behind on mortgage, could we reduce it?

slummymummy66

Any help/advice would be much appreciated.
we currently have a £127,000 mortgage on a house up for sale at £350,000, we would like to buy a £65k mortgage on a house valued at £250k.
Heres the problem, we are in arrears of £7k with the halifax and would need a mortgage to buy the other house, we are selling to reduce our mortgage/debts as we just feel like we are drowning. the mortgage has never been a problem it is out debts that we have been struggling with.
Question is, would halifax let us transfer a £65k mortgage to the other property which clearly would still have a lot of ltv on it, if we had to take out a new mortgage we deffo would not pass any credit checks,
feel like the answer to all our problems is a heartbeat away but it all depends on us having the £65k mortgage.
Thanks in advance for any advice

beecher2

They would treat the porting of your mortgage as a new application, and will be credit checked.

Your options seem to be buying a cheaper house, or renting and rebuilding your credit file.

VIGILANT22

Porting a mortgage to a new property will be treated like a new application.
Your best course of action is to speak to them, you may feel this is difficult due to the fact you're in arrears..However by downsizing you're demonstrating you're trying to find a resolve to this problem. I wouldn't hold out too much hope, however at this present time it is very hard to guess what a lender would and would not say..as they're taking some mind boggling decisions...good luck

JA1000

You are unlikely to get the new mortgage when they see the arrears. If the mortgage has never been a problem why are you in arrears?

Why not manage the secured debt properly and DMP the unsecured debt and then keep your current house?

slummymummy66

Thanks, on paper we can afford the mortgage, 2 years ago we had a builder doing a loft conversion and he walked away with £25k after removing the roof from my house, we had borrowed £20K to pay for the conversion and obviously because he took the roof off we needed that replacing, we paid over 2 cc and 1 loan and unfortunately it has been a case of he who shouts loudest gets paid!
when we took out the loans i was in full time employment but had to give up work when i gave birth to my handicapped daughter.
By us selling the house it means we can clear all these debts and we can start living again,ie, answer the door and phone, open the curtains in the day, frankly debt really is a living hell, we are just existing.
Moving house would also put us nearer to my older childrens school which would save around £20 a week in petrol.
So the ideal solution all round would be to sell the house as it has a lot of equity and pay off debts and make life easier all round.

beecher2

slummymummy, that sounds like an ideal solution but you don't have to buy another house once you've sold your existing one. Why not rent and regroup?

slummymummy66

Looks like that maybe the only option, have just tried to discuss it with halifax but they kept transferring me to the legal department which i think is in india, the whole conversation was scripted and i couldn't get anything clear from them.
When we sell this house we would have between £200k - £220k so could maybe buy a lesser property to rent out and rent a larger property for us (we have 4 children)

beecher2

slummymummy66 wrote: »

Looks like that maybe the only option, have just tried to discuss it with halifax but they kept transferring me to the legal department which i think is in india, the whole conversation was scripted and i couldn't get anything clear from them.
When we sell this house we would have between £200k - £220k so could maybe buy a lesser property to rent out and rent a larger property for us (we have 4 children)

Why would you buy a property to rent out? Why not just stick your money in the bank and work at getting your credit file repaired. With such a low LTV you might not have to wait too long to be able to get a small mortgage again.

slummymummy66

i was thinking we may get a better return on the rental than interest and hopefully the value of the rental property would go up and in a couple of years we could buy again with a small mortgage when our credit file has inproved.

surreybased

Hi,

Not sure if BTL would really give you a higher return, alot of BTLs are struggling to get a good yield and are only in it for capital appreciation however hourse prices rising can't be guaranteed so there's a large risk of actually losing money. I was a LL for a period of time and you shouldn't under estimate the work/costs and worry involved.

I think you may have the opportunity to remove alot of your financial stresses, sell the house, rent for a couple of years to sort out debts and then get back into the market. It may even be that house prices decline in that period and if that's the case you'll be in a better situation with cash in the bank. Also if IRs go up post election you'll be earning an income, rather than worrying about paying higher BTL rates or mortgage rates.

If you rent look for a LL witha long term rent strategy not someone who is renting because they can't sell. In that case you'll have some security for your family.
Good Luck

beecher2

Getting a BTL sounds a risky option, when I'd have thought you'd want to play safe and take the worry away.