Need advice - the best solution

Kaz2904

Have you looked into your tax credits etc?
I think you need to try and figure out what you will be getting in as a single parent before you are able to get any advice or make any decisions.
I know that when mine were tiny it would have made me about £600 per month better off if I'd been single, even taking into account hubby's wages.
Don't forget to factor in childcare and child benefit and look into a salary sacrifice scheme so that you pay less tax to your childcare provider.
Do you even know if it is going to benefit you to work yet?
Hope this helps, ttfn, Kaz.

jamesd

If the prices are continuing to rise and it's providing some income then keeping it sounds best for a while. You might review the rent to see if it's still reasonable for that location. Longer term the Pound is likely to fall against many currencies as interest rates probably fall next year. It's already been declining against the Euro.

Better to mortgage the property I think. Depends on interest rates and the currency the mortgage would be in. But this way you'd keep the gains from the property while still freeing up cash.

One other thing is that the general rule is to keep mortgages on BTL property because the mortgage cost is offset against rental income for tax purposes. And this can include a mortgage or mortgage increase taken out on your own property, up to the purchase price of the BTL property. So one other option is to increase the mortgage on your existing residential mortgage instead of taking out a new mortgage on the BTL. You'd then include the cost of interest on this bit of extra interest in your profit calculations for the BTL property, reducing the tax due on that income. Assuming it's declared at all, that is. I don't think you'll actually be keen to increase your own residential mortgage by say 20,000 though.

Gazella77

Kaz, I really don't know anything and am very frustrated, I tried to get some advice from IR they told me they can't calculate until I have had a baby and also it's more complicated as my maternity salary will be changing almost every month (100% for first 4 weeks, then 90% for the following two weeks, then 50%+statutory for next 3 months and then just statutory and needless to say the statutory will not cover my mortgage, just a little bit above a half of it:mad:). I went to CAB and was told the same thing, first of all they made it obvious that I'm wasting their time as I don't have a baby yet and still things may happen:-( But I really need to know what I might be entitled to before I write to my employer and decide when I will be coming back.

Websites do not provide sufficient info, just general things, and it seems from the available calculators that I'd be entitled to £50 a week based on my current salary:mad:


James, on one hand that's what I thought the prices seems to be rising abroad but not as rapidly as they used to so am not sure how beneficial it may be to keep the property, especially as it gives only £70 a month and with GBP weaker the amount it provides would decrease

'Depends on interest rates and the currency the mortgage would be in. But this way you'd keep the gains from the property while still freeing up cash' - I don't understand this bit I have only one mortgage and only here in the UK in £, the other property is mortgage free.

What is BTL?? Sorry I don't know all the abbreviations and find it difficult to understand. But anyway I'd rather not add anything to my current mortgage, I'm desperately trying to lower the monthly payments. I took this mortgage a year ago and it's fixed for 3 years so I don't think I'd re-mortgage before December 2009. Currently I'm overpaying approximately by £200 monthly, sometimes more if I can afford.

Thanks for all your help:cheesy:

jamesd

If the GBP gets weaker the GPB value of the rent would increase - each unit of foreign currency would buy more Pounds.

BTL is buy to let. Your foreign property is a BTL property in effect - bought and let out.

You could raise money from the foreign property without selling it by taking out a mortgage on it. You'd have to repay the mortgage but meanwhile you'd have the initial lump sum and part of that could be used for the mortgage payments. Since you still own the property you'd continue to benefit from the increases in value.

Gazella77

Thanks a lot, indeed I may look into this see what interest on mortgages there is over there at the mo, maybe it's much lower and then it'd make perfect sense to take the mortgage there to pay quicker here. Need to calculate it carefully though. Thanks.

Gazella77

Oh, I was just told on a benefits thread that having any savings will go against me when I want to claim as a single mum and that I should chuck all my savings into my mortgage...

What shall I do then??

jamesd

Find out what savings will start to reduce benefits. Yes, it's a good idea to make regular overpayments to keep your savings below that if you have means tested benefits to consider. Regular overpayments so you can draw against them is probably the best way to go if this is a concern. But do try to keep savings up to the limit because they are more flexible.

Gazella77

I was counting on CAB to tell me how much I am allowed and give me some genuine advice but got disappointed. They kept saying I haven't got a baby even yet and I should come when I have it :-(
SO I even don't know how much I am allowed. But will try to find out elsewhere.

Until then I will keep overpaying slightly.

Thanks

Gazella77

Just an update on my situation and please could you tell me how much I can reduce my mortgage if I keep overpaying regularly £30. And also I saw somewhere a post from a single mum who stated that her mortgage is being paid for her! Is that possible? Where can I find any info?

I bought my flat nearly a year ago for £125.000, I got a mortgage with C&G and it's a stepped product:

mortgage: 116.250
25 years
Interest:
5.09% first 12 months
5.59% next 12 months
5.99% last 12 months.

My initial monthly payments were at £685.87
and should be rising to £719.66 next year
and to £746.33 the last year.

They dropped down after a year of overpaying to £690.83 at a new rate 5.590 for this year. But I requested my bank to pay £720, which makes £29.17 overpayments every month. I know it's much better to overpay at the beginning of your mortgage free journey so I am trying to do my best but with a baby on the way (due in April) it will be more and more difficult.

Thanks for your advice, reading all your posts keep me motivated!

jamesd

Each time you overpay 30 you'll reduce your annual mortgage interest cost by about 1.67, or about 14p per month. This is at 5.59% interest rate. At 5.99% the annual reduction is 1.79 or 15p per month.

So one year of 30 overpayments would reduce the monthly payment by 1.67 or 1.79 depending on the interest rate.