Financial Advice Needed

katie1983

Going to try keep this short,

Last year my boyfriend was made redundant and had no luck finding a new job for 5 month so we decided to try and start our own online ecommerce shop. Our website is now up and running but there is still so much work to do on seo etc. The website is looking good, it just needs hard work and time to take off.

We decided that both of us should go full time on the website about 3 months ago and to live off our savings.

The problem is the website is taking a lot longer to take off than we first thought and the morgage and bills are really cutting in to our savings so fast.

We asked the halifax for a 6 month payment holiday from the mortgage to give our business a good chance and to take some pressure off from us. The answer they gave us was that the house had fell in value so they could not give us the payment holiday we need. The value halifax put on our house was about 20,000 lower than what houses were getting advertised at in our street. When we told the halifax that their valuation was way out, the attitude was well you just have to deal with it.

The main thing we wanted to ask you guys on here is are we entitled to any financial help for anything - mortgage, council tax etc as we are not earning anything at the moment because we are having to put any money the business is making right back in to it to try and build it up.

We have been to the advice shop and their qiuck answer was no.

We are not married and we have no kids.

Any advice would be really helpful. Thanks.

_Andy_

Hi Katie

Would the lender let you extend the term or possibly go interest only on a temporary basis? I'm assuming you have a repayment mortgage currently).
Other than that there isn't anything you can do with the mortgage to reduce it.
You may want to check out the debt free wannabe forum as the people that post there are very good at looking at outgoings and how to reduce them.

katie1983

Thanks for the reply. I heard something about a few mortgage government schemes, do you know much about them? I was going to email them and tell them about my situation. I am not sure if I would be entitled to anything like that.

Thanks again.

opinions4u

katie1983 wrote: »

Last year my boyfriend was made redundant and had no luck finding a new job for 5 month so we decided to try and start our own online ecommerce shop. Our website is now up and running but there is still so much work to do on seo etc. The website is looking good, it just needs hard work and time to take off.

I wish you luck. eCommerce is an unbelievably competitive world and taking on established names can be tough.

We decided that both of us should go full time on the website about 3 months ago and to live off our savings.

I know this is easy to say from afar, but giving up the remaining secure income from employment is one hell of a gamble.

We asked the halifax for a 6 month payment holiday from the mortgage to give our business a good chance and to take some pressure off from us. The answer they gave us was that the house had fell in value so they could not give us the payment holiday we need. The value halifax put on our house was about 20,000 lower than what houses were getting advertised at in our street.

They may offer you the chance to pay for a valuation. But before you do, just because a house is marketed at a particular price doesn't mean it will sell for anything near it. So you could spend a fee and end up with the same valuation as their estimate.

As a very general rule, this Nationwide tool gives a useful indication of house prices in the current market.

When we told the halifax that their valuation was way out, the attitude was well you just have to deal with it.

Well did you really expect an "ok, we'll do it for you but don't tell anyone else we'll bend the rules" kind of response?

As the nation's largest mortgage provider they probably have a better idea of what people are paying for property than most individuals. I personally don't think it's worth paying for a valuation unless you have supporting information about actual purchase prices locally (not the price tag in the estate agent's window).

The main thing we wanted to ask you guys on here is are we entitled to any financial help for anything - mortgage, council tax etc as we are not earning anything at the moment because we are having to put any money the business is making right back in to it to try and build it up.

BusinessLink may be of help. Your business bankers may be able to point you in the direction of startup grants etc. I don't really see why you should be entitled to any benefits as you voluntarily gave up paid employment.

katie1983

Thanks for your opinion, we know that me leaving my job was a big chance to take, but my partner really has had no luck with finding a job. I know a good few people who have also been looking for a job and gotten absolutely nowhere.

opinions4u wrote: »

Well did you really expect an "ok, we'll do it for you but don't tell anyone else we'll bend the rules" kind of response?

Well now that you mention it, we probably shouldn't have expected a decent response due to the fact that Halifax are a bank. All banks are the same, they are happy to take your money but they won't do any of their customers any favours. They told us we are able to get a payment holiday with regards to my reason (becoming self employed), but they have basically told us that we can't as our house is worth £20,000 less than the price of what other houses in our street are being bought for. Some of those houses have less features than our house has.

If it wasn't for the banks making stupid mistakes, there would be no recession. The banks say they try to help customers, but if thats the case then why have they made it harder for people to get mortgage payment holidays? The percentage of the house valuation to the amount of the mortgage due (if thats how it is calculated) used to be 90%, its now 97%, making it harder for customers to get payment holidays.

Thanks for your opinion.

opinions4u

Well now that you mention it, we probably shouldn't have expected a decent response due to the fact that Halifax are a bank. All banks are the same, they are happy to take your money but they won't do any of their customers any favours.

In their defence, you are basically asking them to increase your LTV from the 97% figure you currently quote to something higher. That, in the current market, would be totally stupid lending on their part. Do you really want to be in negative equity?

You are asking them to lend two people money to put in to a new start business enterprise that is swallowing cash for fun when they have no other source of income and little or no equity in their property.

If you wanted to move home, and had a 25% deposit to put down, borrwoing £10 less than you currently owe they wouldn't lend you the money. They're stuck with you, but why should they lend you more?

If it wasn't for the banks making stupid mistakes, there would be no recession. The banks say they try to help customers, but if thats the case then why have they made it harder for people to get mortgage payment holidays?

Katie, I understand your frustration and I understand your desire to kick start this new enterprise. BUT you have just said banks lent stupidly to get us in to this mess and then slagged them off for not giving you an unbelievably risky loan.

They told us we are able to get a payment holiday with regards to my reason (becoming self employed), but they have basically told us that we can't as our house is worth £20,000 less than the price of what other houses in our street are being bought for. Some of those houses have less features than our house has.

Having been involved in mortgage lending for a number of years, nearly everybody thinks their house is worth more than it really is, and an individual's home has nearly always got "a bigger garden" or "a better view" or "a nicer kitchen" than the one up for sale round the corner.

The percentage of the house valuation to the amount of the mortgage due (if thats how it is calculated) used to be 90%, its now 97%, making it harder for customers to get payment holidays.

Did the Nationwide calculator in my previous post tell you a different story to the Halifax's indexing system?

Did you look at the "grants" section of the BusinessLink site I gave you?

Is there any other support the business can get?

Google "why small businesses fail" and work a strategy out from there.

patman99

katie1983, is there any way you could go back into employement?. You didn't say what you did for a job, but if it was something you were good at, then see if your former employer would take you back.

The only other option is to sell-up and rent a property. With both of you earning very little from your eCommerce site, you could take-over the day-to-day running of the website whilst your b/f claims jsa (and therefore housing benefit to cover the rent, & council tax benefit). If the business takes-off, and starts to generate enough income to pay two wages, then you can re-assess the situation.

BTW, what are you selling on you site? (don't post a link to it though).