Help - Stuck in a Rut, House Problem

TheKentishMan

Hello

First Time Poster Here and I was wondering if anyone has some suggestion on my current situation.

I bought a house prior to moving in with my then girlfriend now wife and was unable to sell it back in 2007.

So I am now renting the 2 bedroom house out and the income covers the Mortgage by £10 per month however the constant upkeep means that I actually make a lost overall.

Ideally I'd like to sell the house but I can't afford to pay the mortgage on my own. The house value is around £85,000 and the mortgage is £88,000 so I expect to make a lost anyway.

As there is negative equity I am unable to change the mortgage deal.

Just feel that I am stuck in a rut and will continue to lose money the longer I keep the house .

Has anyone got any suggestions????

Mark

Mrs_Z

Sorry, I'm not sure that I understand - why can't you move into the house with your girlfriend instead of letting it out?

Well, if that's not an option; either you lose a lump sum by selling the house or you lose smaller amounts monthly eaten by the upkeep. Or increase the rent so that it does cover your outgoings? It's difficult to comment as much depends on the condition of the property, local area, demand, etc.

It might be better to sell up and take a relatively small hit now than to hang on to the property for years to come in the hope that the house prices will rise to recover sufficiently.

GAH

There is no sign of the market picking up anytime soon.

Your best bet maybe to sell the home, but you will have to make up the shortfall, out of savings, if you have any, or you could speak to your mortgage lender and see if they will turn the NE into an unsecured loan.

howm uch capital do you pay off your mortgage each year? If £3000 or £4000 you wait another year, then try and sell, but obv no guarantees house value won't have fallen.

Most of the time, the first loss is the easiest.

TheKentishMan

Ah sorry I missed that bit out. Currently living with my wife and our kids in a different house - family home. So yeah that's not an option.

I suppose the problem as I see it, I want to sell the house which is in Leeds BTW but I don't think I can afford to pay two mortgages while the house sells - if it does indeed sell. So worried about racking up more debts and possibly defaulting on the rental mortgage and putting the family home in Jeopardy.

Seem silly but I had even thought of putting up the rent - so obvious and extra £20 might help

Thank for taking the time to respond

TheKentishMan

Well at the moment the mortgage is on interest only as the the repayment was killing me. it's £380 per month verses £550 on repayment.

I think that I am slowly coming to term with the fact it will be a loss rather break even, it's just a question of how much.

I guess I could wait for the exisiting tenancy to finish - 4 months left and that point put it on the market and try get a loan to cover the mortgage payments. Normally I might be able to cover them but we have just had a baby girl so my wife is currently on maternity leave and a her salary is reducing steadly.

6 months ago I contact one of those cash for homes people as I was curious and after several phone calls they finally offer £60K, which is a massive hit. You can guess the answer I gave them.

sarahk100574

Hi kentishman,
I understand what you mean about covering the mortgage while it sells... tis like a vicious circle for a couple of accidental landlords I know!

The rent sounds very low though for two beds in Leeds... which area is it in? Most two bed rents where i am (NW Leeds) are well over £500 pcm, so you may be undercharging? If you could get a higher rent for the next year or so you could maybe build up a buffer for while it sells later on though.
Would really need to know the exact area/type of property etc to see if rent is a bit too low!:beer:

TheKentishMan

Hi Sarahk100574

It's in Bramley LS13, 2 bed back to back. So maybe the real answer would be to hike the rent up and see if that helps the situation. I think the reason why I hadn't considered the rent increase worried about having no tenants in there and have to pay the mortgage on my own.

Thanks

DannyboyMidlands

Why were you unable to sell in 2007?

TheKentishMan

DannyboyMidlands wrote: »

Why were you unable to sell in 2007?

Left it on the market of 6 months and ran out of money to pay both mortgages. It some point I wish I'd let it go into arrears but hey that the wonder of hindsight

[Deleted User]

Again, I'd suggest evaluating equivalent rents in the local area and putting the rent up so your expenses are more adequately covered. Rental properties in most areas are in high demand.., you will very quickly realise if the new rent level is too high. You will probably need to 'tidy up' the property beforehand but hopefully u will be able to do that yourself to minimise costs and it would need doing anyway whether you rented the property or sold it.

DannyboyMidlands

TheKentishMan wrote: »

Left it on the market of 6 months and ran out of money to pay both mortgages. It some point I wish I'd let it go into arrears but hey that the wonder of hindsight

It sounds like your pricing is a bit ambitious. Price it to sell quickly and you wont have the problem of covering the mortgage while it sits empty.