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

barnaby-bear

Walter_J wrote: »

There is a way out, but it takes balls to do it;

Stop paying the mortgage for a couple of months.
Find a nice little house to rent with 2/3 bedrooms for under £700 pm
Move into it using the money saved from the mortgage as a deposit/first months rent.
Post the keys of your flat back to your lender.

The lender will sell the flat for whatever they can get, and you will be liable for the shortfall between that amount and the outstanding mortgage. Either come to an arrangement to pay it off, or if need be go bankrupt.

This may sound like a desperate strategy, but with house prices likely to carry on falling for a few years yet, you could very well be trapped in this tiny flat until your child is a teenager. Any opportunity of having another baby would be denied you.

My way, you can be living in a nice house for the same money, your bankruptcy ends after a year, and six years after that it is wiped from your records.

Save up a decent deposit and plan on buying a proper home then; my bet is that prices in real terms will still be a lot lower than they are now.


PS reading your post on HPC it is clear that you are actually thinking of leaving your husband. Given the mess that he and his family have got you into I can understand this.

Kind of makes my advice above redundant, though!

This is such rubbish. Mortgage debt is 12 year liability. Such actions shoot credit records to pieces - an approved personal loan to pay off the negative equity wouldn't. In addition to the shortfall there would be additional fees for the legal work of reposession and security of flat until sold (maintenance checks/visits etc). Plus the mortgage company will take any plausible offer and the OP would have little control over how low they drop.

They aren't in a disasterous position - however much the hardcore HPC would like to gloat (laugh at some greed BTL scum instead or chav-scum-15 kid tenny moms), they have no other debts and are just about living within means - plus they seem to have qualifications, good work record and prospects (although maybe hard to see it). This is probably the toughest part of their lives but it sounds stressful but likely to get better, they'll be entitled to free childcare fairly soon and are at the start not the peak of earning power.

barnaby-bear

poppy10 wrote: »

Oh dear, you've been posted on HPC
Get your hard hat on...

There are some very odd people there - bitter and very twisted....

patchwork_cat

Some people are saying oh you will be stuck in that flat until your LO is a teenager- rubbish. This is a dip, there are peaks and troughs in the housing market we are in a trough it is temporary and would seriously doubt that it will last more than a couple of years. I would predict that you will not be in negative equity by the time your LO is 5.

It is hard to say what property is really worth ATM as there are so few selling. When credit becomes more available again then we will see what has really happened.

To have a LO under 5 in your room is not going to cause her any problems and you will just have to restrict large play items or pick collapsable ones and be inventive with storage space.

Trollfever

we are in a trough it is temporary and would seriously doubt that it will last more than a couple of years.

We are living in unprecedented times.

.

beverleyhills

I have just read your posts and not all the replies. I don't have anything constructive to say, Yours posts indicate that that you are being positive in spite of your circumstances.
Continue to create a loving home for your husband and daughter however small. Love is priceless and your daughter will remember it all her life. Stay strong against the 'outlaws' in your fortress.
It is good that you have your mum as a last resort, but try to keep your own home for as long as possible. You can close your own front door against the world.
Sorry if this has been said already; you listed the jobs you have done since leaving school. Write down exactly what you did and the categorise them into skill sets. I anticipate that one of the outcomes of this downturn will be short term contracts for specific tasks.
Best wishes for the future. bh

barnaby-bear

patchwork_cat wrote: »

Some people are saying oh you will be stuck in that flat until your LO is a teenager- rubbish. This is a dip, there are peaks and troughs in the housing market we are in a trough it is temporary and would seriously doubt that it will last more than a couple of years. I would predict that you will not be in negative equity by the time your LO is 5.

It is hard to say what property is really worth ATM as there are so few selling. When credit becomes more available again then we will see what has really happened.

To have a LO under 5 in your room is not going to cause her any problems and you will just have to restrict large play items or pick collapsable ones and be inventive with storage space.

And avoiding the uncertainty of the rental market - with dodgy LLs being repossessed / trying to sell - lack of security and tenure. Plus if their flat goes up in price the next level would go up even more.....

dirtyflannel

Essexgirl81 wrote: »

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

have been thinking about all the peeps who are in this situation is it not possible to swap to a cheaper property and get a bit of cash maybe someone likes your area and would pay to move there but have a property they no longer want dont know all the legalities but if i was in your situation i would certainly think about it local authority housing are difficult to attain and renting is dead money so i would check out other options

Daddy_Bear_2

The £119 per month is my income that includes £80 Child Benefit and £39 Child Tax Credit which I use to buy nappies, toiletries, clothes etc for the baby.

Oh yes, and we're currently only paying about £700 a year off of the capital of our flat. So far we've paid out about £34,500 as a repayment mortgage to the lender and only about £2700 has been paid off of the capital. Is this a 'normal' ratio??

You say the £119 income is for child costs but you have a £0 entry against 'Other child costs'. Is this all included in the 'Grocery' entry? Phone and internet services combined only £16 per monnth from company like TalkTalk which we use.

To be brutally honest with you, your only option is to pay down your mortgage debt in whatever way you can. The simple truth is that you are in negative equity and will be for probably many many years. To improve your options in the future you simply need to reduce your mortgage debt.

You won't be able to find a good mortgage deal as you will have no equity in the property - what is the SVR of your current insurer as it looks like that is what you will have to pay from Nov?

The only option for you really is to get some work, as suggested by others, eves and weekends. It's not going to be fun for you but has to be done. This money should all go towards paying down your mortgage debt.

patchwork_cat

What is unprecedented about these times, I for one have been here before. Every recession has it's unique features, but the basic result and turn around is the same. The term credit crunch is just a media term for a recession which I am sure economists could tell me happen on a cyclical basis and we were overdue for one.

Yes house prices will go up for houses higher in the chain, but in the meantime the OP is lowering their outstanding mortgae and pay is increasing and the OP will have her DD at school so will be free to work more hours. One of the tricks is jumping out as the market starts to rise and perhaps the next house hasn't twigged. I have been a home owner for 22 years and have seen this before.

The OP didn't post on here for oh yea are doomed blah, but realistic advice. It is all opinion and amongst the major pundits on the economy there is a lot of discrepancy as to what they thin will happen, but we are by means in unprecedented times.

The level of debt that some individuals have in this country has been ridiculous over the last 10 boom years and it was unsustainable and ridiculous, this is a correction and a reminder that we cannot just continue to borrow and pay tomorrow, tomorrow is here.

Trollfever

Unprecedented =

The Bank of England has cut interest rates to 1.5%, the lowest level in its 315-year history, as it continues efforts to aid an economic recovery.

http://news.bbc.co.uk/2/hi/business/7817453.stm

"This is a crisis unlike any we have seen in our lifetime," he said in a speech in Virginia.

http://news.bbc.co.uk/2/hi/business/7818347.stm