guaranteed property now in Negative equity

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pimkgin

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Why is it that the bank accepted a particular property as a guarantee for a "buy to let" property, the guaranteed property is now in negative equity and I can no longer afford to pay the mortgage on either of the properties.

The lender says that they can now take the family home (I own) to make up the balance.

Is it not the lenders fault that they made a bad decision in accepting the property in the first place?

I specifically did not use the family home as a guarantee to avoid this situation.
 
You took out the loan in your own name.
You owe the money.
If you don't repay the money the bank will get a judgement against you.
They can register that against your home, whether or not your home is security for the loan.

However, the bank is unlikely to seek to repossess the home as there will probably be another mortgage on it with a first charge.

The bank didn't invest in these properties - you did.
 
Thats a bit harsh Brendan.
Does a bank not regard a loan as an asset....and therefore something of value? Sounds like the bank got involved in property investment through association with these loans! That they are now impaired loans is as much a problem for the bank as the borrower.
What use is a judgement on a principle private residence? As Frank Daly, NAMA said-"You cant get blood out of a stone". If this holds good for the big guys-then it should hold up for everyone.
 
Hi Luternau.

The facts and reality are harsh - not I.

I am trying to explain the factual situation to the OP who doesn't seem to understand that he took out a full recourse mortgage.

This has nothing to do with blood out of a stone, based on the evidence so far. If he has equity in his home, he should use it towards repaying his loans.

Brendan
 
pimkgin said:
Why is it that the bank accepted a particular property as a guarantee for a "buy to let" property, the guaranteed property is now in negative equity and I can no longer afford to pay the mortgage on either of the properties.

The lender says that they can now take the family home (I own) to make up the balance.

Is it not the lenders fault that they made a bad decision in accepting the property in the first place?

I specifically did not use the family home as a guarantee to avoid this situation.
Click to expand...

I'm probably just in a pedantic mood, but I find it difficult to understand what you posted.
I find with clients that you get the best results if you start out clear.
Here are a few queries to clarify what you posted.

#1 - Are you suggesting that there is a third property here?

  1. Your family home.
  2. The buy to let property.
  3. The property you used to guarantee it.
#2 - Is the same bank the lender on all the properties?
If not how may different banks / lenders are there and on which properties (no business names please).

#3 - Are you suggesting that the bank has now stated as fact that it will "take the family home"?

Its very difficult to comment competently until you offer this information. Its possible that if the bank accepted a guaranteed property as part of the mortgage contract on the buy to let property that they could be limited to taking this, but it depends on the contract wording and precedent in court.

If there is a second mortgage provider they could have first call on the property as Brendan has suggested, which makes one wonder how it was ever offered and accepted in the first place and perhaps this is where your query arises, but here I am - speculating!

Certainly the bank can seek redress through the courts, but taking the family home may not be the appropriate remedy in this case - and that's for a judge to decide.
What seems clear is that you need to tale competent legal advice on the matter urgently.


ONQ.

All advice on AAM is remote from the situation and cannot be relied upon as a defence or support - in and of itself - should legal action be taken.
Competent legal professionals should be asked to advise in Real Life with rights to inspect and issue reports on the matters at hand.
 
guaranteed property now in negative equety

yes there are three properties . The property acting for security is also a buy to let. At the time (foolishly I thought they could only take the property that acted as the security. The loans are from the same lender.

Regards Pimkgin
 
How much is the negative equity, how much is the equity in the family home. It is better if you sell them rather than the bank selling them. Banks costs are horrendous and you will get a better price. You really need to be on the banks case to let you help them to get you out of the mess. If both were sold, and the balance was x amount, would you be able to repay x amount if it was at the same term and interest rate as the current mortgages?
 
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