Author Topic: Negative Equity  (Read 1496 times)

Offline Dish shhh

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Negative Equity
« on: February 18, 2011, 09:41:02 pm »
Myself and my wife bought a little 2 bed flat at the height of the housing boom.  We'd just got engaged and thought we'd try to do what we could to get a house where we could at least spend the following 3/4 years, at least until we were lucky enough to have children.  We really were stretching it but we managed to get the money together and finally got our mortgage at the beginning of 2007.  The house was £160,000 but it's worth nowhere near that now.  We, like many couples over the UK and Ireland, had been frightened in to committing to buying a house thinking that prices were running away from us.

Last September we had our first child and we are so happy but we'd love to move to a bigger house.  We both earn a combined £50K plus and we currently owe around £140,000 on our house.  I'd estimate that it's only worth about £110,000 though.  We're trying to overpay and we've saved a few thousand to allow is to do this next month but we really are feeling trapped. 

Now, I know we are lucky enough to have a roof over our head and to have pretty secure jobs but we'd love to have another child at some stage and there's no way we could in our current situation. 

Anyone else in the same position?
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Online TSC

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Re: Negative Equity
« Reply #1 on: February 19, 2011, 12:43:27 am »
You won't be alone.  I'm sure there are loads in the same boat.  Most don't like admitting it like.  I just missed the 'negative boat' having bought in 2005.  But got bit through fixing mortgage payments about 4yrs ago before rates went to next to zero.  My 'deal' doesn't end until June, when I'm sure rates will then increase.  My luck.  cost me thousands in interest savings etc when I look into it.

However I'd be doing well to get much more than what I paid 6 yrs ago today for the house.  So although not neg equity, certainly a way off positive.

Good luck anyway.

Offline Alf

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Re: Negative Equity
« Reply #2 on: February 19, 2011, 12:51:15 am »
Negative equity dwarfed people in the 80's and is doing it again. My heart goes out to anybody in this position.

Offline Sammy5IsAlive

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Re: Negative Equity
« Reply #3 on: February 19, 2011, 01:52:55 am »
Myself and my wife bought a little 2 bed flat at the height of the housing boom.  We'd just got engaged and thought we'd try to do what we could to get a house where we could at least spend the following 3/4 years, at least until we were lucky enough to have children.  We really were stretching it but we managed to get the money together and finally got our mortgage at the beginning of 2007.  The house was £160,000 but it's worth nowhere near that now.  We, like many couples over the UK and Ireland, had been frightened in to committing to buying a house thinking that prices were running away from us.

Last September we had our first child and we are so happy but we'd love to move to a bigger house.  We both earn a combined £50K plus and we currently owe around £140,000 on our house.  I'd estimate that it's only worth about £110,000 though.  We're trying to overpay and we've saved a few thousand to allow is to do this next month but we really are feeling trapped. 

Now, I know we are lucky enough to have a roof over our head and to have pretty secure jobs but we'd love to have another child at some stage and there's no way we could in our current situation. 

Anyone else in the same position?

Not personally but quite a few of the people who I deal with are in a similar situation. The sensible advice I would give is to sit tight and wait for the housing market to rise so you can at least sell without landing yourself in debt and then look to rent a property that can fit 4 people. The rest of Europe is alright with it and I'm not sure why there is such a stigma attached to it.

The less sensible advice up until very recently would have been to have your new baby and live the life that you want to in the knowledge that in the worst case scenario the state will provide a comfortable safety net. Looking at the way that tax credits etc are heading though I'm not sure if that is now a sensible idea.

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Re: Negative Equity
« Reply #4 on: February 19, 2011, 11:21:33 am »
Not personally but quite a few of the people who I deal with are in a similar situation. The sensible advice I would give is to sit tight and wait for the housing market to rise so you can at least sell without landing yourself in debt and then look to rent a property that can fit 4 people. The rest of Europe is alright with it and I'm not sure why there is such a stigma attached to it.
 

You're right about Europe - different mindset there re ownership, and when you think about it, it's fairly sensible.  Why spend best part of a lifetime worrying about paying off your home when you can't take it with you anyway when you go.  For some reason the Brit psyche is to own your own pad at all costs - hence why prices go through the roof during boom.

The big difference re renting in UK v Europe of course is that much of the renting done here will be via private landlords, and you can touch for a dodgy one, or one that simply decides to sell up after you've maybe treated the pad as your long term home.  Whereas in europe a lot of the housing stock is state owned.  A consequence here of the Thatcher yrs really where all council owned properties were sold off on the cheap.  OK if you were one of those to benefit in those days, but a bugger for anyone trying to get their own property nowadays.

Offline Tomo!

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Re: Negative Equity
« Reply #5 on: February 20, 2011, 06:45:00 pm »
Could you not rent out your current property and rent somewhere else to live while the market recovers?
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Offline steviek

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Re: Negative Equity
« Reply #6 on: February 20, 2011, 07:05:45 pm »
Its likely its about to affect me shortly.

My flat goes on the market tomorrow, and i'm due to make a tidy profit on it, however the property me and my girlfriend are looking to move to is worth far less than its asking price.

We've done some investigating and discovered that the family selling our potential new home bought it 2007 for the same price it is being marketed for at the moment. So its highly unlikely they will take anything less, as they won't want to make a loss on it.

This means we'll have to offer up to 15k more than its current market value to get it - and we both really, really want to live there.

If we got it, we'd have to stay there for up to 10 years maybe, and hope the property market has picked up sufficiently so we can make profit on it when we sell it.

I'm hoping there is a deal to be done, but it is unlikely.




Offline Jimmy Conway

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Re: Negative Equity
« Reply #7 on: February 20, 2011, 07:46:53 pm »
Ditto here mate.
Only saving grace for us is, we can afforf mortgage, just need to ride it out as house will always go up (over time)

Offline Sabbi yypia

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Re: Negative Equity
« Reply #8 on: February 20, 2011, 11:22:11 pm »
Few years ago I almost completed on a house purchase before the bubble burst, always wished i had jumped in when i was younger but i always worried about the market crashing as soon as i did, luckily for me the sellers pulled out after getting a higher offer at the last minute, i tried to match it but couldnt. Would have been nice to have had a house of my own but i'm glad i dont have the negative equity thing hanging over me. Hang in there, things will turn round again soon hopefully!

Offline Sabbi yypia

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Re: Negative Equity
« Reply #9 on: February 20, 2011, 11:25:12 pm »
Its likely its about to affect me shortly.

My flat goes on the market tomorrow, and i'm due to make a tidy profit on it, however the property me and my girlfriend are looking to move to is worth far less than its asking price.

We've done some investigating and discovered that the family selling our potential new home bought it 2007 for the same price it is being marketed for at the moment. So its highly unlikely they will take anything less, as they won't want to make a loss on it.

This means we'll have to offer up to 15k more than its current market value to get it - and we both really, really want to live there.

If we got it, we'd have to stay there for up to 10 years maybe, and hope the property market has picked up sufficiently so we can make profit on it when we sell it.

I'm hoping there is a deal to be done, but it is unlikely.





unless they are inundated with offers why would you want to may over the odds for it? Although i guess a property is only worth what a buyer will pay for it..

Offline Rococo

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Re: Negative Equity
« Reply #10 on: February 21, 2011, 12:23:42 am »
I can sympathise.  Bought a normal modest house 5 years ago and after paying a fair sized mortgage every month for those 5 years, am just about even if I sell it.  All of that's ok and I love having my own house, but there are a couple of issues. 

I got a high loan to value mortgage - why wouldn't I as they were readily available and I assumed he market would continue to rise and so after a few years I'd have decent equity.  I'm now unable to remortgage and stuck on the standard variable rate until I can save about £15k.  This is ok at the moment but if interest rates go up I could be screwed. 

I'd also envisaged moving by now but that's just not possible and wont be possible for a while.  I earn good money and can afford my payments plus a bit more if the interest rates go up so I shouldn't complain - I know there are loads in worse situations.

Not sure what the answer is, or if there even is one.  Just got to ride it out, hope I get some pay rises and hope the interest rates don't rise too sharply!