x-post - Salary cut in half overnight - Need help!

theoretica

danlovedough wrote: »

I have always been interested in earning as much money as possible

One of the best ways of 'earning' more money is by saving money and putting in the effort to make what you have go further. Just a little mental twist but maybe one which would work for you.

danlovedough

2.5 YEARS LATER -
After my initial post I started to work hard at saving money, and earning more, and have been fortunate enough to move on to a new role and exit the business this month, reducing my business equity, leaving me in a position where I can afford to move into a new house with my family and have an attractive job to start with opportunity to earn significant bonuses, and managed to hold on to equity of 2.5% in the business I started which has been valued this week at £3 Million. Thought it would be good to drop back into this thread and see if anyone has any advice they can offer on my housing situation.

The goal has always been to move to a new property and the houses we are interested in cost in the region of £320k-£350k.

I have some cash and the opportunity to put a significant deposit into a new property and sell my current house, or to pay down 30% of my current mortgage and switch to a buy to let arrangement renting the house out and putting a 30% deposit on a new property and having a mortgage.

Would be interested to hear thoughts on if it would be better to do a buy to let and hold on to the property I currently live in as an asset which can be paid off by tenants over time, or to sell this house and have a bigger deposit to put into a new house?

See below updated SOA. Any thoughts or comments very much appreciated :-)

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 4000
Partners monthly income after tax....... 0
Benefits................................ 100
Other income............................ 100
Total monthly income.................... 4200

Monthly Expense Details
Mortgage................................ 625
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 125
Electricity............................. 80
Gas..................................... 60
Oil..................................... 0
Water rates............................. 50
Telephone (land line)................... 10
Mobile phone............................ 50
TV Licence.............................. 12.37
Satellite/Cable TV...................... 85
Internet Services....................... 25
Groceries etc. ......................... 600
Clothing................................ 100
Petrol/diesel........................... 150
Road tax................................ 30
Car Insurance........................... 50
Car maintenance (including MOT)......... 50
Car parking............................. 20
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 200
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 10
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 75
Haircuts................................ 20
Entertainment........................... 200
Holiday................................. 400
Emergency fund.......................... 50
Total monthly expenses.................. 3097.37


Assets
Cash.................................... 170000
House value (Gross)..................... 145000
Shares and bonds........................ 75000
Car(s).................................. 5000
Other assets............................ 0
Total Assets............................ 395000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 145000...(625)......4.5
Total secured & HP debts...... 145000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Total unsecured debts..........0.........0.........-


Monthly Budget Summary
Total monthly income.................... 4,200
Expenses (including HP & secured debts). 3,097.37
Available for debt repayments........... 1,102.63
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 1,102.63

Personal Balance Sheet Summary
Total assets (things you own)........... 395,000
Total HP & Secured debt................. -145,000
Total Unsecured debt.................... -0
Net Assets.............................. 250,000

theoretica

Do you want to run a rental property? Do you have time to do it well? If you had all the money in the bank at this moment would you use it all as a deposit on one home, use it as a deposit on a home and a rental property or use some as a deposit on a home and some for something else? If you were to buy a rental property how similar would it be to the place you currently own?

The fact you currently own the property is a big emotional complication, but a smaller financial one (just the cost of selling).

danlovedough

Various factors I am considering here:

Circumstance - I am fully aware of what it takes to the start a new business and am lucky to have a window of opportunity over the next 4 weeks when I will not be working to buy and move into a new house. This window may not exist again any time soon, so circumstantially I am keen to move as soon as possible, for my family the timing could not be better , and to move and be settled in before Christmas is very appealing.

Impatience / being fully self aware of my own lack of discipline - I am keen to move fast, I have funds, I want to use invest them in property before they end up getting wasted elsewhere.

Residual income - I perceive there to be a chance to get a residual income from renting the property and to have a relatively small mortgage which can be paid off over 15-20 years by renting and will be left with value in the property, or full ownership of the property should I choose to sell in the future. I also expect the value of the property to rise over time, creating additional value. (it's in a desirable area).

The idea would be to do some basic repairs and let via an agent which I imagine, once the property is let will not take up too much of my time and if 30%+ of the house value is cleared then the rent will more than cover the mortgage payments and possibly provide a small income...

I do think it could take more time to sell, which could delay moving if I am unable to get an additional mortgage for a new house without selling the current house.

I am not against the idea of trying to sell fast, or selling in the next 1-5 years to release equity if necessary....

What I am still unsure of is would it be just as good to sell fast and move on or hold on to the value of the house. Maybe there is a bit of sentimental value there as well, but not much. I just want to do the most financially secure thing, whilst balancing that with being able to move house fast, which ultimately is the most important thing to me. I am willing to sacrifice some financial value if it means we can move house fast because life is too short and we have truly grown out of our current house.

I have carpets being fitted next week and a skip / storage ready to clear out and tidy up the house in the next fortnight. Would also get someone in to do some basic property maintenance before selling / renting.

The other factor I am considering is that I could rent the property as part furnished due to not necessarily needing / wanting to take all appliances & furniture with us.

danlovedough

The problem also is that I have no equity in the current house, just an interest only mortgage for the full value of the house. Renting seems easier than selling...

mrssjs

What is the £100 in "benefits"?

cms-help

danlovedough wrote: »

Monthly Income Details
Monthly income after tax................ 4000
Partners monthly income after tax....... 0
Benefits................................ 100
Other income............................ 100
Total monthly income.................... 4200

How on earth do you get benefits on that salary? DH doesn't take home that much and we're not entitled to a penny!

mrssjs

cms-help wrote: »

danlovedough wrote: »

Monthly Income Details
Monthly income after tax................ 4000
Partners monthly income after tax....... 0
Benefits................................ 100
Other income............................ 100
Total monthly income.................... 4200

How on earth do you get benefits on that salary? DH doesn't take home that much and we're not entitled to a penny!

I'm thinking it's child benefit, but salary over £60k should mean OP should opt-out.

cms-help

mrssjs wrote: »

cms-help wrote: »

I'm thinking it's child benefit, but salary over £60k should mean OP should opt-out.

If it is they will also need to pay back what has been claimed when it shouldn't have been.

Stewart_78

I would have thought selling both cars and getting 1 or 2 cheaper ones would be a good plan. Obviously PAYG on the mobile as and when contracts are up. Your energy and water bills seem mighty high to me. Have a look at usage. £800 a month on groceries is a lot as well. Can your wife not spend time turning fresh produce into food which would save a fortune. Grow a bit of veg or something?

Also cut up all but one of your cards until you have built up an emergency fund and then cut that one up as well.

Good luck with it.