Stuck in a 1 bedroom flat - is there anything we can do?

Essexgirl81

Hi all,

Please note: all figures are approx to save time!!

My husband and I bought a 1 bedroom flat for £113,000 in 2005. We had a small deposit so we actually borrowed £108,000 from the mortgage company. I incurred a CCJ in 2003 so we had to go with a Higher Risk Lender even though the debt in question was fully paid up and 'satisfied' by the court. I also had other debts totalling £5000 (£1000 on Barclaycard, £3000 Barclays personal loan and £1000 HFC/Currys purchase plan for a comprehansive PC package) that I steadily paid off until February 2008 when I was then officially 'debt-free'. I was quite proud of the fact that I kept up all my repayments even whilst I was on my Maternity Leave on the basic rate of Maternity Pay (my company didn't have a benefits package).

Our mortgage repayments (over a 35 year term) are currently fixed until November 2009 at £751 per month (so renting out is NOT an option - top whack you can only achieve £550 per month in this area for a 1 bed). The mortgage payments are 3/4 of my husband's take-home pay every month. It's official - we are struggling!!

The flat went on the market January 2008 at the asking price of £129,000. It's since been reduced down to £125,000 and it's obviously going to have to come down a lot further now. The mortgage company currently need £114,000 to close the mortgage as we have an 'Early Repayment Charge' on our fixed term.

Basically we haven't paid anything off the mortgage since we've been here. Every year it's the same figure on the statement......Balance = £108,000...so demoralising.

Anyway, we have a 15 month old daughter now and although we're coping ok at the mo it's going to get tougher in the future space-wise isn't it? Hence, trying to sell up. We're not even trying to buy another property (the flat is on with no-chain) because we haven't been able to save anything up since living here.

I had to give up work in October to stay at home and look after the baby because the childcare arrangement we had with my husband's family fell through and we can't afford to pay for it basically - it equalled my wages so there was no point!

The plan is to move in with my mum in St Albans until we get back on our feet and save up some cash. She's the full-time carer for my disabled sister so she receives Carer's Allowance and Housing Benefit for her council house so my husband would be liable to pay the £400 per month rent plus Council Tax if we moved in but it's a snip compared to what he's shelling out at the moment!

My mum has said that she'd help a little with childcare (bless her) so i'm able to go to work again. We'll see - but even then, I don't think we'll be buying again for a long while!! To be honest i'd rather rent what with all the expense this flat has turned out to be. Our leasehold tariff is now over £1000 per year which I think is too expensive for this area - but that's just my opinion :rolleyes:

After having a peek on Rightmove I was amazed (and a little bit upset) to find that the guy who lives upstairs has put his 1 bed on the market for only £105,000 which obviously undercuts us quite considerably. We live in a part of Braintree which is classed as a 'Garden Village' so the prices are generally a bit more than the main town area. In the town centre you can now pick up a 1 bed flat for as little as £89,000 so I think we're in real trouble of finding ourselves in Negative Equity soon if not right now!

Any similar experiences shared or advice about what to do next would be greatly appreciated because we're stumped and feeling down in the dumps at the moment!!

Thank you xx

izzzzythedog

no magic wand im afraid

have you got wtc ?
can you switch to another lender ?
can you find any help toward child care costs ?
if you really must stay at home ever thought of being a child minder ?

houses are for the longer term not a short investment so in the longer run you will be ok , a friend of mine in the same position `sold` the house onto my brother in law , couldnt afford the payments so the BIL took over and his name was placed into everything , after 2 yrs the origional lenders name was removed and the BIL got a cheaper house plus the deposit paid on a shorter basis

pinkshoes

Fixed until Nov 2009, 1 bed flat, and 15 month old daughter. I presume the child wasn't planned???

Just out of curiousity - you had a £5k debt and paid £5k deposit on your house, so how come you didn't hold off buying and pay the debt off first?

Firstly, if your neighbour's flat is on at £105k, then no one will pay any more for yours if it's the same. If you want to sell, you will have to price yours the same, then take out a loan to pay the loss.

Is there no way you can carry on living there? Can your OH take on a second job? Have you been on entitledto.co.uk or the CAB to see what benefits you can claim whilst working?

littlebylittle

I would try to stick it out. As long as you can pay your mortgage, I would just make do for the immediate future. Things will get better (as they have in previous recessions etc) in the longer term, and you will then be in a much better position to move on.

carolt

No easy way out.

You've obviously learned your lesson the hard way.

As a mum of a 2.5 yr old myself, there are plenty of jobs you can do or ways you can earn money to fit round children - I went back to work with all my 3 by the time they were 1, out of financial necessity, but only worked away from home when the oldest was little, as my parents were able to babysit, and like you, it wasn't cost effective to pay for childcare. With the other 2, I worked - but from home. There's lots you can do - someone suggested childminding, or there may be other skills you can use and sell - don't be scared to be self-employed, rather than waiting around for someone to 'give' you a job.

See the Up Your Income Board on here - lots of good ideas.

Or sell stuff on ebay etc.

LittleTinker

You would be so much better off staying where you are. If you are worried at all about your child being in the same bedroom maybe you can look at ways of dividing the room? Or making the bedroom for the child and getting a sofabed for yourselves?

Moving into your Mums seems a good idea now but will bother you all after a few weeks......simply because you are all used to a certain amount of privacy.

And while you are still there, look at every way you can budget, earn a little extra and save whatever you can......easier said than done, i know, but there are some great ways to budget.

Take a look at the Old Style thread for some ideas on grocery budgeting too.

SouthCoast

This is a 1 bed flat on Rightmove.

With thanks to Property-Bee.

History

dateevent14 December 2008

• Price changed: from '£90,000' to '£85,000'

14 November 2008

• Price changed: from '£92,500' to '£90,000'

24 September 2008

• Price changed: from '£96,500' to '£92,500'

03 August 2008

• Price changed: from '£101,995' to '£96,500'

06 June 2008

• Price changed: from '£107,500' to '£101,995'

29 March 2008

• Price changed: from '£109,995' to '£107,500'

07 March 2008

• Initial entry found.

MoaningMyrtle

The only thing I can suggest is a part-time job in the evenings, thne you would have no child-care costs.

robpw2

what about moving into your mums as planned renting out at 500 then you would just have to pay 251 for 11 months till november then you wil not have any early repayment fees

southcoast what is your post trying to show ? it seems very negative

penguine

If you owe £108k and your upstairs neighbour is selling for £105k, it sounds very likely that you are in negative equity. In which case, if you were to find a buyer (and first time buyers and BTL landlords have pretty much dropped out of the market now) you would almost certainly have to come up with the difference to pay off your lender if you were to sell.

I think your best option is to maximise your savings/income and pay down your mortgage as much as you can. We live with a 5 year old in a 2 bed flat so I know it's not ideal, but the good news is that as prices come down the difference between your current property and the next one is also getting smaller.

sarah_elton

Hiya, I live in Witham (for everyone else - that's about 10 mins away) and am about to put my 2 bed flat on the market.

I bought it in October 2005 - price agreed Oct 2005, completed in Jan 2006. I bought for £115k and have since spent about £6k on it.

I think I'll be lucky if I manage £103-105k when I sell. One the same as mine sold in the last few weeks for just under £100k, although that did need work doing to it whereas mine has already had it all done.

I'm really sorry to say that in our area, since 2005, prices of flats have fallen and based on the figures you gave I think your upstairs neighbour has priced quite realistically. There are a good number of two bed flats on at less than yours. I'm sorry, I know it's not what you want to hear. I think you need to decide whether to drop the price dramatically and sell it in negative equity (I owe £109k so will be doing the same), or keep it and rent it (and sub it the £250 a month), or stay there.