Help!!!

El_Chorro

Hello. I've come here because i am not sure where to turn now. We are in what seems to be a very seriously bad situation.

We currently own a 1 bed house 1 up/1 down. Which we purchased 5 years ago this year in a very over inflated market for a cost of 89k. We took out our mortgage through teh estate agents with GMAC RFC as at teh time our credit wasn't brililant (i had lost my job and defaulted on a couple of cc's some 2 years prior to purchasing the house). GMAC were happy to offer us a mortgage and to be honest at a decent rate at that time compared to a number of other higher risk lenders, but no high street bank would touch us.

We have now been married for 6 months and we find ourselves expecting our first child in a property that barely fits us both. We have 1 bathroom and a living room (think of it as a studio on two floors). We have had the property valued at approx £68-73k and that leaves us with a massive amount of negative equity so we cannot sell.

We have little or no savings (2k). We own 1 car between us on a finance agreement, i personally then on top have approx 2k on cc's and a further 4k left in debt from paying for our wedding approx 6 months ago and my partner owes a further 12k in cc'd debt.

No bank or high street lender has been willing to offer us a mortgage. And we now find that we cannot let our property out for more than £500 per month whereas if we change our mortgage buy to let our repayments would be approx £600+ per month. So we'd be renting new accomodation at cost of approx £600 a month, and covering a shortfall in bills on our other property.

We really don't know what to do. We Cannot stay there. Seriously. And our options seem to keep getting removed from under us the more we look into it. IF we don't tell our mortgage company we are breaking the terms of the agreement and we end up with massive fines and possibly losing our home. If we do tell them we can't afford to do it. In additon we cannot remortgage as it doesn't appear any bank will touch us with our levels of debt and the value of the property and what we currently owe our current mortgage

if anyone has any ideas at all please please please tell us...we are getting desparate. At teh very most we have 9 months to sort this out and things are beginning to look very bleak for us!

pawpurrs

Sorry to hear about your predicament, I cant see an easy answer, sorry.
I know the house is small, but babies are only tiny....can you not fit a cot in your bedroom?

Dithering_Dad

You haven't said which area you're situated, but if it is in a city, university town or other place where it is easy to rent out accomodation I would look at renting out your current property (which as a 1 bed place would be ideal rental accomodation for singles or couples). I would then rent a larger place, perhaps in a cheaper location, while the market falls and my own credit history improves.

Remember to make sure that you get permission to rent out the home; tell your current mortgage provider that you're seeking consent to let out the house for a temporary period - they usually grant this for up to 3 years. Also make sure that the rent covers the mortgage and make sure you put a little by in case you have any 'dead periods' without tenants. Meanwhile, start saving up a deposit and repair your credit record by keeping up to date with any credit card payments, etc.

Your credit record is only recorded over a 6 year period, so if your last default was 4 years ago, you'll have a clean record in two years.

ninky_2

Sorry to hear about your stresses.

Why can't you stay there? Is it because you can no longer afford it or is it because you think it is not big enough for you and the baby?

A one bedroom house, although not ideal, is actually big enough for you and your new baby. It may not be what you, as adults, would like for yourselves (and I can understand that). But the baby will not care. In fact, there are recommendations that babies should spend at least the first 6 months sleeping in the same room as parents.

My husband grew up in a one room flat with four brothers and his two parents. They would pile the mattresses up in the corner of the room in the morning and then it would serve as the living room.

Whilst I know that this is not ideal, and it not what people have come to expect in this country, it is far far better than putting yourself in financial strife. You will be in a much better position to provide for your child (and all its future needs) if you cut down on outgoings now than if you try to achieve the white picket fence ideal that I'm sure you both imagined when fantasizing about starting a family.

You may need to get rid of your car and buy a cheaper version. (I am still sharing a 15 year old rover with OH that cost £300 from an auction 4 years ago and it just got through another MOT for just £150 of work).

I live in a 1 bed flat. Was pregnant last year but miscarried. But we were planning to stay in the 1 bed and just manage rather than take on extra debt (mortgage). And I have a turnover of 55k a year!

Do not be fooled by what others try to convince you are the outside signs of wealth (big house, new car, mod cons). You are far more "wealthy" to live frugally and within your means.

El_Chorro

hiya,

we've looked at the buy to let option. They will increase our mortgage rate making our payments approx £150 about the rental ceiling rate for our type of property in the area.

It is the most viable option open to us. But it means that id' be paying £600 a month a 2 bed property in the area - Sutton Coldfield/West Midlands (need to remain local for work purposes), covering a £150 shortfall on the owned let property and in addtion the majority of like for like property rentals in our area include all utility bills so we'd still have all those to cover too or charge less for the property so that we dont' have to pay them leaving more of a mortgage payment shortfall to cover.

i cannot believe banks just aren't willing to help us. my credit has been fine for the last 8 years. (Defaulted in 2001 - only appear registered on my credit file in 2004 - so technically they were 3 years late registering them and i have to wait till 2010 till they are cleared). And even then given our current lack of deposit and the negative equity on our property isn't it doubtful they'd view us as viable risk??? We've paid over the odds up to £900 per month at one point which was hard but we afforded it and we have done without missing one payment for the last 5 years, not late or anything, we've paid it at the cost of thigns we needed for ourselves, didn't matter the mortgage was paid. Yet we are considered sub-prime.

I just can't believe no one can or will help us out there....its verging on criminal!!!

sorry i am just so so angry. to be told by a high street bank that it doesn't matter if we've paid our mortgage payments and that it doesn't mean anythign to them a good repayment history as we don't have a 40% deposit and until we do goodbye. i felt like causing them serious harm!!!

RAS

Hi

Head over to the debt free wannabee form and post your income and expenditure and let's see what can be done about the other debts.

Pee

Hang on a minute. You don't want to stay in the one bed place. If you can't afford to live now, which it looks like you can't by the size of the debts, how are you going to be managing with the little one? Are you going to be working, paying for childcare, etc?

It's a good time to take a look at your finances and see where you are going.

ninky_2

El_Chorro wrote: »

i personally then on top have approx 2k on cc's and a further 4k left in debt from paying for our wedding approx 6 months ago

it is too late to do anything about this now but for anyone else considering financing a wedding with credit - don't do it.

i got married 5 and a half years ago and then had another wedding party for overseas relatives 3 years later. the first wedding cost me £300 (including £70 for dress). the food was a hot and cold buffet put together by friends (with lots of international cuisine!), some bottles of fizz and a pay bar. the venue was donated by an employer, dj another volunteer, mum made the cake and i made flowers myself bought from the market. the second wedding cost £800 (admittedly cheaper as not in the UK). i was really happy with both, photos and video look amazing (taken by mates and edited by me on my laptop at home) and i have nothing but happy memories from both. debt would have marred the occasion for me.

Dithering_Dad

Have you asked your current mortgage provider for consent to let your place out?

I did this when I moved worked for a while overseas, I think I just had to pay a small admin charge and I agreed to use their landlord's insurance. My mortgage payments stayed the same.

I do however agree with one of the other posters and think that you need to 'cut your cloth' and stay put. At least you have a roof over your head, which is better than a lot of people. You could concentrate on paying down/off your debts and then start overpaying on your mortgage to reduce any negative equity you may have.

As another poster has said, pop over to the DFW board and see what advice they can give you in getting rid of the debt. Once you're free of those you can start looking at improving your living arrangements.

Good luck.

ILW

I have to agree with the above. You appear to not be keeping up with the payments on what you have now (using loans and CCs to keep going). How can you even consider taking on even more? You also need to factor in the possibility of interest rates going up quite a lot over the next 2 or 3 years. I think you need to knuckle down and concentrate on hanging on to what you have for the moment.

Doozergirl

I'm another that agrees you need to get over to the Debt Free Wannabe board and start addressing your problems. You can't have everything on credit - wedding, car, house, bigger house You need to see the bank's refusal as a bit of a blessing in disguise because taking on yet more debt is a recipe for disaster.
Renting out your house is also not a good idea. A few months without a tenant will wipe out your savings - you have to account for only 10 months out of 12 being tenanted.

We lived with our baby in a very small one bedroom flat for the first year and even when we moved to a two bed we couldn't get him out of our bed so any second bedroom wasn't used until he was coming up for 3 years old. You can live there. I can guarantee that our place was smaller than yours - we only had a shower room and the kitchen was in the lounge! You may want something bigger for your baby but your baby would be happy in a cosy drawer! Ikea do lovely small cots - well worth investing in.