Urgent help needed

newbieinvestor75

Myself and my partner are currently looking to purchase a new house as part of a Bovis Homes development. We need to move as there is not enough space where we live and it is becoming very impractical for our lifestyles

My partner currently owns an apartment. His mortgage has a remaining £155,000 to pay (purchase price appox £162,000 in 2006). We have sought advice on selling and have been informed that due to a number of county court judgements that have happened in the building, the sales prices have plummeted to around £110,000. Of course, this then means we can not sell.

It would therefore appear that our only other option is to rent. As such I have the following questions:

1. We have filled in an application to switch to an interest only mortgage with our current provided, NRAM. We stated our reasons being that we intend to pay the capital element through future sale of the house and savings (which are currently very limited if I'm honest). Due to us likely needing to keep the property for a number of years until we generate positive equity we applied for a permanent switch. Is this likely to be accepted in the current climate?
2. THE KILLER QUESTION - would we be insane to go ahead with our house purchase, rent the property out and keep the mortgage on capital repayments? Doing the calculations we would only have £100 each disposable income (after mortgage, loans, food, bills, saving for Xmas etc). Is this a bit too close for comfort?
3. We are purchasing our house using the shared equity scheme with Bovis. We intend to go for the 80%/20% option. I have caught glimpse on here of horror stories of shared equity deals - are they really all that bad?
4. Just wondering if its worth us trying to get an approx 10% discount on the house price as it appears this has proved popular advice on the forums but is it pushing out luck?
5. Finally, what sort of 'extras' other than the usual carpet and turf have you bargained for and got in the past?

Sorry for the essay and thanks in advance for your replies

BitterAndTwisted

Yes, you would be insane to take on another mortgage. What happens if you find yourself a non-paying tenant and have to spend considerable sums evicting them?

newbieinvestor75

I understand where you are coming from but I have no choice but to keep the mortgage - it is just wether it will end up being interest only or on capital repayments (in which case when I come to sell I will have equity in the property)

I know this probably dosent influence you but just thought I would throw it into the mix :-)

G_M

Is this a BTL mortgage? If not, have you got/will you apply for Consent To Let from the NRAM?

Here.

newbieinvestor75

We will be getting a consent to let from NRAM

kingstreet

How much deposit have you got for the new purchase?

pararct

Bad bad idea, you are opening yourselves up for a world of hurt if it goes wrong.....

We have sought advice on selling and have been informed that due to a number of county court judgements that have happened in the building, the sales prices have plummeted to around £110,000

How would county court judgements have an impact on a properties worth?

newbieinvestor75

jdhughes57 wrote: »

We will be getting a consent to let from NRAM

We have a 5% deposit

newbieinvestor75

pararct wrote: »

Bad bad idea, you are opening yourselves up for a world of hurt if it goes wrong.....

How would county court judgements have an impact on a properties worth?

Some of the apartments have verb repossessed and auctioned which has led to the prices of the they apartments being impacted

Doozergirl

Have you spoken to people about the next mortgage?

Is it going in your name only? He's not going to get another mortgage, nor I suspect permanent consent to let when he's clearly in negative equity.

It sounds like a disaster to me. One definitely, one theoretically in negative equity. No disposable income. What happens when a tenant decides not to bother paying rent for a few months, or it's empty for a while - even if you move to interest only? You're just collecting properties which you rent from other people but with huge potential financial implications. I don't think you can borrow your way out of this, even if people are prepared to lend you the money to try (I'm not sure they will though)

If his can be rented out, I'd look at renting yourselves.

geoffky

You are not going to get out of this over any short period..Where do you expect capital gains to come from for the flat when the whole of Europe is on its knees?..i think getting another mortgage is madness unless you are in the in for a penny in for a pound mindset. whatever you decide the flat is going to take many many years to get back to even.I reckon a lot more that five and in that time it just takes one bad payer and you two will go under quick. good luck