House not selling.....options?

thaimeister

Hi All,

Stuck in an area we now hate and now pretty desperate to move on. Looking for opinions on what our options might be please. A brief summary of our situation…..

Bought my property as a single lad for £80k (£82k mortgage with higher lending fee) in 2007 before the crash. Now married with one child and want to move to a home/area better suited to a family. The area has taken somewhat of a downturn with the rise of private landlords letting to benefits tenants. A string of poor quality neighbours has added to our stress and anxiety to leave. I listed for sale a little over a year ago at £70k. In that time we have had only one viewing. I have reduced the price twice and it’s currently on at £64,995. Realistically I think we will have to drop to between £55-£60k to get serious interest. I owe £70k on my current mortgage so we are already £5k down at the current asking price.

In an ideal world we want a joint mortgage to buy a semi or possibly a newbuild as soon as mine sells. We have a pot of money set aside which will be used for a deposit on our next home and also to make up the deficit on my current mortgage. However, it’s looking as though the hit we will have to take on my house will probably wipe out that pot of cash.

Financials as it stands………
Current mortgage remaining £70k
Our current asking price on property £65k
Estimated sale price of property £55-£60k
Current savings pot £17k - to which we add approx. £500-£600 each month

The way I see it my options come are…….

1) Cut our losses and accept a big hit to sell quickly. This would wipe out our deposit pot to cover the mortgage deficit. This would mean moving into rented accommodation for a year or so whilst we save up for another deposit. However it would mean we could get away from our area and put us in a better position to move more quickly once we find another property and have build up another deposit

2) Stick it out and save hard until we have enough to cover both a big loss whilst maintain enough to still have a deposit to buy a new home as soon as mine sells. This would probably take another year or so of saving. In honesty the thought of staying for that long does not appeal

3) I’m now open to the possibility of renting my property out but not sure what would be involved in this? I guess I would have to try to change my mortgage to a buy to let? Would I have to use some of our savings pot for a deposit on the buy-to-let mortgage and also would that have an effect on how much I could borrow to buy our second home? For example I know if you have debt it affects how much you can borrow. So would it have a major impact on our ability to obtain a joint mortgage if I also have a buy-to-let in my name only. Also I assume the buy-to-let mortgage would be at the lower end of the valuation so I would still have to cover a hit to pay off my existing mortgage? I’m struggling to get my head around if/how the figures would work out on this option

Also open to any other suggestions which I may not have considered?

Many Thanks

sal_III

You took £80/82k mortgage 11 years ago and still have £70k outstanding balance on it?

This is some bad deal, haven't you remortgaged in recent years to a better deal? If not, this is something you definitely have to look at should you decide to stay or rent out this property.

thaimeister

I was on interest only for the first few years thats why the balance is still at £70k

marliepanda

Would any developers do a part ex?

TBagpuss

You could look into how big a hit you'd have to take in oder to sell it - the 'we buy any house' type of thing won't get you market price but you could find out what you would get, so you have real figures to play with.

If you decided to try to rent it out and rent a larger property yourself, there would be a number of issue to think about:

1. You would need your lender to agree, and give you consent to let. This might be subject you moving onto a higher/different rate.

2. You have a lot of legal responsibilities as a landlord. Read the sticky so you know what you would need to do.

3. Rental income is taxable, and owning a property you don't live in may also affect your entitlement to things such as Tax Credits / Universal Credit.It may not be an issue if it is in negative equity, but I'd recommend that you check before you decide anything.

4. Could you use your savings pot to pay down the mortgage now? This might give you more options in terms of remortgaging to get a better deal, and lower your over all costs.

I suspect that if the area is bad and going downhill you may do better to cut your losses and sell - you would then not have the hassle of renting (and you may find it is not easy to find / keep tenants, or that the tenants you can find are struggling themselves which may increase the risk of rent arrears etc.)

You may then need to rent for a while to build a deposit back up, but in the mean time you will be in an area you prefer. How much would a semi cost you?

westernpromise

Realistically 1/ is your only option.

You've said you don't fancy 2/ and in fact all it will do is leave you in the position of having to sell and buy simultaneously in a year or two. So you'll still have to find a buyer, and even if you do, you'll be in a chain.

3/ doesn't work because you'll need a 25% deposit on a BTL mortgage. If it's worth £60k, this means you'll only be able to borrow £45k against it, leaving you to find £25k in cash to redeem the existing mortgage balance of £70k. You've only got £17k, and that's before any arrangement fees for the new mortgage, and before deducting cash for necessary repairs to it that might come up, and before considering whether you have sufficient rental cover to fund a £45k mortgage. If a BTL lender thinks you haven't you might find they'll only lend you £35k or something.

1/ is thus the only option, but is also clearly superior to the other two anyway. You get to move away now (which you want), and you become the ideal chain-free buyer when you do come to buy. You'll be renting, so can complete at any time - which is a far stronger position when negotiating the buy.

Cakeguts

Have you thought of selling it at a property auction?

Ms_Chocaholic

Do you have a link to the property? Maybe with a few changes you could get a better price.

thaimeister

Thanks for all the replies so far.

I've contacted a number of house builders but not an option. The developer we want to buy from simply doesn't offer a part-ex scheme and won't take a deposit on a plot until we have a firm offer on ours. When I've looked closer at other builders all part-ex actually means is that they appoint an agent to promote it which would still mean waiting for it to sell and we obviously have an agent doing that already.

Looks like the renting out is a no-go too.

I've considered trying one of the quick buy companies just to get an idea but have read so many negative comments on here that it would probs be a last resort. I might still give one a call I guess it can't hurt to get a feel for a base price.

sammcmillan

Hi - I know that the national builders (and you may prefer not to buy one of their houses) do offer "proper" part exchange schemes - I have just sold my house that way and managed to negotiate market value for my house (because the builders will be making a profit on the new house that we are buying). In order to meet their criteria our existing house could not be worth any more than than 70% of the new build price.
Most builders also offer more of an assisted move scheme which sounds like what you refer to ie they just help you sell your house without actually buying if from you.
Might be worth looking to see if any of the larger builders have any developments that you are interested in and then discussing with them.
Good luck with whatever you decide.

thaimeister

Hi thanks for the reply

I've looked into all the current developments in our area. There are only a couple of developments locally which would work for us on price/location. One is Gleeson who simply don't offer any part-ex. The other is Persimmon but their "part-ex" scheme actually just means they appoint an estate agent to promote the property you are selling. They don't actually buy your property.

Thanks