Need to move but got no money, any advice?

ezmerelda

Hello

I need to sell up and buy somewhere closer to schools, but other than the equity in my house I've got nothing.

I should make about £40k profit on mine which will be a nice deposit, but other houses on the street have been on the market for 12 months+ and I'm worried mine may take just as long. And without selling first and having the cash ready, I can't buy anywhere else as I've no money for solicitor's fees etc. I would be prepared to sell and just rent somewhere for a while until I found a house, but rents are way more than my mortgage payments so without spending all my profit I just can't afford to do that - and I need that hefty deposit to keep mortgage payments at a level I can manage. Have just done the quickie mortgage calculator on my bank's website (who my current mortgage is with), it says even with a £40k deposit, they would be able to offer me..... £0. Hmm, oh dear. Rang them up, made an appointment to go in next week (earliest I'll be able to go) and see what the score is.

I was fortunate to have bought when I did at a very low price, but at that time there was no child so location of schools wasn't a consideration, I just bought what I could afford. It's costing me a fortune in petrol to get her to school and back every day, and the high school is even further away. Buses would cost even more, needing two to get to the primary and three to the high.

I know I'm lucky to own my own house at all, but we really need to move and I feel like I'm completely stuck I don't know what the nice man at the bank is going to say, what if they tell me they can't help me with a new mortgage? Are other banks etc likely to have a similar criteria, therefore I'll struggle no matter who I go to? I keep thinking all this through and stressing myself out, I realise it's fairly irrational as I have a roof over my head and should be grateful for what I've got, but I need to think to the future for my daughter. We've no garden to speak of, there's no other kids in the area for her to play with, and with school being so far away it's not even like she can have her mates round for tea or anything without it being organised like some sort of military operation

Anyone have any ideas or advice as to what I can do?

Thanks for listening to the rant, sorry it's so long

SimonMrGreenWard

Without taking a huge risk, you seem to be a bit stuck. One way would be to rent your property out and use the rent excess above and beyond the mortgage payment to help fund a rental in desired location.

Should your tenant stop paying rent you'd be stuffed though.

I guess wait and see what mortgage advisor says.

muskoka

I'm really sorry to sound ignorant, but can't your daughter use a school bus? Dont the council offer a school bus service when the child lives a certain distance away? I'm sorry, I'm not up to speed on this (child well grown up now).

ezmerelda

ooh I don't think I'm brave enough to be a landlord, too much goes wrong with this place! Just this month I've had to stump up for boiler repair (it decided that seeing as it was the end of July, tropical heating would be great and I didn't need hot water lol), and then my washing machine conked out. Bah!

There is a school bus, but having looked at the route it'd still mean either a drive or 2 buses to get to the nearest stop, and she'd still be miles away from her friends

Lets just hope the chap at the bank is slightly friendlier than the website!

lee636

SimonMrGreenWard wrote: »

I guess wait and see what mortgage advisor says.

Yep and look at getting a smaller, more economical car in the mean time.

ezmerelda

lee636 wrote: »

Yep and look at getting a smaller, more economical car in the mean time.

Ah no can do, the car is on a lease and got another 18 months to go yet. It's only a 1.2 engine, not like it's some 2L gas guzzler or anything, but still doing on average 7 journeys a day (often more depending on what meetings etc I need to attend for work, but at least I get a bit of mileage money for those!) soon mounts up. And buses are no cheaper really, and not practical for work etc

mostlycheerful

Yes, it would definitely be good if you could get a place near the school(s) so your daughter can have local friends and to cut out all that travelling and car costs.

Re renting you have to fix stuff for yourself when it goes wrong so why would that necessarily be any more difficult to do for lodgers or tenants? It’s only an occasional job, isn’t it, it’s not as if everything is always breaking down all the time, is it. Well, sometimes everything goes wrong all at once and repeatedly but that’s rare. And it’s got to be sorted out anyway when it happens so it’s not much or any extra grief doing it for renters than for yourself, is it.

Yes, renting can go wrong if you’re unlucky but mostly it’s lucrative and money for nothing. There’s a bit to learn and to be wary of but normally it’s not particularly complicated or difficult. If you can hold down a proper job then you can probably do landlording. You could try it and if it works then that’s a solution. If it doesn’t work, ok, you can come back or do something else. It’s probably worth a try. And unless you try you’ll never actually know if it could have been a solution.

Although lending is down due to recession/credit crunch there is nevertheless some lending still available. So as you apparently probably can’t sell your current place for a year or two or even never then perhaps consider an alternative and slightly more ambitious scenario of trying to find a lender to let you borrow against your equity to raise a deposit and also give you another mortgage to buy a second place while you rent out your current place.

Where there’s a will there’s a way and there are several possible ways of achieving this so perhaps consider the following :

As your wages will only generate a certain amount of lending then perhaps also see if you can get any financially secure family and or friends or colleagues to give you a guarantee of as large an amount as possible. Re a guarantee a guarantor doesn’t have to actually put any cash on the table, they simply guarantee to pay the mortgage if you default. In worst case scenario if it does all go wrong and you default and then the lender calls in the guarantee but you or the guarantor(s) don’t actually want the guarantor(s) to have to cough up then you’ll have to sell the place. So, bit of a nuisance and maybe a bit of loss if you have to sell up cheap in a hurry but over time you can repay the guarantor(s) anything they spend for you so it’s doable. For someone who cares for you and is well off it’s not particularly going to bother them, they’ll be more concerned about your wellbeing than getting a few bits of cash back. Yes, it could go wrong but so can everything in life so nothing ventured nothing gained. You could play safe and just put up with your current situation or you could be bold and try to do something about it and better it.

Another way to boost your wages in order to get a bigger mortgage is to briefly take on an evening and weekend job. Yes, a bit of a pain but as soon as you’ve got the maximum amount of mortgage that you want then you can pack it in.

Some people also raise money to buy houses off credit cards and loans. Yes, that can be an expensive way of borrowing and a bit flaky, but so what. If you can pay it back on time then all well and good. If not, well, you can mostly just default them or do your own DMP (Debt Management Plan). Ok, your credit rating may get shredded, but so what, if you’ve achieved your objective of getting another place and solving the current unsustainable situation then it’s mission accomplished and well worth it, isn’t it, and anyway you don’t need any more credit as the credit has now served it’s purpose and you’re home and dry.

Another way to raise mortgage money is to share with a second and even third person and so then with the resultant economies of scale you can get a big place with lots of spare rooms to rent to lodgers to cover the mortgage. So in this instance you have an agreement regarding the exit route if someone wants to sell up and what happens if someone fails to pay their share. Yes, it’s risky and as with everything it can go wrong but people do it and if you choose good financially secure people, and also perhaps get them to get their family or friends to guarantee them, then it can be doable. There are some mortgage companies that specialise in shared scenarios so perhaps it’s worth a bit of researching and looking into. I would if I was in your position.

If doing this then re the second house aim to get one as big as possible with several extra rooms which you rent to lodgers, the time honoured tried and tested way that millions of people get their mortgages paid. So even if the property is run down and tatty if it’s got lots of rooms then a lick of white paint and some cheap second hand furniture and it’s ready to go for cheap lodgings. Lodgers mostly don’t particularly care much about the quality, it’s the location and a cheap price that are the key issues that will attract them.

Yes, in a sense you’d be overextended and if it all went wrong then you could be up the junction, but, hey, needs must and you only live once and it could be a solution to your current situation and a good one at that. If it worked well, which this kind of business normally does, then you could be sitting pretty and making good money for next to no effort. Most people do very well out of this kind of property business, you’ve got to be unlucky to go wrong with this. If you do it to scale then you can find it pays a lot better than working. Yes, indeed, landlording is mostly money for nothing and is probably the most lucrative thing you could ever do in your life. If you set your mind to it you can achieve anything (well, almost!). And if it goes wrong, which is unlikely, well, at least you tried. I think you should grab the bull by the horns and go for it. Otherwise what’s the alternatives? Are there any alternatives?

I hope this helps your thinking. Good luck with whatever you decide.

chocsessential

Could you find a buy to let investor to buy your house and then rent it back to you on a temporary basis while you look for another house? I did that once and it meant I could release the equity to put down as a deposit on my next house. Try to find one by word of mouth though, and avoid estate agents otherwise you will have to pay them commission.

drdaz123

chocsessential wrote: »

Could you find a buy to let investor to buy your house and then rent it back to you on a temporary basis while you look for another house? I did that once and it meant I could release the equity to put down as a deposit on my next house. Try to find one by word of mouth though, and avoid estate agents otherwise you will have to pay them commission.

also be aware that they will probably only offer you about 75% of your propertys value!!

drdaz123

missile

You don't say how far it is to the school? How old is your daughter, she will attend school for X years, what happens then? Only you can judge whether being closer to school would improve quality of life for your family and the cost is justified.

There must be other kids who live near you? Perhaps your daughter could make friends with them and you could share transport with the parents?

Moving is expensive. You will either have to increase your mortgage and / or buy a cheaper house. Seems to me, it would take a very long time to recover the cost of buying and selling on the petrol saving.

Nixer

If the council will provide free school transport and yet you are too far from the bus stop they should surely provide transport (usually it's a taxi) either to the bus stop or all the way. That's what seems to happen round these (very rural) parts anyway. It used to be if you were more than 3 miles from the school that it was free but I don't have kids so I don't know if it changed.