Advice needed... sell then rent / buy? Dont sell? Confused :(

cfcboy

Hey all, in a bit of a muddle on what i should do, wondering if anyone could point me in right direction...

So bottom line... im looking to sell my 3 bed apartment (2 story) in the South East (just outside of Windsor/Ascot). I currently have a mortgage of £158k (purchased for £175k) which is on interest only against the libor rate +3% (approx £500 a month).

Now as this is a leasehold, above 2 shops in a block of 4 flats (each with large secluded balcony) i think im going to hit some issues with the lease.... its down to 74 years. I was quoted £10k to renew this for 99 years but not too sure what to do

Before i go about explaining my options let me state my finances.

Income (pm) - £4100

Outgoing (loans, cc) - £1200 (Outstanding balance of £19k, due to finish all in 18 months max)

Utility Bills / food, travel, everything else - £1500

Total remaining pm - £1300

After all the above I have a poor credit rating according to both the big two.. i think its due to the amount of credit i have

So i think ive got three options so bear with me:

* Sell then rent - Sell my current property without letting the leasehold getting more out of date (adding cost). Ive been quoted £210k for my property so thats take home of roughly £45k after fees etc. Take say £15k and pay off debts (which will raise the credit score?). I could get a short min lease of 6 to 12 months whilst im looking for ideal property, credit rating should have bit ofr time to build up in that time.

* Sell then buy - So sell using above details using £40k as deposit but still have debts open? Would be looking for mortgage of around £230k so need a good lump of it to even get my foot in the door of a half decent rate. Credit rating is poor so will still have this aginst me and with the debts still in place doesnt make me an ideal person to lend to!

* Sit tight - Dont do anything for 12 months but look to pay off as much of the debts as i possibly can. The longer i leave it though the more the leasehold goes down and looks more unattractive to buyers and lenders. A one year gap coul dbe as much as £3k extra to extend lease.

Really been umming and ahhing of late and cant seem to make a decent decision. Just wondering if anyone could point me in the right place? Thanks in advance

Wh05apk

Certainly sounds confusing to me, what are you trying to achieve?


It doesn't look like you are struggling, so you are not being forced into a sale.


The lease would be worth extending, as soon it will start to restrict the number of lenders available, and impact the value.


What is the current value?

cfcboy

sorry, it is a tad confusing but shouldnt be (its the way i tell them )

So the place we live in is worth approx £210k but im a bit worried the lease is going to impact the buyers (as you stated). Ive been quoted £10k to extend the leasehold but i dont have that anywhere neither can i get any credit due to the amount i already have and the poor credit rating (due the £19k outstanding).

The place we live in is a good sized 3 bed apartment (upstairs downstairs) but the misses is really getting on my back to get somewhere with a garden... this shouldnt be the basis to move but im really keen to get out of this place and finally get a house.

Im thinking i should just sell up, pay my debts then rent but not sure if im chucking my cash away when id be better spent staying put and looking to pay off the debts for 12 months.

Also wondering if its possible to extend the lease at time of sale? So i put in place a contract to extend once the contracts have been exchanged?

Thrugelmir

Sit tight.

Address your debts.

Switch to a repayment mortgage

Extend the lease

Save a deposit

Sell

Time will help restore your credit rating.

That's my personal view.

cattie

First of all the lease will affect the price greatly unless you start the extending process before getting the place sold. And yes you can start the process before any sale actually completes. Many vendors take this route when selling a short leasehold property as it's often the only way to encourage buyers other than cash purchasers looking for a cheap deal.

Also, as you state the flat is above shops, this could be an issue too with some mortgage lenders as many just don't like properties that are above retail premises.

With the way the market is at the moment in London & SE I'd be reluctant to sell & then sit back before buying in case I ended up being priced out & forced to keep renting till goodness knows when.

getmore4less

£4100 net is a salary (joint/single) range of £64k-£72k

£19k £1200pm over 18 months is an average rate of 17%.

The amount of debt is not that big an issue on the salaries more likely something else, any missed/late payments?

Get all the reports and fix any issues.

How much do you really have left every month?

if you really have £1300 free you could clear the debt in 9 months probably down to 8 if you fixed the rates even with just £800 extra leaving £500pm spends only 10 months.

that frees up another £1200pm by end of year 2 you have up to £35000 saved up.

Have you really fixed the issues that got you in debt and have the 1300pm free.

if not then a SOA and a trip to the debtfreewanabee board is in order to understand your finances better, moving to buy will just increase the debt not reduce it.

Currently it costs you £500pm + £270pm(reducing and only 18 months) interest on the debts

Can you rent for less than £770 if not cheaper to stay put and pay down the debt