Housing conundrum

Vande

Hi, Please forgive me for posting about a very personal problem to me, but I know you are a lovely lot of people and I don't know who else to ask at the moment. Hopefully any help you give might help others aswell at some point!

I live and work in Oxford, England and last May bought a 2-bedroom flat in Hastings with a buy-to-let mortgage as a way to get on the property ladder after years of saving for somewhere to live but not having anything to show for it. I couldn't afford anything in Oxford as it is the 2nd most expensive place in England, after London. Anyway I have been renting the flat out since August and and paying the mortgage. The mortgage is £334 pcm and the rent is £420 pcm.

The problem is I still have nowhere to live myself! Plus the flat is costing more than I thought as I have to pay ground rent etc and I have already had bills totalling a phenomenal £1200 for that.

I am staying with my nan temporarily until I can sort something out, and it is driving me absolutely insane!!! She never stops whinging and calling me, and I never get any privacy. I feel like I have lost nearly 3 years of my life already.

So what I am looking for is any suggestions of what I can do to get out of this place and get somewhere to live. I could sell the flat, and I also have an additional £7000 saved in an ISA. My wages are low though, at only about 14000 pa.

Thank you SO much for ANY suggestions anyone may have at all!!! My sanity depends on it :-)

herbiesjp

Depending on the mortgage and the value fo the property, you might be able to get some equity out of the Oxford property, to increase the deposit you put down on yours - that is if you want to keep the Oxford property - what figures are we looking at here?

Do you have any penalties on your BTL mortgage?

What property prices are you looking at buying?

Vande

Hi, Sorry I probably haven't explained it all properly, but I don't have an Oxford property, just the Hastings one - it is an Oxford one I need to live in!

No, no penalties, I have managed to pay it so far with no defaults.

A couple of other notes to add - the deposit I originally put down on the Hastings flat was about £21000 and last time a valuation was done the property had gained in value since I bought it.

meanmachine_2

Vande wrote:

Hi, Sorry I probably haven't explained it all properly, but I don't have an Oxford property, just the Hastings one - it is an Oxford one I need to live in!

No, no penalties, I have managed to pay it so far with no defaults.

A couple of other notes to add - the deposit I originally put down on the Hastings flat was about £21000 and last time a valuation was done the property had gained in value since I bought it.

Sorry, I don't understand where all your money is coming from. Don't mean to be nosey, but you only earn 14K, and yet you have savings of 7K and put down a deposit of 21K!!! You must be the world's greatest saver!

By my reckoning, with a salary of 14K, you could only have got a mortgage for around 50K maximum, plus 21K, making a grand total of 71K. What is the property in Hastings, a beach hut?!

The fact is, with below average wages, you really can't afford a place in Oxford. There's no getting around that. Even if your Hastings property rises in value, it's more than likely that Oxford prices will also rise - if not more, as it's a desirable area.

I don't know why you thought that taking on a BTL would make you money. At best, it's a nest egg for when you retire. At worst, it's an asset without a guaranteed return and a pain in the neck.

You could try selling it. That would give you, say, £10K profit. Add that to your 21K, plus your 7K and you have 38K (estimate) to put down for a place in Oxford (less solicitors and other fees). Add to that a mortgage of 50K, say, - does that give you enough for a place in Oxford? Doubtful.

My advice is to sell the property. Put the equity into a high interest account. Continue to save. Be nice to your gran. Climb the career ladder, then in 5 years' time you might be able to afford somewhere in your desired location.

Does that help?

herbiesjp

HI Vande - apologies - I read the post too quickly and got the properties the wrong way round.

Still need to know the other figures though to see if it would work for you.

Vande

Haha you make it sound like I am a bank robber or something! The simple explanantion is I had a higher paying job with accomodation included before the one I have now which meant I was able to save hard and didn't have time to spend money because of the long hours I had to put in. I had to leave that job though and now have had the one I mentioned for the 3 years. The place in Hastings in a 2-bedroom flat, and yes I did have a job getting a mortgage! A lot of companies said no before a broker finally got me the one yes. But I have justified that company's gamble by keeping up my payments through wages and the income from my tenants. My mortgage company, and I suspect others, don't keep to the 4 x income threshold when dealing with Buy-to-Let because of the probably income from tenants.

Anyway to get back on track herbiesjp what other figures do you need?

If I was able to get a place in the Oxford area I could rent out a room to generate some income as there is always big demands for rooms in this area. Otherwise I can see me having to do what my brother and sister did and get a part-buy part-rent place, which would be a shame as some of my money, which already isn't enough, would be going on rent.

meanmachine_2

I don't think there's an answer to your problem at the moment.

You could sell the Hastings flat and downsize to a one bed in Oxford. Would that work?

The problem is, your equity and savings (excepting your ISA) are tied up in bricks and mortar, meaning that, were you to buy a second property, you'd have to start from scratch, with a £7K deposit and a new mortgage based on your current salary. That wouldn't buy you a garage in Oxford, I wouldn't have thought.

You either stay with nan, try to save (using the rent money to help you with this), and when you've saved enough consolidate everything, sell the Hastings property and buy in Oxford.

But you need a few factors to coincide - you need a promotion of some kind, and you need to sell Hastings at the peak of the market, buy in Oxford at the bottom of the market (if there is one in the next 3-5 years).

It's all about timing. Others on this board know my feelings on the housing market, that it's a massive bubble waiting to burst. If you take that view, you should definitely sell now and waiting for the crash.

But it's a gamble as there's no guarantee it'll happen (given the British public's seemingly insatiable appetite for property!)

EdInvestor

Hi Vande,

Perhaps I'm missing something, but what's stopping you from going out and renting yourself a pad (room/studio/flat) in Oxford?

You've already got yourself "on the property ladder" in Hastings and the investment is more or less paying its way, you don't need to spend your salary on it, the tenants are paying the mortgage. So you can afford to rent!

Can't you?

Vande

Thank you meanmachine, yes maybe I should sell the flat now, but on the other hand as Editor says I could also rent and keep it. It's difficult. One of the worst things in the leasehold money, which like I said has already been £1200 in just under a year. And with renting it's going to cost me even more than living with my nan where I buy all the food and groceries for us and visitors and pay towards utilities. But then my emotional health would be better and I'd have some freedom . . .

Still very much a conundrum, but I am very grateful to those that are making suggestions!

EdInvestor

Since you're used to long hours, what about looking for a part-time job and using the money from it to pay the rent on your own place, Vande? This may put you back into an approximation of where you were before, but with the significant improvement that you now have a self-funding long term property investment

I applaud your attitude to money and saving/investing, but it sounds as though you could do with having a life as well

The other possibility would be to move to Hastings, live in the flat yourself and rent out the 2nd bedroom to a lodger to help cover the mortgage. That would obviously depend on job opportunities in Hastings: salaries would probably be lower there, but you could perhaps lower costs by switching to an ordinary non-BTL mortgage. I'd have thought you should always keep this possibility in reserve anyway.

Vande

Some excellent further ideas to consider there, thank you Editor :-) Yes you are right - getting my life back is very important ;-)