Trapped!

DAVESDON

Hubby and I bought our house in March 2009 for £100,000. We had a 10% vendor gifted deposit. We took out a mortgage for £90,000.

Having now had a baby, we decided we want to move to something bigger in a better area, so we approached the same agency we bought the house from to sell it.

However, the mortgage advisor has told us that it isn't financially sensible to change our mortgage, and that we are unlikely to sell this house for more than what we paid for it.

But hang on...

We are on a 5 year fixed term at a 7.49% rate which is ridiculously high and we want to remortgage this house or get a whole new mortgage on a new house.

The estate agent valued the house at £110,000 and said we should expect a minimum of £105,000 but the mortgage advisor reckons the valuation report will not agree more than what we paid for it (ie. £100,000)

So are we stuck in this house? Our mortgage is still around 90k because we added fees to it.

We do not want to sell up and rent, or rent it out - if we do that, we'll never get back on the property ladder.

Also, we have 2 mines within the boundary of our property. This wasn't a problem for our mortgage company when we bought it, but the mortgage advisor says we now need something called an 'inference' report from the coal mine company, which costs £80. Should we be buying this? Or should it be the prospective buyer of our house?

So confused...

bris

There is nothing stoping you from putting your house on the market and hoping to sell it.
The 5 year 7.49% is very high indeed but have you looked at the small print? There will be early redemption penalties in there that will be excessive, so have a look and see what that could cost you.
The mortgage advisor will have some or most of his fee's clawed back because you are selling early so he's going to try and talk you out of it, but don't listen to him.
The coal report is carried out by the buyer's solicitor so you don't have to do one yourself, in fact why didn't your solicitor do one when you bought it, it should have been one of his searches.

Plans_all_plans

In your situation I would ride it out and stay in your current home. Although the interest rate is extreme, I cant see you being in a good situation selling up either. Was the baby on the cards when you bought? It's a very short time after buying to sell up!

olly300

bris wrote: »

The coal report is carried out by the buyer's solicitor so you don't have to do one yourself, in fact why didn't your solicitor do one when you bought it, it should have been one of his searches.

Mining searches are optional.

I got quoted for one by a solicitor my mortgage broker advised.

I used a different solicitor as I was and am fully aware of history the area I brought my property in.

Being forced to learn history of the wider local area at school had some uses.

olly300

DAVESDON wrote: »

We do not want to sell up and rent, or rent it out - if we do that, we'll never get back on the property ladder.
.

If you can afford to rent the house out you would still own a property, However he fact you are considering doing so soon after you brought it indicates there is something wrong in the area the house is in so your house would be hard to rent out.

Young kids don't need massive amounts of space until they are in the junior years of primary school so unless your house is one bedroom there is no reason to move for years.

myhouse_2

Your case highlights the downside to owning a house - no flexibility, no mobility, thousands in costs to move.
Although normally I would understand you wanting to stay on the ladder, really I think you have nothing to lose (and possibly plenty to gain) by selling up and renting. The basic reasons are:
-your interest rate is so high that it makes renting a decent deal for you (paying the landlord instead of paying the bank).
-you gain the mobility (moving when renting only costs hundreds as no purchase fees)
- someone else takes on the risk of your house dropping further in price(quite likely in my personal opinion).

dopester

DAVESDON wrote: »

Having now had a baby, we decided we want to move to something bigger in a better area, so we approached the same agency we bought the house from to sell it.

Something bigger in a better area sounds like it will be more expensive.

You've only got a short posting history at MSE so I took a flick through. £5K fee to end your 5 year mortgage term early.

18 months isn't very long to own a house.. and perhaps you should have both given more consideration to your future desires and needs before you bought your current home. If you'd rented you'd probably have been quids in after fees, and whatever it would sell for. If you're 'trapped' it seems like a 2009 purchase trap "own a home" of your own making to me. Maybe you should weigh up the advantages of selling and renting.. if it's not too late.

DAVESDON wrote: »

Hi everyone,

Just wondering if someone can help me work out what benefits I can claim? As entitledto.co.uk seems to think I'm only entitled to child benefit of 80 per month?

I am 23, married to a 24 year old man, we own our own house (mortgage) and have one child who is 6 months old.

I do not work as I am a full-time mum and hubby earns 19,000. We are struggling to cover our bills and mortgage now that we have a baby and are living beyond our means, getting into more and more debt per month.

Each month we have to pay just under 700 on the mortgage, 200 to pay back a loan from my dad, then theres council tax,gas,elec,water,home ins,car ins,car tax,fuel,food bill,tv licence,phone,babies supplies, etc all add up to a crazy amount!

We currently get the standard child benefit and 33 pounds tax credits a week. Is there anything else that can help us? I do not want to return to work until my baby is a bit older and I dont want to put her into fulltime child care and my maternity allowance stops next week.

Thanks in advance.

JQ.

First, go and see a different independant mortgage adviser. Sounds like your current one has a vested interest. You need to see if you can get off this mortgage - refinancing over a longer term or interest only may give you some breathing space.

Second, get 3 seperate Estate Agents round to value your house. The one who sold it to you is unlikely to tell you it's now worth £80,000, as I suspect it might upset you and they're the ones who pushed you into it. They'll just stick it on their books at £105,000 and leave it their unsold for 2 years.

Third, prepare for the worst - you didn't pay £100,000 for the house, you paid £90,000 with a 100% mortgage. The vendor gifted deposit is just a scam for the mortgage co, which I'm surprised allowed such actions in 2009 - but I guess that's why you're paying 7.5%. On the basis you paid £90,000 18 months ago I would not be surprised if it is now worth less than that now.

You need to act quickly and get this sorted if you are overspending every month. The situation is not going to get better and even if you have to sell the house, make a loss and owe money, that will be better than increasing those debts every single month.

If renting the house out will cover the mortgage then definately look into that.

Could you get a part time job to increase your earnings in the short term to stop the overspending? Could you trade things on Ebay to make some extra cash - buy stuff at car boots at the weekend and then Ebay them during the week? My wife gave up work 2 years ago and it does make money tight - she's just started making handmade quilts and is looking into selling them to craft shops for some extra cash. We also sell lots of stuff on Ebay.

Good luck with it all an hope it gets sorted.

betmunch

bris wrote: »

The mortgage advisor will have some or most of his fee's clawed back because you are selling early so he's going to try and talk you out of it, but don't listen to him.

Utter rubbish.

Theres no clawback on a mortgage.

The Mortgage Advisor has a duty of care to the client, the EA just wants to get another house on their books. If anyone should be listened to right now its the Mortgage Advisor!

There have been huge changes to the mortgage market since you could get away with a 10% vendor gifted deposit, its not going to be an easy ride for you I'm afraid