Rental Income

terese

Hello all, its been a while since I've posted, a matter a fact this forum helped a lot when I was buying my house.

I managed to purchase my home in 2007. From 2010 I've in between jobs and right now I'm not working. I've decided to right my property and the bank is saying that I need to pay £100 extra each month because I am getting a rental income.

The problem is that the amount that I rent the house for is less than the mortgage payment and i have to literally borrower from families each month to top up the payment. For me to add another £100 is going to drive me into bankruptcy while I am out there looking for work and sleeping on my sister's couch.

What to do

princeofpounds

Hi there,

I'm sorry to hear this, but this is the reality of the choice you made to become a house owner and a landlord.

How much is the house worth and what is the mortgage for?

The standard answers here are:

a) Sell it
b) Earn the money to meet the shortfall
c) or go bankrupt.

There is a certain amount of 'tough luck' you will need to deal with.

a) is probably the best option. Not only will it stop the squeeze on your cashflow, but it will free you from the financial risk if interest rates were to rise or house prices fall further (which would make bankruptcy inevitable).

Having said that, there are some other things you could potentially do to at least avoid c) for the time being.

- Did you look into the possibility of receiving SMI? http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/On_a_low_income/DG_180321
- 100 a month is not a huge amount of money, is there not any casual work you could do? Did you visit the 'up my income' board?
- Did you tell the mortgage company that you are struggling with the mortgage? They have an obligation to at least consider lowering the burden. They may well not be very helpful (and why should they be?) but you never know, sometimes they will offer repayment hoildays if you are on a repayment mortgage so you just service the interest to give you a couple of months breathing room and so on.

G_M

As pop says above, this is a fact of life with running a letting business. Buy to Let mortgages, or Consent to Let on residential morgages are more expensive (depending on the lender).

You could try shopping around for a cheaper mortgage but I'd not be optimistic.

How are you managing the letting? If you are using an agent, have you considered managing it yourself and saving the 10-15% fee?

More on letting here, but not that will help with your financial shortfall.