Pay off Mortgage & rent or keep it???

shortchanged_2

Smudge33, do you only have the 1 child?

If so why do you feel the need to have such a large, expensive house if you are struggling to make ends meet?

Is downsizing an option?

According to your valuations on the properties you appear to have a fair bit of equity in them.

smudge33

Well that was one of the reasons the house didn't work: we'd planned on more children but that isn't going to be.. *ahem* ANYWAY!!

Yes, we are ok with a two bed plus box flat, or three bed place, if it's in the right area. The right area means that flats cost a minimum of £300k... honest. We could, easily, sell this place BUT Mr Smudge wants to hang onto it. Someone told him that once the estate at the end of our street is demolished, the value will go up (how much WHO KNOWS) - I think it's more like a security blanket really. I would be ok with selling it, I think, given how much equity it would release for the new place, so we could lower the amount borrowed quite a bit.

:-( I wish that was an option but I can't see how I'll change his mind. The other flat is for our daughter, once she's old enough plus we have a friend living there - he's happy, looking after the place, we cover our mortgage but don't charge too much so he can save up for his deposit :-)

shortchanged_2

To be honest you're situation looks pretty dire. You essentially have a £305,000 loan on your property. You potentially have £100,000ish equity in your other properties. You have no repayment vehicle in place, a very small amount of savings and your husband is 50 years old.

I think you seriously need to get some proper financial advice as I feel you are swimming and barely keeping your heads above the water at present.

originalmiscellany

Smudge, do you agree with shortchanged? it feels like the elastic has stretched as far as it can go, and it's about to go snap.

smudge33

I think so: certainly we can't take any more debt and recently sold our car back to the garage - £300 a month (plus diesel) was just taking it too far for something we used twice a week. I know that this is affecting my already dodgy mental health...

A poster on the place it dropped this first (house buying, renting and selling) said that I would never get a mortgage deal like this one again (0.5% above BoE rate, IO tracker) plus it is totally flexible, so when we do get more income, we can pay it all in to reduce the capital...

We can't not sell really: it feels like such a burden when we don't live in it!

So... the options are more like:
1. sell the house, get rid of the £305k /loan/ and use the money left to build up savings, rent a place near nursery and sell House 2 when we feel ready, using that for a deposit.
The problem with that being DH is now 50...
in which case we're unlikely to get another mortgage, right? so that leaves us. Erm. Screwed.

I should say that on a monthly basis we are ok: I'm still building up our savings so we have a bit of a cushion in case he didn't get paid for a month or two (you can't tell these days). We're not on beans on toast yet! However, I'm aware that we are rather enormously 'over exposed' and it's making me ill.

Where is best place to get advice do you think?? Last guy I spoke to basically said 'why sell if you can rent it out until the value comes up again?' ignoring that we're liable for the mortgage when it's empty.Doh.
0.5% above BoE base rate tracker

Keep that deal at all costs.

It's inconceivable that you'll be able to get a mortgage like that again, it's a once in a lifetime opportunity.

smudge33

Oh there it is! I wondered where I'd put that copied text...

shortchanged_2

Your rental properties are not necessarily an issue as long as they cover their costs. The problem is you have a yawning £200,000 gap in your finances which you appear to have no way to pay off.

And yes your mortgage rate would be fantastic if it was a repayment mortgage or you had a repayment vehicle in place!

smudge33

Hmm. I have no idea what to do now. None.

I've looked at a couple of new deals - about 4 or 5 plus % for repayment mortgages and they would cost about £1800 or under per month. That's more than half our wages. I don't think that's sensible, is it? I mean, I'm sure I could get some cheaper deal but on average that seems to be what's available. OH B====-ks.

originalmiscellany

On the bright side, this is a great place to get advice from -The obvious thing to do next would be to include an SOA
http://www.makesenseofcards.com/soacalc.html
which lists what you're currently spending and "incoming" - it's something that may be of benefit to see if there's anything you can nail down to save money on a month to month basis, which will be of benefit to you in the short and long term too...

smudge33

Thanks. I'm off to have a little cry but I REALLY appreciate your time and help, really. Dh is not 'interested' in money so it all lands on me. and I'm not the brightest penny in te box by a long way.