Sell, Let Out or Stay Put?

Donadea Leo

Hi Apologies if this has been dealt with elsewhere. A friend of mine who lives closeby has a bit of a dilemna. His allergic to computers so I said I would find out what I could for him.

He has the possibility of a job in another part of the country. Seems very interested in this as is his wife who would like to also move to that part of country. He has to make decision whether to go for job by early next week - no guarantee of getting it. For personal reasons this would be a good move for them.

Anyway difficulty lies in fact that he bought house 2 years ago, so clearly will be in some negative equity and so if sells (big if I guess) will lose money. Do people know if bank are likely to allow this i.e. allow them to sell at below cost without demanding difference there and then - didn't buy at boom time but still likely to be shortfall of guestimate of 20k on top of what is still on mortgage - again if it sells. He says he would like to buy again in time but rent for year or two to check out area they're moving to. He is going to phone bank tomorrow to discuss this a bit more. In one sense if you can sell and then buy in another area what you buy will also be cheaper so it will offset the loss in theory.

The other option of course would be to rent out house, we discussed fact that he would lose Mortgage Interest Relief and have to register with PRTB, pay the council file tax returns etc.etc. but if house prices continue to fall then the losses keep getting bigger so hard to know if this is just going to make things worse in the long run. They wont be in position to have house sitting on market unoccupied for months on end especially as his wife will have to leave her job and try to find something new which could take any amount of time.

Maybe he'd be better off just doing nothing until he has paid back the mortgage a bit more. It is a bit sad to have to make such a big life decision based on servicing your mortgage but maybe thats life. Yes he is lucky to have a job at present so isn't complaining.

Any advice, thoughts, similar stories etc would be very welcome

the groutch

based on the details given, if they can still afford the repayments on the mortgage they should stay put.
banks are unlikely to allow negative equity selling
becoming a landlord can be much more hassle than it's worth, and losing mortgage interest relief would be a big hit for someone only 2 years into a mortgage (the relief after 2 years would still be 10-15% of the value of the monthly repayments).
unless there's something very very special about the new job (doubling his pay overnight or something like that), I can't see any value in moving.

djimi

How far is the new job from where he lives? I suppose commuting is out of the question; even as a short term solution?

Donadea Leo

Too far to commute unfortunately. Had the same thoughts as yourself Groutch in relation to what he is best off with.

Have heard of being able to use equity from a new property (if you were to buy one) to offset debt and obviously somehow continue loan - with permission from the bank, tis all very complicated. Would be an option if people had some savings for a deposit on new home rather than simply paying off mortgage loan. Doesn't help my friend at present though.

Saw another post re: negative equity mortgages - might be worth some consideration, don't know if they're fully up and running or of anyone has managed to get one - how they work etc.

draiochtanois

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Donadea Leo

Thanks for that. Would be a good solution but I hav no idea how it works - legally how do you do this, I was what I'd describe as some personal adds on Daft looking for matches etc., but could only imagine it gets quite complicated in terms of insurance, primary residence etc., Does anyone know of anyone who has done this or what their experience has been, is?

draiochtanois

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