Advice on finances, mortgage..............
Discussion
Looking for some constructive (if possible) advice on my property/financial situation. I’m posting in this ‘secret squirrel’ login, as my work colleagues use PH, and I’d rather they didn’t know my financial situation….
Currently, having moved jobs quickly, I’m living in a flat which I own and which has no outstanding mortgage. Current value is £165,000.
I have another property, which I have owned for three years. Bought for £229,000. Original mortgage was £205,000. Mortgage payments are £1250 pcm. This is currently rented out for £800 net. Had it valued about two years ago for £265k.
A neighbour sold for £232k two months ago.
My original plan was to continue in this situation, in the naïve belief that the property ‘crash’ would have sorted itself out sooner rather than later.
I also have about 15k in the bank, which is rapidly disappearing……….
So…. Would the option be to brave it out, keep paying the deficit, and look at it as a longer-term investment? Or sell ASAP, cut my losses?
Or is some remortgage plan available or advisable?
Currently, having moved jobs quickly, I’m living in a flat which I own and which has no outstanding mortgage. Current value is £165,000.
I have another property, which I have owned for three years. Bought for £229,000. Original mortgage was £205,000. Mortgage payments are £1250 pcm. This is currently rented out for £800 net. Had it valued about two years ago for £265k.
A neighbour sold for £232k two months ago.
My original plan was to continue in this situation, in the naïve belief that the property ‘crash’ would have sorted itself out sooner rather than later.
I also have about 15k in the bank, which is rapidly disappearing……….
So…. Would the option be to brave it out, keep paying the deficit, and look at it as a longer-term investment? Or sell ASAP, cut my losses?
Or is some remortgage plan available or advisable?
Stick it out buddy if you can, if you do you will be sitting sweet in years to come. Is the rented property interest only or repayment? Its an option, failing that you could ask for a 3 month payment break and use the money you save to make the deficit up over the next 9-12 months.....
I'd be inclined to cut your losses, especially if you can sell, cover your mortgage and put a few quid away. The property market WILL come back - the problem is that might be 1 year or 10 and for however long you will be paying £400 a month to be 'in the game'.
If you sell you can bank the cash and buy the same (type of) place again for less as, IMO, prices will go down more before they go up. All the time you wait your window of opportunity reduces, as your capital is being eroded while the chances of having to use some to get out of the house/mortgage is increasing.
Just my 2c
If you sell you can bank the cash and buy the same (type of) place again for less as, IMO, prices will go down more before they go up. All the time you wait your window of opportunity reduces, as your capital is being eroded while the chances of having to use some to get out of the house/mortgage is increasing.
Just my 2c
You already have an asset which has appreciated - the flat you own outright.
If you sold this the cash realised could go a long way towrds reducing the mortgage on the house. What's more, the gain on the disposal of the flat would be completely tax free - unlike any future gains on the house as it is owned at the moment (i.e. a second investment property).
After you sell the flat, you move into your house which now becomes your main residence. Later, if and when you sell it and (hopefully) make a profit on the sale, that "gain" will almost definitely also become a tax free disposal (this does depend on how long you live in the house).
In the meantime, to subsidise the mortgage on the house, you could continue to rent out part of it under the "Rent a Room Scheme" - which is also tax free.
If you sold this the cash realised could go a long way towrds reducing the mortgage on the house. What's more, the gain on the disposal of the flat would be completely tax free - unlike any future gains on the house as it is owned at the moment (i.e. a second investment property).
After you sell the flat, you move into your house which now becomes your main residence. Later, if and when you sell it and (hopefully) make a profit on the sale, that "gain" will almost definitely also become a tax free disposal (this does depend on how long you live in the house).
In the meantime, to subsidise the mortgage on the house, you could continue to rent out part of it under the "Rent a Room Scheme" - which is also tax free.
Eric Mc said:
You already have an asset which has appreciated - the flat you own outright.
If you sold this the cash realised could go a long way towrds reducing the mortgage on the house. What's more, the gain on the disposal of the flat would be completely tax free - unlike any future gains on the house as it is owned at the moment (i.e. a second investment property).
After you sell the flat, you move into your house which now becomes your main residence. Later, if and when you sell it and (hopefully) make a profit on the sale, that "gain" will almost definitely also become a tax free disposal (this does depend on how long you live in the house).
In the meantime, to subsidise the mortgage on the house, you could continue to rent out part of it under the "Rent a Room Scheme" - which is also tax free.
All good in theory, but i'm assuming the OP moved in to the flat with the new job, as the house was too far away to commute.If you sold this the cash realised could go a long way towrds reducing the mortgage on the house. What's more, the gain on the disposal of the flat would be completely tax free - unlike any future gains on the house as it is owned at the moment (i.e. a second investment property).
After you sell the flat, you move into your house which now becomes your main residence. Later, if and when you sell it and (hopefully) make a profit on the sale, that "gain" will almost definitely also become a tax free disposal (this does depend on how long you live in the house).
In the meantime, to subsidise the mortgage on the house, you could continue to rent out part of it under the "Rent a Room Scheme" - which is also tax free.
I'm in a similar position and have decided to hang on to the house up north for the near future, as the rent just about covers the mortgage.
Move to an interest only mortgage on the house?
Sell one and live in one sounds a good option if you are really struggling.
If you are prepared to sit it out then the prices of both should rise eventually as histoically property prices always go up eventually. Though whether when adjusted for inflation you are better off who can tell.
Sell one and live in one sounds a good option if you are really struggling.
If you are prepared to sit it out then the prices of both should rise eventually as histoically property prices always go up eventually. Though whether when adjusted for inflation you are better off who can tell.
Is there something about your finances you arent telling us?
You have 1 mortgage at £1250 a month which is in part subsidised by rental income, leaving you with a "bill" of £450 a month.
The other property is costing you nothing, as you have no mortgage on it.
Where's the problem?
I appreciate you still have bills to pay etc but I can't see why this would leave you in a pickle with your savings.
As pointed out, if your lender will allow you to go to I/o on the rental. That will get your outgoings down. However I'm betting you also dont have permission to let from them? If not, you may well not get it either with that shortfall.
Have you told your insurance co you're letting the house? If there's a problem and they don't know they wont meet the claim.
You have 1 mortgage at £1250 a month which is in part subsidised by rental income, leaving you with a "bill" of £450 a month.
The other property is costing you nothing, as you have no mortgage on it.
Where's the problem?
I appreciate you still have bills to pay etc but I can't see why this would leave you in a pickle with your savings.
As pointed out, if your lender will allow you to go to I/o on the rental. That will get your outgoings down. However I'm betting you also dont have permission to let from them? If not, you may well not get it either with that shortfall.
Have you told your insurance co you're letting the house? If there's a problem and they don't know they wont meet the claim.
Edited by scotal on Wednesday 4th February 11:17
Pickled Piper said:
Jasandjules said:
If your mortgage is repayment, would you save much by changing it to interst only? If you can get it down to the rental value (extend the term if necessary?) then wait until the market recovers before looking to sell it?
This is what I would do.pp
ETA, you're also going to have to check the lenders policy on allowing letting with a shortfall against the mortgage, or you're going to have to be cagey when it comes to telling them why you have moved out (they arent going to like that if they don't know already)
Edited by scotal on Wednesday 4th February 11:30
Gassing Station | The Pie & Piston Archive | Top of Page | What's New | My Stuff