New Build Disaster - help needed!

silvercar

Doom_Lord wrote:

Yes you might have to subsidise it and yes you would be commiting mortgage fraud (seems to be the norm these days anyway) but at least you'll have fixed costs over the next few years.

Not fraud if you obtained the mortgage to live in the property, just a breach of the mortgage conditions, civil matter not criminal.

Bubble_Pricker wrote:

What is the difference between renting a flat and paying rent and renting the money and paying interest?

The security of living in your own home, knowing that you won't be turfed out at 2 months notice. Knowing that you will have a home to live in in retirement without having to find rent money.

keeperbear

Bubble_Pricker wrote: »

And I am sick of this silly argument for buying.

Instead of lining the landlord's pockets, you have lined the pockets of the building company and you are still lining the pockets of the Halifax. What is the difference between renting a flat and paying rent and renting the money and paying interest?

Property is a depreciating asset, so its real value will naturally decline, not increase. This natural picture has been distorted by nominal house price inflation of the past decade.

Why is this a silly argument for buying rather than renting? I am sure that many people who have benefited from HPI over the last ten years would totally disagree with you.

As for your comment on property depreciating, your argument is too simplistic. It depends on what you are valuing. If it is a freehold property, an important part of the valuation is the very land it sits on, rather than just the bricks and mortar of the property itself. Unless it becomes polluted, the long term value of freehold land will never "naturally decline" as land is no longer made. Even ownership of a leasehold flat may grant you with a share of the freehold land it sits on, so rights to the land may be as valuable as the infrastructure you live in.

For example, my leasehold flat was built in 1978, and according to your argument, it should naturally declining in value as the fabric of the estate ages. Fair enough argument, but ownership of the flat grants ownership of 1/520th of the freehold rights to the riverside land its built on. Thus, over time, the valuation of a "property" comes as much from the very land its built on, rather the bricks and mortar its built from.

keeperbear

Doom_Lord wrote: »

Also if your "Mortgage fraud" is found out but you have tennants in your flat, it is still in negative equity and your making all the mortgage payments the bank may be more inclinded to give you "consent to let" instead of repossesion.

Regardless of the fraud make sure you sort out you Tax situation because Tax office will not be so forgiving.

As a number of other posters have pointed out, it is NOT mortgage fraud as the mortgage already exists.

Turnbull2000

Perhaps Bubble Pricker should have stated that renting is a better solution in today's climate. Yes, long term I agree that buying is the avenue we all strive for unless the UK adopts European tenancy laws and culture. But under the current climate of uncertainty, soaring inflation in China (over 20%) and signs of credit tightening in the US, I believe renting would have been a more sensible choice for the time being.

I am sure that many people who have benefited from HPI over the last ten years would totally disagree with you.

And that is possibly one of the most preposterous arguments put forward in this thread. Yes, I'm sure that the banks, EA's and building societies would disagree.

Doom_Lord

silvercar wrote: »

Not fraud if you obtained the mortgage to live in the property, just a breach of the mortgage conditions, civil matter not criminal.

Well thats alright then :rolleyes: I think that we can all agree that property will go up in the long term, but can this person stay solvent until their property recovers? Could be a 5 to 10 stretch.

lynzpower

why has this thread turned into a HPCarama?

at the enfd of the day the Op has come asking advice, cant we just give her that without raking over all the old arguments over and over

Doom_Lord

lynzpower wrote: »

why has this thread turned into a HPCarama?

at the end of the day the Op has come asking advice, cant we just give her that without raking over all the old arguments over and over

I did give some advice cut your losses or battern down the hatches in case the situation gets worse.

eek

Well if you want to be clear cut.

Sell. Imagine the pain of trying to pay a 7.75 or 8.25% monthly repayment on a property where the rent fails to cover the interest on the current 4.69% monthly repayment.

Its the worst case scenerio but I fear that your chances of re-mortgaging to a bearable rate a year down the line won't be that great.

Catblue

I would also take the hit, sell up and rent nearer your family for a while. Use this as an opportunity to save up some cash and to research your next house purchase thoroughly.

The fact is that your family need you right now and they are far more important than any apartment will ever be.

You simply do not need the additional stress of BTL mortgages, tenants etc. at this worrying time. God forbid, but you also need to consider what will happen if your own circumstances change for the worse - illness or even divorce, both of these more likely if you put yourselves under a terrible financial burden.

Take some time out and prioritise your family and your husband for a while. Hopefully your dad will soon be on the mend, your circumstances will have changed for the better, and you can start again soon.

You'll be older, sure, but also wiser.

RedTomato

It's a long shot but you might possibly just have a case against the advisor - have a search around the website of the financial ombudsman. His advice sounds like tosh. Banks have never been so willing to lend money on property as during the past 5 years so if a valuation is coming up short this should ring serious alarm bells and any advisor worth their salt should have told you that.

As for what to do now, really it's going to depend on your attitude towards risk and other quality of life issues. The sort of questions I'd ask myself would be...

If I sell now because of my father will my OH resent me for this? Will it damage our relationship?

How draining is the commute to Essex? How long is it likely that father will need care?

Renting out and buying elsewhere is doubtless a risky strategy - what's our attitude to risk as a couple? Will we survive the strain of paying two mortages, especially if the rental property is empty or I want to take time off work to have a baby?

Personally, I'm quite risk averse so I'd rather limit losses. I'd also agree with those who say that currently, renting is not dead money. If renting is cheaper than buying and you save as much as possible while renting and spread it over a few investments in different risk categories you will almost certainly keep up with the housing market outside prime central London (which Feltham, famous for its young offenders institution, I'm afraid is not).

Also, my experience of owning a modern flat built in the 70's is that service charges increase a lot after the first few years of a new build's life and prices do not keep up with period property.

Good luck and I hope your dad does OK.