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A family member bought a BTL house in the North in 2008. We all know what happened in 2009. The property is in negative equity. It is on the market, but there hasn't been movement in 2 years. Mortgage is approx. Ł75k. Value is probably around Ł20k. Family member does not have the money to make up the difference. RBS is chasing and threatening legal action but has yet to get debt collectors involved. I am not clear what their usual procedure is. Family member is not making mortgage payments and property is currently uninsured (yes, a violation of mortgage terms.) Family member would like to see if RBS will settle. Does anyone have any experience in terms of how to do this and any recent experience of how many pence in the pound is a reasonable settlement? Funds would come from another family member (who is not rich and so would be limited in ability to help...hence trying to get a sense of what kind of offer might be accepted.) Bankruptcy remains an option although he is hoping not to go down this route.
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Re: BTL Mortgage in Arrears -- any advice on how to approach with settlement amount.
Whilst we are all aware of the North/South divide, it's beyond my understanding how the value could be only Ł20k?
BTL mortgages are normally subject to rental income rather than income. Moreover, they normally require a much higher deposit, hence my question about the value. It just sounds like something doesn't add up here.
Did they have any tenants? Surely the rent was supposed to cover the repayments.
BTL sometimes looks like a licence to print money, thanks to many TV programmes dedicated to the property market. However, reality can be quite different. Many landlords don't like void periods and for that reason are happy to keep good tenants at lower rents rather than risk re-marketing the property and not knowing who they would get and how quickly. -
Re: BTL Mortgage in Arrears -- any advice on how to approach with settlement amount.
Trust me...I've seen the documentation. It was interest-only and bought at the height. I've checked comparables and he would be lucky to get Ł25k. A second property he owned was sold last year for Ł20k, which is consistent with comparables in the area. It has been on the market for nearly two years. They haven't been able to rent it either, which is also consistent with the neighbourhood. It does add up; I've examined it for them. Banks were all too happy to lend pre-recession.
Anyone out there with any helpful steps forward? Unfortunately, post-mortems aren't going to get them anywhere right now...Comment
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Re: BTL Mortgage in Arrears -- any advice on how to approach with settlement amount.
Sounds very unlucky. Here in the Capital we still can't see the end to the latest boom. Prices are now well above 2007. On the other hand, something doesn't seem to be adding up. Pubs, cafes etc are much more quiet than this time last year. People seem to be looking after their pennies. Judging what you've said, the area where your family member lives must be one of the hardest hit by the 2008/09 recession.Comment
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