House situation - Advice needed

Aelo

Good afternoon everyone,

Firstly I would like to say that I apprecaite any advice that any of you can give regarding the below, as right now, me and my partner are a little stuck!

Anyway ... enough of the mushiness and on to the topic at hand!

Both me and my partner live in an house which she owns. It's been on the housing market for over 15months with hardly any interest now. To cut a very long story short, we really want to get out and right now we have come up with 2 prospects, this is where I would like other peoples advice on, as we are both new to this really.

Info: We have no real movement on the house selling price at the moment, as we have no equity (she brought it 5 years go and due to the recession, it's all kinda gone down hill from there).

1. Pay a large amount off the mortgage, carry on paying off the mortgage (including extra) to get the value even more down and lower the price on the house (which we have done already) even more to hopefully get more interest in the property, this will mean we'll lose money.

2. Get the house ready (including buying the lease) so we can change our mortgage to a Buy-To-Let, getting an Managed service from an Letting Agency to Let the property out, so we can move. This will also mean we'll lose money, especially in the short term (the lease is £4,000 alone). The only major glitch on this option is that my partner does not really want anything to do with the house, but she is willing to take it in to account anyway.

We've been to see my partners Mortgage adviser, she is with a Bank and she believes both are possible.

Our two main concerns are that once our current house is dealt with, we still need an amount for a deposit for a new house (we are looking to upgrade to a bigger house), as well as the whole "we'll lose a lot of money either way" kinda thing.

Our current house is a 1 bedroom starter home.

I've tried to keep the post short (or shorter than what I first started) but this included taking out certain information. Please let me know if you require further information and i'll try my best to add more.

As you can imagine, we're a little stressed and new to the whole situation and a little stuck in what the best thing to do -- if you have better advice than the 2 we've come up with above, then by all means please share.

Thanks.
Aelo

19lottie82

First off, if it has been on the market for 15 months, then I'm 99% sure it's overpriced (unless it's just a cesspit inside).

If you post the rightmove link, we can compare it to recent sales in your area and offer an objective viewpoint if there are other reasons why it might not be selling.

I think you know yourself what the most sensible option is out of the 2 scenarios that you have suggested. And besides, you do know that the minimum equity for a BTL mortgage is 25%?

Do you really want to be a Landlord? Can you afford to pay 2 mortgages (or 1 mortgage and 1 lot of rent) if difficulties arise?

My advice would be if you HAVE to leave (do you have to?), reduce the price accordingly. Your negative equity isn't anyone else problem, I'm afraid.

OR, and the most sensible option..... Stay put and throw everything you can at the mortgage for as long as you can.

G_M

1) Have you got savings? If so, reduce the price tofind a buyer and use the savings to make up the shortfall needed topay off the mortgage. This is quicker than over-paying the mortgage before you sell.

2) Do the maths. Get a spreadsheet and do lots of research. What monthly rent can you get? Multiply by 10 (NOT 12) for annual income. Then add in ALL the costs. So howmuch money willyou be making/losing if you rent?

Read:

New Landlords (information for new or prospective landlords)

But frankly you don't sound keen to be landlords.....

ValHaller

Aelo wrote: »

1. Pay a large amount off the mortgage, carry on paying off the mortgage (including extra) to get the value even more down and lower the price on the house (which we have done already) even more to hopefully get more interest in the property, this will mean we'll lose money.

1 is the best option - although you are putting the cart before the horse.

Doing option 1 will not mean that you will lose money - it is owning the house which has lost you the money already. Paying down some of the debt is your way out

Aelo

Thanks all,

EDIT: tried to add a link for Rightmove but it won't allow me as i'm a new member. Only thing I can give is this:
property-for-sale/property-37167416.html

Do we 'really' need to move -- no, but we really want to (I know that is sdifferent).

We have done the maths and can confirm, that, if needed, we can afford both mortgages. We've also done the maths on a spreadsheet for the letting situation, from the price we can rent, including all fees and insurance etc. we would be losing aprox £10 per month.

I know that the negative is no one else problem really and we can afford the hit, really, but obviously we didn't want to if we could help it. If we did lower the price of the house, wouldn't it be better to pay off a lump sum off the house anyway ? Only reason why i'm asking is because the amount per month will go down and we'll just still pay the same amount (so we pay more off again etc.).

I've read through all the response and take on board all your advice,

Thanks for your assistance.

19lottie82

http://www.rightmove.co.uk/property-for-sale/property-37167416.html

Is it this one?

On first inspection the photos could be improved a bit.

The bedroom looks sparse and a little bit depressing, the bed isn't made very neatly. I know it's small but try adding a few splashes of colour and some nice bed clothes, maybe a picture on the wall? Same with the bathroom.

Also the picture of the garden is a mess. Would you want to sit out there? Get it tidied and take a new photo.

Sorry to sound harsh but I'm sure you want an honest opinion!

And again, do you have the £ to make up the 25% equity that is required for a BTL mortgage? IF you do would it not be more sensible just to use it tog et rid of the house altogether?

You say you are looking for o/o £83k, but how much are you expecting?
A quick search of places within a 1 mile radius show this 2 bed for FP £89k

http://www.rightmove.co.uk/property-for-sale/property-40100144.html

A brand new build apt for £93 with all furnishings and appliances

http://www.rightmove.co.uk/new-homes-for-sale/property-37477363.html?premiumA=true

A 2 bed house for FP £85k

http://www.rightmove.co.uk/property-for-sale/property-38363560.html

A 2 bed flat for £80k FP, with garden

http://www.rightmove.co.uk/property-for-sale/property-39605956.html?premiumA=true

a 1 bed bungalow for offers in the region of £77

http://www.rightmove.co.uk/property-for-sale/property-32878288.html

Yours doesn't look too competitive I'm afraid.

Out,_Vile_Jelly

I nearly rented a near identical property (in London). I imagine 1 bed houses appeal to a fairly small market- more expensive than a flat, but without significantly extra room. The stairs make it impractical for a couple with a baby, even if they could fit a cot in the bedroom.

If you can tidy up the garden (maybe some cheap outdoor furniture to emphasise that it's a useable space) and put a small shed in for extra storage that would help I think.

Aelo

sorry I forgot to answer the BTL part, yes we can afford the 25%, barely.

Don't get me wrong, we could just lower the house till it's a stupid price and someone will nab a "bargain" but we will still need some money for a deposit for our next house (this is my main concern).

No need to apologise for sounding harsh, that is why I came -- for an honest opinion. The house was bare for the pictures, that is what the estate agent asked for though!

The garden IS a mess in those photos, if i'm honest, it's not too much better now, we've done some weeding etc. as much as I would love to just get completely rid of the bushes and just turf the thing ... we can't. Leasehold property that states we have to keep everything as is, which is unfortunate.

I doubt anyone would sit out there anyway, as it's not really a back garden, it's a side garden, can't even put a fence up, which I would do if possible.

But yeah, I think from reading all of the above, the best option is just to lower the price, take the hit and pay the excess amount later on once it's sold.

We'll also look in to a little more garden tidying, then get some new photos done.

Thanks all.

RAS

OK

Looking at streetview and googlemaps, is there some sort of footpath running in front of the front door? Where does it go to?

The garden does not look private; how does one get to it from the house?

There are a lot of trees and a derelict plot behind you? What is that about?

I have heard of de-personalising a property but this has no personality at all; looks like a rental property. Nice bedding, something on the walls, a kettle, a couple of nice towels. A little colour?

Where do you eat? Whre do you store anything like vacumn?

The space under the stairs is a complete waste of space.

Aelo

RAS wrote: »

OK

Looking at streetview and googlemaps, is there some sort of footpath running in front of the front door? Where does it go to?

The garden does not look private; how does one get to it from the house?

There are a lot of trees and a derelict plot behind you? What is that about?

I have heard of de-personalising a property but this has no personality at all; looks like a rental property. Nice bedding, something on the walls, a kettle, a couple of nice towels. A little colour?

Where do you eat? Whre do you store anything like vacumn?

The space under the stairs is a complete waste of space.

Yes that is an footpath, it goes past our house through to the road / another carpark (where a Pub used to be, which has now been bulldozed)

It's not a private garden, as such, it's a side garden (mentioned in my above post) -- you come out of the front door, turn left and it's there.

All the trees are part of 2 house in front of us, there is also a section on the footpath which is privately owned land, it's not Council.

---

EDIT: When we first put the house on the market we were valued @ £87, since then we have dropped the house price twice.

But After checking those properties out, I see that our estate agent was very wrong, we have had another evaluation done recently at a figure of £75 - £79 to, as they called it, get more interest.

When I get home tonight i'll need to discuss with my partner but it looks as if our two choices are now either stay and pay off as much as possible or drop the price and take the hit and then worry about a deposit afterwards.

19lottie82

Aelo wrote: »

Don't get me wrong, we could just lower the house till it's a stupid price and someone will nab a "bargain" but we will still need some money for a deposit for our next house (this is my main concern).

It's not a "stupid" price if it sells, it's a realistic one.
Just because you need £ for a deposit, doesn't make your house worth anymore I'm afraid.

Again, if I were in your position, I would throw everything you can at the mortgage and re assess the situation in 2 years or so.