Could we ending up losing our new home.

makingendsmeet_2

Hi 1st post on here need some seroius advice. Basically myself and my partner are struggling to make ends meet but at the same time are trying to purchase a new house MAD you may think please read on and the give any advise. We have 3 children by the way ages 9,5 and 18 months.



Outgoings. Rent £650
C.T £104
Water £30
Elec £40
Gas £30
T.V £10
Telephone £20
Household £360
Mobiles £50 (this is for 2 but these will cancelled in 2 months)
Internet £20 (this i pay for with by selling on Ebay)
Car Ins £50 (my partner has only been driving 1 year)
Child Care £200
Diesel £160

TOTAL £1724


Debt Outgoings

Myself Alliance and Leicester Loan £ 215.00 4years Left
Mint Credit Card Min Pay £55.00 Balance £2300
MBNA Credit Card Min Pay £35.00 Balance £2200

Partner Black Horse Loan £120 4 Years Left
TSB Loan £90 1 year left
Egg Card Min Payment £40 Balance £2500


Total £555



Incomings Myself £1150
Partner £ 500
Child Ben £ 160
WFTC £ 120
Maintence£ 200


Total £2010

So thats


Incomings £2010
Outgoings £1724
Debt Pay £ 555


Total Minus £269


Ok so heres the story at the moment we make up the shortfall by selling on Ebay and doing jobs for cash on the side but this isn't guaranteed and isnt going to last forever.Our rent is high but not sky high as any 3 bed house in this area is a minimum of £550 per month but in order to move we need around £1000 up front for let bonds months rent etc etc. We have tried the council for housing but as we pay the rent at the moment our housing needs arn't considered urgent. We have tried housing assoiciations for letting but they have nothing either. We have however been offered a shared equity property with a housing association which with rent and mortgage costs would amount to £550 per month as appossed to the £650 we pay now. There is no reason at the moment for us not to be accepted for a mortgage as we have kept up with all our credit commitments but as you can see by the figures this can't go on. What I need to know is if we go into this mortgage and cant meet our credit payments and do something like a DMP can they touch our house. Obviously if we enter in to DMP now we will run the risk of not being able to get a mortgage and still paying £100 more per month rent. They is also the fact as in any private renting that the landlord could deciede to sell up and we would be homeless, where as with the equity scheme we have somewhere to live for life.


Hope this all makes sense if not I will post more later

[Deleted User]

Have you had a look at mortgages and what the potential repayments would be?

If you need £1000 up front to buy the house but don't have it you may already be stuck at the first hurdle as some of that would probably be required for legal costs,valuations etc..

It is possible you could, depending on your incomes, get a morgage large enough to cover the house purchase, plus extra to pay off some or all of your loans/credit cards.

The plus side of this is that you would only have the one monthly payment - which would most probably be a lot lower than what you are paying out now. This is the ONLY plus to this idea.

All the negatives to this option are -

1. Your loans/credits cards would now be attached to the house which would mean if you continued to borrow later on, then got into further problems, your house is at risk. (Keeping the loans and credit card debt seperate would mean your house would only be jeopardised if you defaulted on the mortgage).

2. The new lower payments could lull you into a false sense of having more money to spend - and you could end up running up more debt.

3. The overall interest you would pay on your existing credit card/loans would be far more as it would be stretched over the term of the mortgage.

4. Ther emay be exit penlaties on your existing loans which could add to the expense.

Looking at your expenditure is there any way at all you can cut back on the cost of childcare? Could family help out temporarily whilst you save up some money?

Are you a driver? If you are female you may get insurance cheaper than your partner. Also if you have been driving longer.

You could still shop around for cheaper car insurance. Lots of info on this site about that. Ditto for all your utilities.

Another option could be to ask the credit card company about reducing your monthly minimum payment temporarily - but I do not know if this will affect your credit rating when applying for the mortgage.

Hope some of this helps

good luck

skintchick

OK, first up, I cannot condone this cash in hand work - you should be honest and declare it.

But moving on:

Your gas and leccy seem high - have you looked at Uswitch to see if you could change to c cheaper supploier? i pay £35 a month for both with Powergen.

What is 'household' for exactly? It seems very high. Check out the OldStyle board for help on eating cheaply.

Mobiles very high, as you acknowledge. I pay £30 a month for my landline, line rental AND mobile.

Internet - you can get unlimited broadband cheaper than £20.

Car Ins £50 (my partner has only been driving 1 year) OUCH!!

Can't commenyt on childcare as don't have children.

Diesel £160 - that's a LOT of diesel! Where are you travelling? Can you use the car a bit less?

You really do have LOADS of money coming in, equivalent to a salary of about £32,000, so it should be possible to sort these debts out.

I think the shared buying thing is a good idea, BTW, especially as it will save you £100 a month, but beware of hidden costs - do you then have to pay for maintenance of the house etc?

rchddap1

We're in a shared ownership house, and it is good for us. We went for it originally as we were renting, couldn't afford a house in the area, and the bills were exactly the same (ie, no increase in cost). However, we didn't have any cash flow problems.

We are also responsible for maintenance...for example, we had a leaky water pipe in the loft and had to pay for a plumber to come and fix it. If its a brand new house then you may also need to take some time off work to let in builders and the like to fix the snags.

Between being accepted / interviewed and moving in...it was around 2 months.

There are also the added costs of moving in...assuming you already have all the furniture that you need...you'll need to pay for a way to get it to the new house. All the other costs of buying a house also remain...ie, solicitors etc....

makingendsmeet_2

Hi Thanks for your speedie replies so far.


With regards to child care I only wish we could get friend or family to help out. Unfortunatly both of our sets of parents also work full time to make ends meet so they are unable to help. At the moment we pay £2.80 p/h for child care which in our area is very cheap as most nurseries around here are £4++ p/h. We also have major headaches with all the hoildays kids have from school then nursery fees can treble. Fortunatly my parner now has a job at a college where she also gets all school holidays off so that helps a bit as before we were paying more in childcare than she was earning in school holidays. She did also look in to becoming a child minder but its in the lease that No Buisness can be run from the house and we checked with the estate agents and that includes child minding.


As for the car insurance well I get a company car so I pay nothing. But my partner isn't entitled to drive it so we need the second car to get the children to school and her to work and its 3 miles so walking isn't practical. We are trying to swap her car for a cheaper to run car as in insurance at the moment and could save up to £15 per month there and a little bit a year in cheaper tax. Although her car is a 1.8 diesel and averages 40+mpg. The return jorney to work and back for us both is 20mls each 5 days a week and then there is the fact that my partner has to share the task of dropping off and picking up children with her ex husband as part of weekend visits they share that 50/50. I tried fiddling my fuel card so work payed my jorney to work and back every day, but I got caught and nearly lost my job so thats a no no. I need my car at work for work and never know what time I will finish so car sharing isn't an option.



As for the cost of moving into a new home we estimate the legal costs to be around £900. The Survey fees to be around £200 and the moving cost to be around £100 (hire a van and do it yourself job). We plan to pay for some of this from our £750 holding deposit we have in the house we are in at the moment and the rest beg and borrow from family. The house does not have any stamp duty payable.


As for securing a loan to pay of the debt on our new mortgage I really don't like the idea, like you say it could have the effect of making you feel well off. The way I see it is if we are on a DMP then our credit rating would be very low and we wouldn't have access to loans, cards etc. Surely not having that facility would help stop us ending up in the same situation again.


The mobiles are tied in a contract but as soon as I can get out I will and then its Pay As You GO.

Household does include nappies and clothes I have also tried to include things like haircuts etc in this figure and car mots etc hence the high amount.

The gas and electric were the cheapest we could find on u switch and even then we recieved a bill this morning of and under payment of £220 so the direct debits are no where near enough. I think our boiler is dodgy but thats the problem with private renting if its safe and it works then they aren't bothered.


Yes the maintenance on the shared house is up to us but I'm quite handy and fixing plumbing,electrics etc is not a problem for me.

Robert_Sterling_3

Deleted_User wrote:

Have you had a look at mortgages and what the potential repayments would be?

If you need £1000 up front to buy the house but don't have it you may already be stuck at the first hurdle as some of that would probably be required for legal costs,valuations etc..

It is possible you could, depending on your incomes, get a morgage large enough to cover the house purchase, plus extra to pay off some or all of your loans/credit cards.

The plus side of this is that you would only have the one monthly payment - which would most probably be a lot lower than what you are paying out now. This is the ONLY plus to this idea.

All the negatives to this option are -

1. Your loans/credits cards would now be attached to the house which would mean if you continued to borrow later on, then got into further problems, your house is at risk. (Keeping the loans and credit card debt seperate would mean your house would only be jeopardised if you defaulted on the mortgage).

2. The new lower payments could lull you into a false sense of having more money to spend - and you could end up running up more debt.

3. The overall interest you would pay on your existing credit card/loans would be far more as it would be stretched over the term of the mortgage.

4. There may be exit penlaties on your existing loans which could add to the expense.

Looking at your expenditure is there any way at all you can cut back on the cost of childcare? Could family help out temporarily whilst you save up some money?

Are you a driver? If you are female you may get insurance cheaper than your partner. Also if you have been driving longer.

You could still shop around for cheaper car insurance. Lots of info on this site about that. Ditto for all your utilities.

Another option could be to ask the credit card company about reducing your monthly minimum payment temporarily - but I do not know if this will affect your credit rating when applying for the mortgage.

Hope some of this helps

good luck

I agree with the sound advice given here except for paragraph three which I have highlighted in blue.

If you move from high interest rates on credit cards to a longer term but lower rate secured loan then the outgoings per month will be reduced and my become manageable rather than remain unmanageable. E.G. If you are paying 15% on a 5 year unsecured loan and you change to paying 5% on a 20 year secured loan then your monthly outgoing in respect of the new loan is much less than it was previously. The total amount of interest paid over the 20 years is greater but inflation works to the advantage of the borrower.

Summary.

The reason you should not move from an unsecured loan to a secured loan is because you youse would be at risk.

It is not because you pay more interest on a long term loan than on a short term loan as that depends among other things on the rates of interest charged on the unsecured loan and on the secured loan.