Help please - Rent/sell/debt crisis

Woodsylou

Hi.

After a lot of burying my head in debt i have obtained help and i have joined a DMP and started to get things sorted. i am now extremely skint but on the path to a better stable debt free future.

i own a property (a one bedroom flat) which i rent out to tenants. i don't make an profit, the rent pays the mortgage and the service charges/ground rent.

i rent a three bedroom house with my husband and two children. my landlady has informed us she is selling so we need to move. we have been paying a reduced rent (she is extended family) so now we need to find a deposit for a new place plus pay more in rent.

now i don't actually know what to do next. I think i have around £6k profit in my flat. i also own my car out right which is worth around £2.3k.

We can afford to privately rent a flat, it will be tight but doable, but we don't have a deposit. now i could sell my car to get a deposit and fees, but then i don't know how my husband and I would get to work and how i would get my two children to school/childminders/grandparents houses.

i could sell my flat, but that means we give up the hope of ever owning out own property. in the future im hoping there will be enough equity in there to put a deposit down on a family home.

now i know i have to be realistic and do what i need to do and i just wondered if anyone would be able to advise me what's the best next step?

i am trying to get an appointment with the CAB but can't get through. I am open to all suggestions.

thank you in advance for reading x

RAS

Who is your DMP with?

Hopefully a free provider?

You need to talk to them before you do anything else.

It may be you have to suspend payments or reduce them to get together the deposit you need.

The equity in the flat is likely to be eaten up by selling costs anyway.

Woodsylou

PayPlan.

I don't think i could suspend much more, they're taking the minimal a month (£100) as it is. We're really in the proverbial.

Pixie5740

How are you calculating that you're not making a profit on the property you let out? Do you have an interest only mortgage or repayment mortgage and is it either a residential mortgage with CTL or a BTL mortgage?

Woodsylou

i have a repayment mortgage which is £619 a month. i rent the flat for £675 which covers the ground rent and service charge. i have a horrific credit rating and can't re-mortgage or anything as no company would touch me!

Pixie5740

Only the interest portion of your mortgage is tax deductible so you might actually be making a profit each month that should be getting declared to HMRC. Don't confuse cash flow with profit.

Woodsylou

oh great. even worse news!

RAS

You need to declare to HMRC even if you are making a loss.

Pixie5740

Woodsylou wrote: »

oh great. even worse news!

To be forewarned is to be forearmed. Better you sort the tax out before HMRC come chasing you.

Woodsylou

ok. right so i'll do that next.

so what about my original problem, does anyone have any advice for that please? thank you

Pixie5740

Honestly, in your situation I would sell the flat. If money is that tight what would you do if the boiler breaks down, or you have a void period, or a tenant falls into arrears, or if the service charges increase, or any of a million and one other expenses that come with letting out property? Could your finances cope with them?