Mortgage - Selling house & outstanding balance

BronsonTB

Is there anyone that provides a service of dealing with your bank when you have a negative equity mortgage & want to sell the house?

Dealing directly with the Ulster bank is very painful & not making progress.

Mortgage is in negative equity (20k approx)
Couple have split up. (over 7 years)
House was rented but the tenant is moving out shortly.
Couple have agreed to sell & want to move on with their own lives.

Is there any advisors who would engage with the bank to agree on how to deal with the remaining debt after the house was sold?

TIA

gogo

BronsonTB wrote: »

Is there anyone that provides a service of dealing with your bank when you have a negative equity mortgage & want to sell the house?

Dealing directly with the Ulster bank is very painful & not making progress.

Mortgage is in negative equity (20k approx)
Couple have split up. (over 7 years)
House was rented but the tenant is moving out shortly.
Couple have agreed to sell & want to move on with their own lives.

Is there any advisors who would engage with the bank to agree on how to deal with the remaining debt after the house was sold?

TIA

Can they take out a personal loan to cover the shortfall of the 20k? Might be the easiest option for them assuming they have affordability for same, maybe go 10k each if they can agree to that. Most banks would be happy to offer this once you can afford it?
Or is the issue that they just can’t raise the 20k at all?

BronsonTB

gogo wrote: »

Can they take out a personal loan to cover the shortfall of the 20k? Might be the easiest option for them assuming they have affordability for same, maybe go 10k each if they can agree to that. Most banks would be happy to offer this once you can afford it?
Or is the issue that they just can’t raise the 20k at all?

Thanks for the reply, yes, that's a possible option but they are still then tied together for the length of that debt, equally liable. They both have new relationships & want to move on.

Ideally the 20k would be split into 2 loans & each responsible for paying their own half individually. This was they could move on & the bank still get there money.
I'm looking to see if anyone knows of a service that would help achieve this.
At the moment the bank are not accommodating.

Jim2007

BronsonTB wrote: »

Ideally the 20k would be split into 2 loans & each responsible for paying their own half individually. This was they could move on & the bank still get there money.

Well first of all they will not know how much the negative equity will be until they actually sell the house, it could be 10k or even 40k!

Second by splitting the residual loan into two the bank is being asked to accept a higher level or risk of being able to collect on the loan if one partner defaults, so you need to find a way of making it interesting for them. It there some other asset that can be offered as security for this new loan?

BronsonTB

Jim2007 wrote: »

Well first of all they will not know how much the negative equity will be until they actually sell the house, it could be 10k or even 40k!

Second by splitting the residual loan into two the bank is being asked to accept a higher level or risk of being able to collect on the loan if one partner defaults, so you need to find a way of making it interesting for them. It there some other asset that can be offered as security for this new loan?

Selling price based on a recent sale agreed & EA advises the selling price is realistic so the neg equity balance is pretty accurate & house will only be sold once SP is reached. (it's not a forced sale in that sense where they have to take a low offer, they don't).

Yes, bank have had 10 years of interest & mortgage payments without missing one, they could have given keys back & claimed bankruptcy when they split, but didn't. Now they are looking for the bank to be reasonable & still get there their money but allow the 2 parties move on in the meantime. Yes, slightly higher risk but should the proven track record to pay count for nothing??

OP Post is more about advise from someone that has had similar dealings with the Ulster Bank rather than details of the personal deal itself.

3DataModem

BronsonTB wrote: »

they could have given keys back & claimed bankruptcy when they split.

Couple of things;

Giving keys back doesn't do anything. The debt is still just as enforceable.

Applying for bankruptcy affects all assets other than necessities, and also only applies if they are unable to discharge debt. As they are living elsewhere and can rent property, then the courts would likely reject a bankruptcy application as they are able to discharge debt, just don't *want* to.

BronsonTB

3DataModem wrote: »

Couple of things;

Giving keys back doesn't do anything. The debt is still just as enforceable.

Applying for bankruptcy affects all assets other than necessities, and also only applies if they are unable to discharge debt. As they are living elsewhere and can rent property, then the courts would likely reject a bankruptcy application as they are able to discharge debt, just don't *want* to.

That was in the past, they are NOT filing for bankruptcy but could have when the house was 100k in negative!! instead the were responsible & continued to pay their mortgage & now they are simply looking for the bank to be reasonable in how to deal with the remaining debt at this point in time..

Back on topic.

3DataModem

BronsonTB wrote: »

Is there any advisors who would engage with the bank to agree on how to deal with the remaining debt after the house was sold?

TIA

Unlikely an advisor would get any write-off here.

The bank will request a statement of affairs, and see that the debt is serviceable and collateralised against a rentable asset.

10k for an individual with no other debts is not a large amount. With interest rates so low then a relatively long-term loan (4-5 years) could be offered; costing c. 50 per week each.

They might have a shot at getting the post-sale loan at an interest rate close to their original mortgage interest rate.

3DataModem

BronsonTB wrote: »

Yes, slightly higher risk but should the proven track record to pay count for nothing??
.

Lots of people default on debt after marriage break-up, it's one of the most common default triggers (losing job + bereavement being two of the other big ones).

gogo

Can they just get a credit union loan, one each for 10k.. any personal loan will cover it.. the bank in reality won’t care where it comes from once they get it? They sell house and engage a solicitor who will redeem the mortgage for them from sale proceeds and 10k from each of them to make up shortfall. This would be standard practice, unsure why the bank aren’t engaging with them on this, unless it because they, the bank, don’t want to do the personal loans.
If that’s the case tell them to go elsewhere for the loans. They don’t even have to attend the same bank.. once they have the personal loans they are only libable for that and no longer have a connection to each other and the mortgage is gone, up to each of them to facilitate their own loans then.
This is standard fare.. is it a case that the bank think they are looking for a write down, it’s a bit odd really? If I sell my house for 20k less then the mortgage owed and make up the shortfall with a loan from the credit union, what should they care? A solicitor will be redeeming it for them as part of the sale and once he gets the funds to clear the mortgage it’s no real concern of the bank once the mortgage is cleared at the end of the day.

Tell them to go to another bank, credit union wherever and look for personal loans, one each to make up the short fall, wouldn’t bother with UB.. they seem to be confusing the issue.

BronsonTB

gogo wrote: »

Can they just get a credit union loan, one each for 10k.. any personal loan will cover it.. the bank in reality won’t care where it comes from once they get it? They sell house and engage a solicitor who will redeem the mortgage for them from sale proceeds and 10k from each of them to make up shortfall. This would be standard practice, unsure why the bank aren’t engaging with them on this, unless it because they, the bank, don’t want to do the personal loans.
If that’s the case tell them to go elsewhere for the loans. They don’t even have to attend the same bank.. once they have the personal loans they are only libable for that and no longer have a connection to each other and the mortgage is gone, up to each of them to facilitate their own loans then.
This is standard fare.. is it a case that the bank think they are looking for a write down, it’s a bit odd really? If I sell my house for 20k less then the mortgage owed and make up the shortfall with a loan from the credit union, what should they care? A solicitor will be redeeming it for them as part of the sale and once he gets the funds to clear the mortgage it’s no real concern of the bank once the mortgage is cleared at the end of the day.

Tell them to go to another bank, credit union wherever and look for personal loans, one each to make up the short fall, wouldn’t bother with UB.. they seem to be confusing the issue.

Thanks for the reply, yes, I think this will be looked at as the only viable solution. One of the parties really wanted to deal with the same bank without having to borrow from a different provider. They are in the process of changing job to complicate any other loan applications with other places.

BronsonTB

Update: They are going to continue to pay the mortgage & reassess in a future date. (ideally when the house is completely out of negative equity.