What do you think is the best mortgage I could get is?

albo2002

It's very complicated (read below), but last year I bought two properties, just before the credit crunch, and for both they are coming off their fixed rate period within the next 12 months.

The first was a property in Wales that I bought for £102,000 with a deposit of about £62,000. I was going to live there but after about 15 months that didn't work out so I switched it to a buy to let. The property market there (Merthyr Tydfil) seems to have collapsed (and it was clearly overpriced anyway), and my worry is that that house is now worth less than £70k or even £60k. I reduced the 25 year term mortgage to 11 years.

Then I bought a flat in England for £190,000 with a 5 per cent deposit and the mortgage worked out at about 5.5 times my salary. I reduced the mortgage from 30 years to 19 years. This is where it gets complicated: the flat was due to have improvements done to it to the tune of £40,000 that I was going to fund from the equity in the Welsh house. However, earlier in the year the project manager came back with a new estimate of £80,000. However, the credit crunch has meant that the project will now have to be delayed.

The flats, as a result have become unsellable, and solicitors advise buyers not to buy there as long as uncertainty surrounding the project continues. So it is very hard to say what my flat is now worth, but let's say it's £175k.

What I really want to do is to amalgamate the two mortgages and have one long-term fixed rate mortgage. Do you think this is possible and what deal do you think I could get?

(PS sorry for overuse of the word 'is' in the heading')

paulfaz

Why do you want to spend 80K on the flat is the first question you need to answer - you can't afford it and it's an awful lot of money for 'renovations'.

What does that include exactly?

albo2002

paulfaz wrote: »

Why do you want to spend 80K on the flat is the first question you need to answer - you can't afford it and it's an awful lot of money for 'renovations'.

What does that include exactly?

I don't want to spend £80k and I've been fighting it for the last six months (I set up an internet forum rather like this one which 85 of my neighbours joined for instance). None of my neighbours want to pay it either and the people behind it cant get the funding at the moment to proceed with it.

I was happy to pay £40k for it a year ago but cant afford that today, and many of my neighbours are in the same boat.

The money was to be spent on recladding three tower blocks and cladding three spur blocks. There was also talk of corner cladding, extending balconies, building penthouse flats on the roofs and installing external lifts.

I don't think it will ever be £80k as everyone is so angry about that estimate, so at the moment, with these fixed rate deals expiring shortly, this £80k issue isnt the biggest priority.

silvercar

You try and remortgage the falt and any valuer is going to say that its a risky venture. I doubt they would put a value of 175k on it with works costing at least 40k scheduled.

I think you will be stuck with the best deal you can get from the existing lenders.

albo2002

I'd be in trouble if that's the case. For one of the lenders it's fine, but for the English flat the new rate would be LIBOR plus more than 2% - ie currently over 8%.

IT_nerd

So you've been asked to fund the building of some penthouse flats for no return.
Hahahahaha, what the fudge?

Tell them where to stick it.

I presume this would be £40K per flat??

silvercar

I'd be tempted to stick the english flat in an auction. Its only going to give you grief and cost you money.

albo2002

IT_nerd wrote: »

So you've been asked to fund the building of some penthouse flats for no return.
Hahahahaha, what the fudge?

Tell them where to stick it.

I presume this would be £40K per flat??

yes it's per flat

the original promise was that we would get a return on the penthouse flats. However, we got together and some legal eagles looked at it and it turned out that that's not going to happen.

silvercar

albo2002 wrote: »

I'd be in trouble if that's the case. For one of the lenders it's fine, but for the English flat the new rate would be LIBOR plus more than 2% - ie currently over 8%.

I think you are in trouble, but you are too close to see it.

You have a property with a high mortgage, work needing doing that you have no choice but to pay for, a legal wrangle that could last years, very little return for the extra costs.

Wait a year or so and you can add to that list empty flats where the owners have gone bankrupt, walked away or died and you could have serious problems in the block.

I would seriously sell for whatever you can get and get out now.

albo2002

silvercar wrote: »

I think you are in trouble, but you are too close to see it.

You have a property with a high mortgage, work needing doing that you have no choice but to pay for, a legal wrangle that could last years, very little return for the extra costs.

Wait a year or so and you can add to that list empty flats where the owners have gone bankrupt, walked away or died and you could have serious problems in the block.

I would seriously sell for whatever you can get and get out now.

my one hope is that this project is being run by the board of directors of the flats' management company - ie people voted there by share of freeholders.

Most of us got together a couple of weeks ago and agreed to call an EGM to remove the directors. If we can get control then we will probably manage the project better and remove the uncertainty about the project.

Before the credit crunch it was estimated that £40k to improve the flats would have seen a return of about £80k after all..

silvercar

If you did want to get out, now would be the time to go rather than wait bad be caught. I can see that it could work if it all pans out. Your problem will be if other flat owners cannot afford to contribute to the improvements.

Looking at the figures in your first post, you have shortened the term; if you were stuck on a high rate, one option would be to lengthern the term again or go interest only.