negative equity house on oz going back to UK

[garye]

We have a rental house in Brisbane we purchased 4 years ago. Worst investment ever. Paid $398000 including costs on a 100 percent mortgage. Now worth approx 280000 Our mortgage is 305000 The bank paid the mortgage down last year from the sale of our residential house. We are leaving next year for good. We have nothing left emotionally or financially to put into this place.We can carry on renting it out and pay the shortfall of approx 1200 a month and hope some day it may recover!!! We have lost sleep over this and have now decided we are going to walk away and let the bank take it.Our a plus credit in Oz will be ruined but we aren't coming back. We paid for mortgage insurance on this house so the bank will not lose out anyway.The insurance company would lose. What would the fall out on doing this potentially be? We have no other options left as we couldn't afford to service the debt when in UK. Any advice would be great

[cerberusalert]

They could come after you for any shortfall after the house has been sold & if you are both named on the mortgage you would be held jointly & severally liable.

 

Depending on what the shortfall is and whether you would have any assets in the UK it might be worth considering starting completely afresh and looking at bankruptcy if they locate you.

[garye]

Thank you for the replyWe have a house in the UK with about 50000 pounds equity.We will not sell our house as thats all we have.How negotiable are banks if we offer to sell it at market value. Will they still want the shortfall?I'm sure the answer would be yes.Would it be worth talking to the bank to see if there are any other options?At the momenty we are still paying the mortgage and have no arrears.I don't know if its possible to access super to pay off an investment house?I don't really know were to go with this.Don't really want to do a runner but next year we are going and options are limited.

[cerberusalert]

Technically speaking they could come after you here in the UK for any shortfall if they were aware of your whereabouts.

 

Will they still want the shortfall?

In all probability yes, although they may enter into a repayment plan for a limited period then they would be likely to sell the debt on and claim tax relief on a bad debt. These debts are usually sold for between 7 & 15% of their face value and the purchaser will more than likely negotiate a reduced payment.

 

.I don't know if its possible to access super to pay off an investment house?

Do you mean your pension?

 

If so IIRC it may be possible to access it under 'hardship', see; http://www.consumeractiongroup.co.uk/forum/showthread.php?265807-More-AUS-debt-being-chased-in-the-UK&p=3303856&viewfull=1#post3303856

[garye]

Thanks for that info.as we have mortgage insurance wouldnt the bank be all ok and not to keen to take any payments from us?EG foreclose as quick as possible to get there money from the insurance?Then insurance would come after us?Would it be the same scenario as having credit card debt and moving overseas?Yes super = pensionIt's a tough world we did all this investment property lark on there reccomendation.

[cerberusalert]

It depends on the insurance and what it actually covers.

[thelife]

If the shortfall between the value and the loan is AUS$25k and to continue to rent it out will cost you $1.2k per month, you could cover the negative equity costs in 2 years.

 

Why not go to the bank, explain the situation to them, offer to pay off AUS$280k and then ask them to finance the shortfall over a 24 / 30 month loan?

 

I would not do something so drastic over 8% negative equity!

[thelife]

Also, re the above, if you do ultimately default, I would rather default on a 25k than a 305k loan.