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Hi not sure if anyone can help but I am a citizen of Australia and have a property in the uk that I am stuck with as it’s in negative equity and I can’t sell it. I’m thinking of stopping paying the mortgage and letting it get repossessed but worried if I will be chased the money owed here in Oz, can that happen? Thanks. 

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3 hours ago, Ben12345 said:

Hi not sure if anyone can help but I am a citizen of Australia and have a property in the uk that I am stuck with as it’s in negative equity and I can’t sell it. I’m thinking of stopping paying the mortgage and letting it get repossessed but worried if I will be chased the money owed here in Oz, can that happen? Thanks. 

I’m sure it can happen.  Very few things don’t sell for the right price so perhaps you need to drop it further.  If it gets repossessed it will be sold at auction, likely for a much lower price.  There will also be considerable fees attached if you go down that route as it’s a long drawn out process for the lender and won’t come for free.   The first thing to do is contact your lender and find out what your options are.

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12 hours ago, Ben12345 said:

I am a citizen of Australia and have a property in the uk that I am stuck with as it’s in negative equity and I can’t sell it. I’m thinking of stopping paying the mortgage and letting it get repossessed but worried if I will be chased the money owed here in Oz, can that happen? Thanks. 

Yes, it can happen and not worth the risk IMO.   Is the property in a decent enough state to rent it out?  

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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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14 hours ago, Ben12345 said:

Hi not sure if anyone can help but I am a citizen of Australia and have a property in the uk that I am stuck with as it’s in negative equity and I can’t sell it. I’m thinking of stopping paying the mortgage and letting it get repossessed but worried if I will be chased the money owed here in Oz, can that happen? Thanks. 

However tempting, this is such a bad idea. As Tulip states, you will be left with a much larger debt than if you had sold the property yourself. They are likely to have something on file which links you back to Australia, and if you don't repay the debt, it will eventually be passed on to an Australian debt collecting agency and then you are in deep doo-doo. 20 years ago you could've probably got away with it, but not the way information is shared these days. Unless you plan to jet off to South America with a large suitcase full of money, this is probably going to catch up with you in the end.

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2 hours ago, Marisawright said:

Yes, it can happen and not worth the risk IMO.   Is the property in a decent enough state to rent it out?  

I rent it out but the lender won’t give consent so I do it on the side. Worrying if they ever found out. Don’t have any choice. Got the property just before GFC so it’s 20k Gbp In negative equity and all the repairs add up. Another 14 years left to pay and the prices have never risen in the last 8 years. Im what is called a mortgage prisoner over there. Suppose I’ll just have to live with it. 

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Posted (edited)
5 minutes ago, Ben12345 said:

I rent it out but the lender won’t give consent so I do it on the side. Worrying if they ever found out. Don’t have any choice. Got the property just before GFC so it’s 20k Gbp In negative equity and all the repairs add up. Another 14 years left to pay and the prices have never risen in the last 8 years. Im what is called a mortgage prisoner over there. Suppose I’ll just have to live with it. 

14 years will go by quickly enough and then you will at least own an asset. It may have a growth spurt in the future too.

But on the other hand if you can sell it yourself and move on then that could be worth it too if you can use the money you are paying more productively.

Edited by Parley
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I want it all, and I want it now.

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2 minutes ago, Parley said:

14 years will go by quickly enough and then you will at least own an asset. It may have a growth spurt in the future too.

But on the other hand if you can sell it yourself and move on then that could be worth it too if you can use the money you are paying more productively.

It’s one of those deadly together mortgages so not a chance I can sell it. Yea you’re probably right. Thanks for the advice everyone! 

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2 hours ago, Ben12345 said:

It’s one of those deadly together mortgages so not a chance I can sell it. Yea you’re probably right. Thanks for the advice everyone! 

Hi Ben 

Was the mortgage with Northern Rock? If so I was with them and there is a lawsuit going on because we where all trapped paying high interest rates.

Have a look at harkus Parker law firm in the UK and register your details

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2 minutes ago, Lavers said:

Hi Ben 

Was the mortgage with Northern Rock? If so I was with them and there is a lawsuit going on because we where all trapped paying high interest rates.

Have a look at harkus Parker law firm in the UK and register your details

Yes it was then they changed to NRAM. That’s great, how long has that been going on and what have they advised? I’ll have a look. Cheers. 

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1 hour ago, Ben12345 said:

Yes it was then they changed to NRAM. That’s great, how long has that been going on and what have they advised? I’ll have a look. Cheers. 

Yeah mine went to NRAM after northern rock folded, left me stuck paying 5% and couldn't move because like you I bought right before the crash.

Luckily my house made money and I could settle up before moving out here last year.

They seem to think there's a case but how long it takes is anyone's guess. I first registered maybe last May and the last update was maybe a month or so ago.

They take a cut but there's nothing to lose and there was no reason for us to be stuck paying such high interest rates.

They are saying that we should have been paying the same interest rates offered at other banks so are going after the overpayment, which could be a nice sum.

I've also done a claim on my diesel car as they emailed me about that haha.

 

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20 minutes ago, Lavers said:

Yeah mine went to NRAM after northern rock folded, left me stuck paying 5% and couldn't move because like you I bought right before the crash.

Luckily my house made money and I could settle up before moving out here last year.

They seem to think there's a case but how long it takes is anyone's guess. I first registered maybe last May and the last update was maybe a month or so ago.

They take a cut but there's nothing to lose and there was no reason for us to be stuck paying such high interest rates.

They are saying that we should have been paying the same interest rates offered at other banks so are going after the overpayment, which could be a nice sum.

I've also done a claim on my diesel car as they emailed me about that haha.

 

That would be nice! Lucky yours made some equity, I thought mine would have risen a bit in 8 years. So you don’t need to pay anything upfront? Thing is if I contact them then lender might find out I’m in Oz which I don’t want. 

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15 minutes ago, Ben12345 said:

That would be nice! Lucky yours made some equity, I thought mine would have risen a bit in 8 years. So you don’t need to pay anything upfront? Thing is if I contact them then lender might find out I’m in Oz which I don’t want. 

By all accounts property is going through the roof in the UK atm, so you might end up selling just at the wrong time. Assuming it's not an interest-only mortgage, you will be paying of much more of the principal by now, so more of each mortgage repayment will be your money when you come to sell the place.

Good luck with the lawsuit - hope it can benefit you. @Lavers showing what a great forum PIO is for helping people in a fix 🙂 

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Posted (edited)
58 minutes ago, Wanderer Returns said:

By all accounts property is going through the roof in the UK atm, so you might end up selling just at the wrong time. Assuming it's not an interest-only mortgage, you will be paying of much more of the principal by now, so more of each mortgage repayment will be your money when you come to sell the place.

Good luck with the lawsuit - hope it can benefit you. @Lavers showing what a great forum PIO is for helping people in a fix 🙂 

The stamp duty freeze is coming to an end in the UK, so I would expect prices to calm down.

Find it hard to believe that a property is still in negative equity after all this time. Has the OP had it valued recently?

Edited by newjez
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Nearly there! Don't drop the ball now guys! Vaccines are weeks away. Stay safe!

 

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58 minutes ago, newjez said:

The stamp duty freeze is coming to an end in the UK, so I would expect prices to calm down.

Find it hard to believe that a property is still in negative equity after all this time. Has the OP had it valued recently?

The market in the north east hasn’t moved from what I’ve seen and yea had it valued recently. 

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2 hours ago, newjez said:

The stamp duty freeze is coming to an end in the UK, so I would expect prices to calm down.

Find it hard to believe that a property is still in negative equity after all this time. Has the OP had it valued recently?

I’ve recently spoken to two estate agents and both have said the market has already started to calm down.  Both said prices have even started to drop very slightly. 

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3 hours ago, Ben12345 said:

Thing is if I contact them then lender might find out I’m in Oz which I don’t want. 

They probably will.  You’ve said the lender won’t give consent to let.  I’m sure you realise this but you are in breach of contract by letting and that could come back to bite you.  Every property sells for a price, you need to adjust your price to make that happen.  Getting a little less than you’d like seems the lesser of two evils in your position.   You’ll then have to set up a repayment plan to clear the borrowing still owed.  It’s not good when it goes wrong.  I remember in the very late 80’s when many were in terrible negative equity and spent years paying it back.  Sometimes investments go wrong and buying property is in that bracket.  The UK’ has had a housing boom although I’m not sure that the north east has.  Either way, if your property hasn’t gone up in the last 8 years it’s reasonable to assume it’s not about to.  Just get rid of it.  It’s not like you’d be selling for too little as it’s only worth what someone will pay for it.  Sell and pick up the pieces.  Nothing else you can do.    

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58 minutes ago, Tulip1 said:

They probably will.  You’ve said the lender won’t give consent to let.  I’m sure you realise this but you are in breach of contract by letting and that could come back to bite you.  Every property sells for a price, you need to adjust your price to make that happen.  Getting a little less than you’d like seems the lesser of two evils in your position.   You’ll then have to set up a repayment plan to clear the borrowing still owed.  It’s not good when it goes wrong.  I remember in the very late 80’s when many were in terrible negative equity and spent years paying it back.  Sometimes investments go wrong and buying property is in that bracket.  The UK’ has had a housing boom although I’m not sure that the north east has.  Either way, if your property hasn’t gone up in the last 8 years it’s reasonable to assume it’s not about to.  Just get rid of it.  It’s not like you’d be selling for too little as it’s only worth what someone will pay for it.  Sell and pick up the pieces.  Nothing else you can do.    

No need to be concerned about being in breach of contract when the property is in negative equity as it would not be in the lender's interest to cancel the contract.

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Chartered Accountant (England & Wales); Registered Tax Agent & Fellow of The Tax Institute (Australia)

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4 hours ago, Ben12345 said:

That would be nice! Lucky yours made some equity, I thought mine would have risen a bit in 8 years. So you don’t need to pay anything upfront? Thing is if I contact them then lender might find out I’m in Oz which I don’t want. 

Not to sure if they contact your lender or not but just ask to makesure.

No nothing to pay upfront so a no win no fee basis just like ppi claims.

Nothing to lose so if it comes off then brilliant, if nothing happens then so be it.

 

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If I was to sell I’d be paying approx $700 per month on 30k shortfall. Prob best I keep renting as I’ve been ok the last 8 years. It’s currently on IO but I’ll change it to repayment and just pay it off. Rental income covers about 80% of the MRP.

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1 minute ago, Lavers said:

Not to sure if they contact your lender or not but just ask to makesure.

No nothing to pay upfront so a no win no fee basis just like ppi claims.

Nothing to lose so if it comes off then brilliant, if nothing happens then so be it.

 

Thanks mate. 

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55 minutes ago, Ben12345 said:

If I was to sell I’d be paying approx $700 per month on 30k shortfall. Prob best I keep renting as I’ve been ok the last 8 years. It’s currently on IO but I’ll change it to repayment and just pay it off. Rental income covers about 80% of the MRP.

That’s a big shortfall.  Changing to repayment won’t be easy as you’ll have to prove affordability.  They may smell a rat when your payslips/tax returns/outgoings are from Australia!  Maybe just do overpayments.

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13 hours ago, Tulip1 said:

That’s a big shortfall.  Changing to repayment won’t be easy as you’ll have to prove affordability.  They may smell a rat when your payslips/tax returns/outgoings are from Australia!  Maybe just do overpayments.

Yea I’d just overpay. I just checked and there’s actually 20 years left on the secured amount and 14 on the unsecured. Painful how long it is, not sure if it’s worth trying to pay it off earlier or saving my cash here. Might be worth speaking to a financial advisor. 

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Posted (edited)
31 minutes ago, Ben12345 said:

Yea I’d just overpay. I just checked and there’s actually 20 years left on the secured amount and 14 on the unsecured. Painful how long it is, not sure if it’s worth trying to pay it off earlier or saving my cash here. Might be worth speaking to a financial advisor. 

The first thing to check is whether overpayments will reduce the principal.   If they do, then it's worth doing, because that will also cut your interest payments for the future and reduce the burden.  

 Let's say you're paying 5% interest on the mortgage and you've got $20,000 here, earning 3% interest.  That means you're making a loss of 2% on those savings, compared to if you paid it into the mortgage.   And that's not taking into account the fact that it's compound interest.

The downside, of course, is that you may not be able to withdraw the money if you need it. 

https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/#

Edited by Marisawright

Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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15 hours ago, Ben12345 said:

If I was to sell I’d be paying approx $700 per month on 30k shortfall. 

Is that assuming you get a personal loan here in Australia to pay off the shortfall?  


Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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Is there no way to engage a broker to see if you can remortgage to an investment mortgage? Aus tax give very generous concessions (including depreciation if applicable) and if you make a loss as it sounds like you might then this can be offset against tax

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