can't afford mortgage

[dragonflyblu]

a few years back my husband and i and my brother and his wife bought a house together. we had an agreement that we would pay 20% of the mortgage and they would pay 80%. the bank set us up with 2 loan accounts and we signed an agreement that we own 20%. But essentially we all own 100% of the house. We built a unit under the main house for us, and they live upstairs. My husband and I travel alot so the idea was to have a base in australia. Now that interest rates have increased so much and my brother left his job (due to illness) they cannot meet the repayments. They are paying every month by using credit cards for food etc.

They are not behind on any payments yet. We do not want to buy the house off them. It is too expensive for us and not what we want in the long term.

There is no equity in the house. We are going to put the house on the market but I am pretty sure it is in negative equity since we all consolidated our debts into the mortgage loan. I understand that with this limited information the advice can only be very general, but i am just looking for options on how to get rid of the house. We have had it on the market before and it didnt sell.
is there a specific type of financial advisor we should go to?

[andie_pandie]

Hi Dragonfly

Thanks for your post, the whole situation must be a big worry for you.

With regards to negative equity, the banks are very careful when they allow consolidation into a home loan. Generally they will require at least 10% including the consolidation before they do the loan. Also banks normally will have a more conservative valuation on the property that what the market dictates at the time.

There are a couple of things that you need to look at and one is talking to a Solicitor about the split of the property etc so when it sells there are no issues and everything is fair and equitable. Next it would be advisable to seek out a financial advisor to discuss your situation as well, they are full of great advise. And the next thing is get at least 3 appraisals on your property.

Keep your head up, you might be surprised and actually have a little bit of money left:fingerscrossed: Also it was good to see you did your finances and knew that you could not afford to pay them out as I see people fight tooth and nail sometimes to keep a property and in the end it is just to much.

Please keep me posted, you are also welcome to PM.

Regards Andrea

[andie_pandie]

Hi Dragonfly (LOL - the other post was not showing so reposted roughly same info)

It must be a really stressful situation for you. Hopefully below is some info that might assist.

With regards to negative equity in your home the banks are very careful to avoid this. When you debt consolidate generally you need between 10-15% value in the home including the debt consolidation. Also when they value the property a banks valuation is generally more conservative than a Real Estates Opinion or Resent sales in the area, this once again to protect you. The only reason why I would be concerned is if the area that you live in has devalued for any reason.

Here are a couple of things that you will need to look at, first of all speak to a solicitor to make sure everything is well between all parties and there are going to be no problems when settlement occurs. Next speak to a financial advisor about your situation, and if you have any money left after this transaction they can give you some advise here as well. The last thing is get 3 real estate appraisals so you get a good average on what the house is likely to be listed at.

I hope this has helped a little bit, good luck with everything and you are welcome to keep me posted via PM.

Regards Andrea

[dragonflyblu]

thanks for the reply's good advice. We are not too stressed as we can afford our % of the payments, but of course worried that my brothers family are struggling. will follow up on your advice. Thanks