Hard decisions - help please

Kessie1

Just looking for opinions really. We're in a bit of a 'situation' property wise.

Jan 2008, we put our house on the market, lots of equity at this point, intending to move to a slightly bigger family house in an area where the schools are good. It wouldn't sell. In July 2009 we released some equity to rent that house on a BTL (or would that be LTB?) and bought a second property, which we have renovated and intended to sell both at a later date to buy the slightly bigger family house.

So that date has come and both are on the market at the moment. Rental property is under offer and survey has been done. Buyer hopes to complete in early March.

First property is in pretty good nick and its a biggish three bed with a huge garden. The street is not somewhere I would like to stay long term but it would be ok for the next five years. The problem is that we have lost £30k in value since July 2009 and we only have £5 left in equity once redemption and EA fees are paid. The mortgage is £61k, value £70k. Its empty now.

Since 2009, we have had another child and the second property is not big enough in the long term (different sex children, only two bed). We've had 16 viewings since November on this house, but the feedback is that its a lovely house (its an old cottage) but the main road and lack of parking are putting people off. One couple have put an offer in (at asking price) but they seem very eccentric (barking in fact). It has retained its value since we bought it as its in a desirable location, but bearing in mind its been renovated, I think it has lost a bit of true value (around £10k). Mortgage is £75, value £110k.

So.... I just wondered if you were in our position what would you do? To sell the BTL property would make us a little better off for now, but it feels like I am 'giving it away'. My DH says the best option would be to sell this house and move into the BTL as this would substantially reduce the mortgage overall, but we can't pay both mortgages while we are waiting for this to sell. We've discussed renting the cottage out and moving back to the BTL, but neither EAs were wildly keen, possibly as they know they're losing a potential sale? We did have savings, but its all been eaten up in the last three years between dodgy tenants not paying rent and car trouble. There's only so many emergencies your emergency funds can stretch to! Add a 2nd child and maternity leave into the mix and well you can imagine... I'm back to work now and being fairly disciplined with money.

We know we've made a mistake buying the 2nd property in the first place (believe me my mother in law keeps reminding me ) and I'm very fearful of making another huge one buy selling the first property at such a low price...

Help!

DannyboyMidlands

Since you can't face up to the obvious ie that you need to sell one of these houses (for what it is worth rather than your fantasy valuation), I'd keep buying more until the situation sorts itself out. That'll definitely work.

dawyldthing

even if you sell it for less than you paid (which is likely as 2009 was the peak in house prices) at least one of them will be out of your hair

poppysarah

Kessie1 wrote: »

One couple have put an offer in (at asking price) but they seem very eccentric (barking in fact). It has retained its value since we bought it as its in a desirable location, but bearing in mind its been renovated, I think it has lost a bit of true value (around £10k). Mortgage is £75, value £110k.

So you could sell this and clear some money off your own mortgage?

Kessie1

poppysarah wrote: »

So you could sell this and clear some money off your own mortgage?

Yes that's what my DH says is the most financially sensible. The house with the most equity (House A) needs to be sold and we can go back to having a smaller mortgage within our comfort zone. We probably need to pull out of the sale on the bigger house (House and get House A up at auction. Will re-rent House B if that doesn't work and keep House A on the market until it sells and then we'll move back to House B.

Thanks for letting me think it through

And like I said I know I've made a huge mistake buying the second house and I've had enough of my mother in law reminding me. Wish I was so perfect I could judge others mistakes but I'm not. And I certainly won't be buying a third one Dannyboy.

cottonhead

I would be practicle and live in the 3 bed house as it has enough space for your family and you say you would be Ok there for 5 years. Let the other house go. Its annoying that it didnt work out but sometimes these things dont. At least you will have somewhere large enough to live, 1 mortgage to worry about instead of 2. No hassle of being a landlord etc..... its not your fault the property market didnt work out and doing things that way sounds less stressful and a bit of a clean slate to start saving towards a deposit if you want to move in 5 years. Sometimes you have to take the practical route. We dont want to sell our house but its only 1 bed and we need more space and as we cant afford a deposit for a bigger place we will have to go into rented for a couple of years and save. Not what we wanted but thats they way it happended. Good luck.

Kessie1

cottonhead wrote: »

I would be practicle and live in the 3 bed house as it has enough space for your family and you say you would be Ok there for 5 years. Let the other house go. Its annoying that it didnt work out but sometimes these things dont. At least you will have somewhere large enough to live, 1 mortgage to worry about instead of 2. No hassle of being a landlord etc..... its not your fault the property market didnt work out and doing things that way sounds less stressful and a bit of a clean slate to start saving towards a deposit if you want to move in 5 years. Sometimes you have to take the practical route. We dont want to sell our house but its only 1 bed and we need more space and as we cant afford a deposit for a bigger place we will have to go into rented for a couple of years and save. Not what we wanted but thats they way it happended. Good luck.

Thanks Cottonhead, you're right it will be less stressful and its been one of life's lessons for me. We would be fine in the original house for 5 years or longer if necessary. My oldest is in Year 1, so we don't have to start thinking about secondary school until 2017. Next auction date with our agents is 27 Feb :eek:

Hope that you manage to save for your deposit