Negative equity 1 bed flat & expecting twins!

apjbart

My son lives with his partner who owns 50% of the equity of a 1 bed flat, which was purchased four years ago for £100,000 in respect of which she obtained a standard repayment mortgage for her 50% - £50,000 with no deposit.

The property is now worth around £85,000 hence she faces a bill of around £7,500 negative equity on moving out, which given that they are expecting twins this summer, they need to do.

Both of them are earning although this will change to just my son (around £24,000 per annum) whilst partner is on maternity leave. Neither of them have any savings although they don't owe much either. It is likely that family will help a little but there is not much spare cash around!

The housing association are currently proving unhelpful either in terms of arranging some sort of 'swap' with a larger property, or in allowing the property to be sub let (which would still cost around £80 PCM due to the difference between mortgage & rent payments and likely incoming rent).


Other suggestions include -

• My son - who would be a first time buyer - acquires a larger shared equity property, or rents, in his own name.
• Partner declares herself bankrupt and lets the building society and housing asociation fight over the bones of the property - can this be done in these circumstances and is it a realistic option.

The only good thing about this is that my wife and I get to be first time grandparents of twins!

Advice would be very welcome.

19lottie82

It's not ideal but it looks like the only realistic solution would be for your son and his OH to sleep in the living room while the babies have the bedroom (if the bedroom isn't big enough to accommodate 2 cots) for a couple of years and save save save.

elff

we had a 2yr old when we found out we were preg with twins...... twins were in our room for the first year - buy a big cot so they can share for a few months - and dont buy too much crap .... they need a bouncy chair each thats pretty much it After a few months babies can have the bedroom adults have the living room - our bed was in the living room for over a year - nice throw over it in the day time.

good luck with the twins...... dont believe what everyone tells you

GAH

Admittidly its not ideal, but the best thing to do is stay put and try and overpay mortgage until out of NE, at least they have a roof over their head.

They could move out and rent, but renting is expensive and the shortfall needs to be paid back.

If your son was able to buy, he would get a mortgage for 3x salary so £72,000, then would need at least 10% deposit if not more to get a better rate, solicitor costs, remvoal fees etc.

I wouldn't take on another shared equity property though, more hassle than there worth.

CLAPTON

Well, given her experiences with shared equity housing, it would seem perverse to consider another shared equity scheme

They need to work out a proper budget for the post children era.

It's very worrying that you say they no savings (and some debt?) when both have been working; how much can they realistically afford for housing costs when the twins arrive?

Although I wouldn't advocate bankruptcy it might be a bargaining weapon to persuade the housing association to allow sub letting
However, without knowing the rules and regs of the shared equity deal it's alittle difficult to know how to proceed

Illberich

That's a really tough one...

Afraid I can't think of anything other than sticking it out as other people have suggested.

Although they are having twins they don't necessarily NEED much more room than 1 baby (in the short-term), and instead of relatives spending money on loads of clothes and toys that they will quickly grow out of why not ask for money! They can then use some of the money to buy the toys & clothes they NEED and then put the rest towards a 'moving house' fund.

But they should definitely put a plan together immediately of how they intend to get out of the flat (saving enough to cover neg equ and put a deposit down on somewhere else), so that by the time the twins are big enough to NEED more space they are in a position to move.

Good luck - everything will be fine

xylophone

As others have said, stick it out in the flat and save as much as possible.
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/Expectingorbringingupchildren/index.htm
http://www.tamba.org.uk/
Babies grow out of clothes with terrifying speed so don't turn up your nose at second hand!

BitterAndTwisted

Has anyone looked into the consequences of going BR when they "own" a shared-equity property? Are they the same with a normal mortgage?

As has already been advised, they will not be in dire need of another bedroom until Christmas at the very earliest, most likely quite a lot longer.

The time for panicing and hand-wringing is not now.

bluebell_woods

I would definitely recommend staying in the flat for the time being. You haven't said what kind of flat it is - ie is it ground floor, is there a garden, room for a storage shed, etc? Clear out every bit of clutter and try to put up extra storage shelving before the babies arrive.

It's going to be really hard to pay of the NE on your son's salary, and with all the new pressures of having baby twins. Maybe your son's partner could look around at some of the extra ways she could make money via her new mums networks and make a start while she's pregnant, eg Phoenix cards, Avon, Body shop. New mums like to support each other at this early stage, and I'm sure her existing friends would support as well. Depends where your son's partner lives of course, but the maternity hospitals and GP surgeries are usually holding post natal groups for new mums.

We managed to go for about two years before buying any new clothes for our first baby by using second hand stuff. If your son and partner go on to freecycle they could start requesting second hand baby clothes now, and also equipment. Also if the babies receive gifts of money I would suggest putting as much of it away as possible into savings - and don't be tempted to spend it on toys, clothes etc. This could be a real boost towards saving for the whole family.

We also lived in a small place but shared our bedroom with the baby for ages. I realize twins could be more tricky, but in fact the cosiness could be a really good foundation for close family life. My daughter still says she loves our little house, that we moved from when she was three. The most important thing is that your daughter's partner knows you're supportive of her situation.

elff

I would like to add FREECYCLE we got so much of the need items for babies - Cots we got off EBAY very cheap new mattress from M&P (which they only delivered one....then sent the twins a lovley box full of toys and 'bits' to appoligise for only sending 1 mattress

Clothes - babies are in them for such a short time second hand is fine - new outfit for comming home is all thats needed.

Also play up the positives of BF babies..... ours were badly toungue tied and couldnt latch on... Formula for twins works out around £80-90 A MONTH - you get NO help with this!!

BitterAndTwisted

NINETY pounds a MONTH? :eek:

I had no idea that formula was so expensive. That's an obscene amount of money