Hi,

I, like many others, am in a negative equity situation (borderline). I have an existing mortgage for £88K and a secured loan with Nemo Personal Finance for £35K. Current value of home is £135K. Total outstanding mortgages is then £123K leaving around £12K to 'play' with.

My problem is, I may have to go down the quick sale route which means I could be selling for around £100K (not good I know) but my wife's mental health is at stake due to a neighbour from hell!!) leaving me around £23K short to satisfy the 2nd charge. I have access to a further £10K of my own but i would still be £13K shy for the 2nd charge.

My question is....as the Halifax have offered me £211K (documented mortgage offer), can I settle the 2nd charge through my new mortgage (Halifax being my new lender)? I am looking to go with a 75%/25% equity share scheme with Bovis on a reduced property at £227K (previously £247K) so I effectively only need around £170K for my 75%.

Would Halifax be willing to allow me to borrow say, £192K (making their LTV 85%) so I could satisfy the 2nd charge (my £10-12K from my property 'quick sale' making up the shortfall)?

Sorry if this sounds complicated but there is some great advice on this forum and I think I'll get a straight answer here.

Just need to know if this is possible and the process that needs to take place to assure all parties (quick sale co, 2nd charge lender, etc). Need to get my wife and kids out of here!

Many thanks.

Andy.

If you haven't got equity, you can't make it by juggling loans, discounts and so on. Remember that your mortgage offer will probably depend on a valuation and, if you are going to be paying £227k for a property, then you should not expect the valuation to be more and it could even be less. Lenders use the lower of valuation and price when calculating the LTV ratio. If the valuation is £227k, you may be able to borrow 85% of 75% of £227k or £145k on the new property.

Have you contacted your council, police and so on about the neighbour? A solution can sometimes be found but these things are often slow to be resolved.

Hi,

Thanks for the reply, I thought I may be chasing shadows on this one.

I expect them (hopefully) to value the property at £227K as it is a one off reduction and all others of identical style are on the market for £247K.

I guess I would be ok if this was a simple remortgage to raise funds (assuming enough equity and appropriate LTV). I just thought I may be able to raise up to 85% LTV (£192K) but use funds equalling 75% (£170K) to satisfy the equity share scheme and the surplus to my existing 2nd charge lender.

I naively thought my new lender may be able to do this as I will still be within their LTV limits and I would still be borrowing a lot less than they are prepared to lend me(?).

I am a little confused about you're last statement concerning the 75% of 85% of £145K. Could you please clarify?

Thanks, I've tried the landlord, council, environmental health, etc. Absolute waste of time! I can't tell you the stress it causes. Can't concentrate on work, family, etc. It's completely soul destroying!!

Regards,

Andy.

Hi

If you own 75% of the house, that means your share will be worth £170k. Halifax will only lend you up to 85% of the value of your share of the house, therefore they will only lend you up to 85% of £170k = £145k.

I see, thanks for that. Does this mean the most I'll get from the Halifax on this particular equity share scheme (75%/25%) is £145K? Assuming the house is valued at £227K.

Thanks for the reply.

Jeez, I'm confused now.

The Halifax mortgage advisor said that a deposit was no problem as Bovis (in this case) are effectively supplying a 25% deposit for the transaction.

This leaves me borrowing 75% of the purchase price hence 75% LTV on the mortgage (subject to evaluation obviously).

Sorry guys, appreciate the replies but I seem to be missing something here?

Thanks.

Andy.

If it's a 75%/25% shared equity scheme, you buy 75% and rent the other 25%. You are only putting the 75% that you will own up as security. If a lender will lend 85% of what they value the security as, they will lend 85% of your 75%. The other 25% doesn't belong to you unless you take up any option in this particular scheme that lets you buy it at a future date.

Other schemes involve cashback, paid deposits and so on. None of the schemes, however, can create equity for you.

If you have £123k outstanding on your present home and you sell for £100k, you would need to save up £23k plus a deposit before you can buy another property.

Thanks maxsteam,

I think what I've failed to make clear is that part of this scheme is for me to pay Bovis back over the first 10yrs (first 5yrs interest free and then 2.5%APR for the remaining 5yrs) so I end up 'owning' 100%.

Does that help to clarify/change anything?