Remortgage Advice for not very bright me

marinamak

Hello everyone. I hope someone can help in a language I understand. 7 years ago (was richer then) I put down £100k on a property worth £322k. For the first 3 years I paid interest only (850 e month) and the past 4 have been paying £1360 (interest and capital). I now owe £199000.
I am now a lot less rich, with accumulated debts so would like to borrow £40k to pay these off.
What should I do?
Also, an estate agent friend values the property today at £700k

Thank you !

marinamak

Oh. And I am stuck in current mortgage till june next year. I can't afford it.

GMS

What is your income?

Dave_Ham

You also need to find out what the Early Redemption Charge will be if you come out early.

Not paying this may be false economy if you trash your credit file in the meantime if genuinely unable to pay..

Good luck

marinamak

Hello! My income is pretty much 0 at the moment as i am running a start up company that has recently done badly.

GMS

No income means pretty much no options.

Is the business improving?

Could you sell and downsize?

JimmyTheWig

I agree with GMS about selling.
I don't understand how the property price could have doubled in the last 7 years, but even if we assume you could get £600k for it now that would still give you £400k equity after paying off the mortgage. Take off £40k to pay off your debts and another £20k for moving costs leavs you with £340k to buy somewhere else outright. That should buy you somewhere decent pretty much anywhere in the country.

marinamak

Business is improving, yes. I don't want to move anywhere as i like where i am. The value of it has increased as it's in a part of london that has seen those kind of price growth. Another reason to stay!

GMS

I don't mean to sound disrespectful but if you can't pay the mortgage then you can't stay. If you can't service your unsecured debts then you could end up with defaults, CCJ's, charging orders and even bankruptcy which would risk your property anyway.

There is a slim possibility of a secured loan to repay the debts but this would most likely be a high rate short term solution.

Give serious thought to selling as it would allow you to make a fresh start.

Dave_Ham

AS GMS rightly says, with that amount of perceived equity there is likely to be someone who will lend on silly rates although you do not want to go down this route surely as one hell of a gamble.

What about achieving consent to let on the property, renting out until the business starts to pay for itself and then move back in?

Rent somewhere cheaper or stay with family for a year could save all of your issues in one go...

marinamak

That is an option. Having spoke with my bank (HSBC) it seems i can switch to interest only but it would incur a £2600 early repayment charge.