Post Bankruptcy help and advice needed

Mrsh182

Hi, thanks for reading!


I am looking for some advice regarding our current financial situation. In October my husband and I went bankrupt. They did not take our house as it is in negative equity by about £5,000 and at some point soon we will probably try and by back the interest (well my mum will).


We have three children and our house is quite small. Our children are 4, 2 and 8 months. The house is fine for now but as the children get older we would really like to move as our bedrooms are tiny.


My Grandfather has approached me recently and basically said that if we get ourselves on the right path then in a couple of years they may be able help us out to the tune of around £10000- £15000 but this would have to go towards building a more secure future for us and our children.


We currently pay interest only on our mortgage and this is a 'for the life of the mortgage' arrangement. We only have 11 years left on our current deal and we would struggle to extend this as my father is guarantor and he will be at retirement age.


I am totally at a loss as to what to do to secure a better future for ourselves and ensure our children don't lose their home or even better that we may be able to one day move to somewhere bigger.


Once we are out of the bankruptcy in October I am hopeful that we will be able to start paying an extra amount off the mortgage each month - perhaps an extra £300. If we do this for 8 years even this is still only be 28800 paid off (plus perhaps the extra from my grandparents) - would we even be able to remortgage our current property? My husband and I are both self employed and currently earn around £30000 between us (I only work a few hours a week). Once the children are all at school I could of course look for more work.


Could we use the money from my Grandparents go extend in to the loft - (my husband could do most of the work so we could probably do it for the £15k, would this increase the value of our house thus having the same effect as paying an amount off the mortgage or would this be a stupid thing to do when we are not paying anything off? I am thinking this would be we would never need to leave this house you see.


I'm so confused, I want to know what I can be doing over the next few years to build a better life for my family - can anyone help?


Thanks xx

fiveyearplan

Converting the loft could increase the value of the home. That would either give you the extra room you need or give you more towards your next home. Paying off an extra £300 per month would have far more an effect than just decreasing your mortgage by the amount you say as you will in effect be paying that off the capital which would reduce your interest each month meaning your mortgage is reduced by even more. There is a calculator (on this site I think ) that would show you what results paying off that amount each month would yield.

How much is your mortgage
How much is your monthly repayment

fiveyearplan

Here it is
http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator

Enter your details in there and you'll be shocked how much a £300 per month overpayment will reduce your mortgage. Please come back on here and tell us the results.

longtermplanner

Try and get the equity buy back sorted asap. Don't think about converting the loft until this is resolved!