Anonymous asked July 9, 2014

I need to sell my home I live in UK. But I have a 2nd and 3rd charge on my home as well as the mortgage. My house has been valued at £40,000 less than I owe for all the loans. I cant afford to rent it out as the rent wont cover the loans and mortgage I will be £600 a month short. I also have another house that I have tenants in but have no equity in that place either so cant even borrow against that. Can the mortgage or loan companies stop me from selling with negative equity? And can they take my other house if I cant pay them after the sale?
Thank you from very worried Sam.

  1. When you borrow money to buy a house the bank puts a lien on the title of the house. This means, legally, that the house cannot be transferred to someone new without satisfying this lien. The bank, generally, will not release a lien unless they have been paid in full.

    So, yes, the mortgage company can prevent you from selling for less than what is owed. You haven't satisfied the lien and do not have a clear title to transfer to the new owner.

    The question is moot, because you can't sell when you can't pay the bank back what is owed. Because you can't sell, they won't bother your other house.

    This is where it gets ugly. Some banks will agree to let you sell the house for less than what is owed. This is called a short sale (the sale of the home will leave you short of the full balance owed). This has quite a negative hit on your credit, but not nearly as bad as a foreclosure or a bankruptcy.
  2. If you sell your home for under what you owe for it, the bank will still make you liable for the money you owe. And they may be able to place a lien on your new home if you fail to pay debt.
  3. Oh dear!

    You may not be able to sell for less than the amount you owe as the companies will want paying back.

    If you do try and sell, they could file for bankruptcy which would entail you possibly losing all your assets, including your other home.

    Where are you moving to once you have sold this house? If you are buying another property, it probably isnt a wise idea.

    Whatever you do, you will be chased for the money you owe, as it is a legal responsibility.

    I dont know what type of property you live in, but another option may be to stay there and rent out the other rooms to bring in some money to help you pay the mortgages and keep somewhere to live.
  4. As i understand it you are liable for all the money that is outstanding then mortgage companies are contacted by the buyers solicitors,so you must assertain the legal standpoint of them first.
  5. Whether you sell for less than you owe makes no difference to the fact that the money was lent to you personally - they're only called mortgages or charges because they were to buy property.... if you sell for less than you owe then you still owe the difference .... the banks and other lenders will still be able to chase you for that outstanding money .....
  6. If you can then the best thing for you to do is stay inside your property and pay off your mortgage slowly

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