Auctions

themightypierre

hi Folks. First time poster and looking for advice please.

We live in a rented house and we rent out our house we own which is mortgaged to about £88000. We have about £13000 in loans and about £8500 on credit card debt and our tenants move out tomorrow. We have got a two month payment holiday from the mortgage company starting in January but if we do not find new tenants then we cannot pay the mortgage and the rent on this house where we are signed up till July 2012.
My fear is that if nothing happens in two months we will be faced with repossession or maybe just putting it up for auction to get the mortgage payed off but I have little idea how this works and whether I am going to lose out drastically on the price of the house.
The house would probably go on the market at £125000.
So my questions are:

1. Is putting the house up for auction a terrible idea bearing in mind even with the rent we are struggling to live month to month. Or is there a smart way to do it to maximise my return.
2. Are there ways to extend the payment holiday giving us more time to get new tennants in (the building society gave us two months because there was a £1000 of credit on the account and my payment is about £500)
3. Any more general advice you could give. I really don't want to have another debt consolidation loan as I have spent two years paying interest on this one and the initial capital is finally going down.

We are (belatedly) implementing Martin's plans of reducing and shopping around but the issue of the house needs to be resolved one way or another in the next two months . Any advice would be apreciated.

Doozergirl

You aren't in arrears yet?

Tenants can be found quite quickly as long as you price correctly. depending on your rent level, a reduction of £25 can make all the difference and this sort of money per month is nothing against what you lose when you are marketing too high. Look at what is on the market at the moment and undercut it to get tenants in quickly.

Or are you shortfalling every month even with a tenant?

If you need to sell then having the usual three valuations from agents telling them that you would like a quick sale, they will give you the straight price. Whatever price they give you I promise will be better than the price you will achieve at auction. People think that auction is a quick route but at this time of year, you're looking at February before there is a hammer dropping so march before any completion.

A good FTB with your house at a sensible price should see the house sold in the same time frame as attempting to go to auction but you will get a better price. I would even go into arrears to get a sensible price rather than sell to people who are pretty ruthless when it comes to property. There is a lot not selling at auction right now and having been in auction rooms over the last couple of years, with the exception of just few months, the people in there are vultures happy to pick at the bones.

It takes a while before your lender will attempt to repossess. If you aren't even in arrears yet, you have enough time for a straight sale to someone who your EA has qualified their affordability.

Get the EAs in now. Don't try to get too much rent or if you really need to sell, don't prolong the agony by getting another tenant in.

Good Luck, and do come back and tell us how you are getting on.

themightypierre

Thank you. I am not asking an excessive rent really. Its just fell a little awkwardly with the time of year. But what you say sounds interesting. We had dismissed putting it up for sale at the same time as looking for tennants but maybe I will revisit that. I will keep you informed.

paddedjohn

Why arent you living in your own house and using your rent money to pay your mortgage?

themightypierre

The area we live in now is our home. We have lived here for two years. Our daughter goes to school here and we are also signed into a contract here to keep us here till July 2012.

themightypierre

Doozegirl said to come back and here I am. Our current situation is that we have a buyer who is taking their time getting through the mortgage process which has caused us some considerable distress and we are still awaiting the lender approving her mortgage.

Our two month payment holiday is all but up. We are due to make a new payment on the 26th but realistically we are not going to be able to make that and stay afloat. I am going to phone the building society this morning to plea for another month. My questions for you helpful people are:

1. Baring in mind my mortgage was about a grand in credit so the payment holiday was in fact being funded by that credit mean I am better able to insist on being given an extra month's grace ?
2. What if they say no ? What would follow if I just did not make a payment this month ?

I am convinced the woman wants to buy my house but am less convinced she can get the money. I am willing to give her the week to get a definitive answer but after that we will got to letting again. I know there are plenty of people wanting to look at it in that light. I am just worried about the consequences of missing a mortgage payment.

SouthCoast

Having problems with your mortgage payments?

http://mortgagehelp.direct.gov.uk/what-are-the-facts.aspx

And some auction results from February:

http://www.allsop.co.uk/3/Property-Auctions