Negative Equity Flat

[CRB14]

I bought a flat back in 2007 which has dropped about £15-20k. It now means I'm around £5k in negative equity.

I don't want the place any more but the one next door has been on the market maybe 18 months with no signs of selling and I feel it will hamper me selling mine at a reasonable value.

It appears I could be stuck with it for a number of years yet. I have some savings which ideally I'd use as a deposit for a new house rather than plough back into the flat that I don't want.

Has anyone any suggestions as to what I could do? Consent to let is an option but I'd need to know I could get it before asking. Otherwise I could use my savings to convert to a proper buy to let but then I've got nothing to buy a new place with.

Is it possible to just give the keys back to the mortgage company or would I still be liable for any outstanding debt?

[Road Pest]

You can return the keys but you may be liable for the shortfall, and any costs incurred while the lender sells the flat for you. I know I am certainly liable with my flat but lenders may have different rules. I would have thought until the flat is sold arrears will be built up and that would more than likely prevent you from getting another mortgage. Consent to Let is usually very easy to get but I would make sure you can afford both mortgages if you do this.

[croyde]

I see you are in London. Is negative equity possible in the capital at the mo'? Despite the recession the prices around here (SW London) are rising at a still unbelievable rate and I just can't work out who has the money to buy half million pound rabbit hutches of dubious quality.

A mate bought a house in North Devon around 2007 for £220,000. He's finally sold it a few months ago, after a year on the market, for £150,000

Definitely a recession outside the M25.

[CRB14]

Thanks, so with a new mortgage and an existing consent to let would my total borrowing amount be reduced?

Say my mortgage is £500 a month (£6k a year) does that come off the top line of my salary as an outgoing expense or could I take the income into consideration also?

[croyde]

I suppose that is whether a Consent to Let is treated the same as a Buy to Let. I'm sure someone will be along soon with the answer.

Best of luck.

[CRB14]

croyde said:

I see you are in London. Is negative equity possible in the capital at the mo'? Despite the recession the prices around here (SW London) are rising at a still unbelievable rate and I just can't work out who has the money to buy half million pound rabbit hutches of dubious quality.

A mate bought a house in North Devon around 2007 for £220,000. He's finally sold it a few months ago, after a year on the market, for £150,000

Definitely a recession outside the M25.

I'm working in London at the moment. The flat is elsewhere hence why I want to get rid.

[Road Pest]

For your own piece of mind I'd have thought you would want to be able to cover both in the event you have to. Don't forget associated costs. There might be a 1% load on your interest rate from the lender to allow you to let. Also you will still have to pay for upkeep, new boilers, etc. Not trying to put you off, it is fine if you can cover it all and make money from the rental income. Only interest can be offset for tax purposes.

[jonny70]

Do lenders allow you to rent out your flat whilest in negative equity/ Dont you require a BTL mortgage?