of the property...

      Like markg said it is well worth checking out a financial advisor if you don't have one and need a good one try these guys: Trafalgar Square Financial Planning Consultants.

      I'm not quite sure I understand why you can't simply move back with your parents and let the property out without remortgaging? If you can keep hold of the property that will always be your best bet as prices will go up again eventually and you will rue the day if you sell now...

      good Luck!

      Tim

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      • #4
        Re: Help & Advice greatly needed!!!

        Try your local Citizens Advice Bureau - they're brilliant on this kind of thing.

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        • #5
          Re: Help & Advice greatly needed!!!

          Hi Kensam81,

          I don't know if you're still in the same predicament, but you can let out your current property, even though you may have a 'Together Mortgage', but you do need to get your lender's permission (you will get a 'Consent to Let' letter once they've agreed).

          When you let it out, you will stay on the same 'Together Mortgage'. You will not be forced to change deals. In fact you can't, because you would not fit the criteria on the loan to value ratio.

          Lender's should treat you fairly as the FSA dictate. It would be difficult to see how Northern Rock would be seen to be treating you fairly if they refused your request to let the property to ameliorate your situation (especially since they are owned by the government).

          Regards,

          Brian
          Want to reduce your home or buy to let insurance? Any UK post code. Guaranteed to undercut your current premium. PM me for a Free Quote.

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          • #6
            Re: Help & Advice greatly needed!!!

            Yeah I would recommend the CAB, a good starting point as they are free. Hope it all works out for you.
            Northern Ireland Property

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