There are, however, a range of solutions that can be pursued in order to deal with a property in negative equity. Once we have completed an initial consultation with our clients, we can begin to plan the best course of action for dealing with you problem debt.
For the majority of our clients, the best option available is usually a negotiated settlement with their lender. This approach, also known as a shortfall sale, typically involves the borrower selling the property and our team negotiating with the lender to write off as much of the shortfall from the sale as possible. Our client will then have an agreed, affordable amount to repay either in installments or as a single lump sum payment depending on what makes the most financial sense for them.
We often find that our clients are sceptical that a bank would agree to write down debt, but there are good reasons for them to do this. Repossessing a property and then paying someone to sell it for them is a long and expensive process for the bank and they rarely get the full market value for the house, so agreeing a settlement is often the best option for both parties.
It isn’t usually a good idea to try to resolve debt problems by taking on more debt, however in some cases it can be possible to deal with problem property debt by remortgaging.
While not suitable for everyone, restructuring your mortgage is an option that we might pursue with clients who are struggling financially due to unexpected changes in their circumstances, such as a growing family or a change in your work situation. We have successfully negotiated with our clients’ lenders to extend their mortgage term, allowing them to stay in the home they had worked so hard to secure.
An individual voluntary arrangement (IVA) is a legal agreement between you and your creditors. IVAs are a possible solution we would consider where a borrower owes money to multiple creditors.
Most, though not all, types of debt can be included in an IVA, including mortgage debt, credit card debt, unpaid council tax or money owed to HMRC. An IVA might also be worth discussing if you own multiple properties with mortgages from different lenders, or you have unsecured debt from several creditors.
Once a settlement is agreed with your lenders it can be paid as a five year payment plan, known as a contribution IVA, or, if you can afford it, as a single lump sum.
What do our clients say?
One of our recent clients, Lorna, said this after we completed her case; “I purchased an apartment in 2008 for £195,000. I made a bad decision and took bad advice regarding an interest only mortgage in conjunction with co-ownership. The monthly rent and interest only mortgage was too much for me as a single person and they was never any chance I would have been able to start making mortgage repayments. I was totally mis sold this mortgage. I thought there was no way out and I continued to struggle to make payments for eight years getting further into debt in order to live.
“In 2016 my property was in £100,000 of negative equity and I wanted out. My Mortgage company and co ownership were of no help and told me bankruptcy was the only option. When I found out about Negative Equity NI, I made an appointment for an initial chat, with no great hopes of a solution. After my first meeting with Tom in April, I actually felt for the first time in years that there was a solution to this nightmare and I could actually be out of it in a few months.
“The whole process was actually very simple and not at all stressful, everything is taken out of your hands and dealt with in a professional and efficient manner. Nothing was too much trouble, even though I often had silly questions! I moved out of my apartment in August and am now in rented accommodation, so much happier and stress free without a mortgage, which was literally making me ill. Big thanks to Negative Equity UK for making everything so easy.”
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We have successfully negotiated hundreds of cases every year where we have arranged the sale of our clients’ homes and reached an affordable debt settlement with the lender. In September alone we were able to write off a total of £1,287,323 in unaffordable mortgage debt.
Whatever the situation we will offer you a bespoke solution based on your own personal circumstances.
Whatever your circumstances, the first step to dealing with your property debt is to contact Negative Equity UK for an initial free, no obligation consultation with one of our advisers.
Take a look at our reviews and call us on 0161 631 2727 or go to our website and arrange for us to call you at a time that suits you.