What options do I have? I am very concerned about my future

Cuticuraser

Hi all

I am writing on behalf on a friend who is worried and needs advise. I wasn't sure which board to put it on but hopefully this is the right one:

"Hello, I currently live in a flat that I purchased around 6 years ago on the help to buy scheme. The flat is now worth about £50,000 less than what I got it for and I am struggling to sell it. My partner (who I recently got enagged to)  recently lost her job but at the same time she wants to move to a better area. Our area is quite rough and I have been promising her for more than a year now that we will will move to a better area.
I cannot afford to buy a bigger home in a nicer area (partly because of the negative equity) so our plan is to rent out in a nicer area for the next couple of years and hopefully save up. I am worried because the rent will probably be a bit more expensive than what my current mortgage costs are per month and I don't know when my fiance will get a new job. Our lifestyle expenses are high (we go on a big holiday every year and I have expensive gym membership). In terms of other debt I have a car on lease and that is about it. What options do I have?"

Thanks

elsien

Are you saying you are in negative equity because if you are, how do you plan to make up the shortfall to the mortgage company? 

You can only move to a nicer area when the two of you together can afford to do so. 

So you can either stop spending so much on expensive holidays, et cetera and use that money to pay off the negative equity for your flat and then move.
Or you can stay put for now, and when your fiance gets a job, put a proper plan together.

I’m not entirely sure what other answers you are hoping for? 

ETA, it really would be preferable for your friend to come on here and ask the question themselves. 

FlorayG

Options; stay with this lifestyle and in this property OR change your lifestyle and save money. Honestly I think this question is a joke, it's very clear what they need to do
How is the property worth so much less? Property prices haven't dropped really

400ixl

So are you saying that due to negative equity and wanting to move you want to rent out your current property and then rent somewhere new in a nicer area. The challenge is that the difference between the mortgage cost - any rental income will be less than the rental of the new property and this may not be affordable due to high outgoings and lower incomings due to partner not working?

Well, most of this is in your control.

Stop living beyond your means, that is simple and totally in your control, be it you may not see the full impact until you see out the commitments you have made. Gym membership wise, are you in a long term contract, or can you cancel and either not have a membership or at least go somewhere affordable. Holiday wise, what are you committed to? Is it something you can cancel or change to a lower cost?

On your current house, will the rental income cover all of the costs that you currently pay?

Simple answer could be that moving at this time is a pipe dream. It may be that costs need to be brought under control and firstly put into reducing the negative equity to then be able to sell in a few years and to be able to move to the desired area.

Cuticuraser

FlorayG said:

Options; stay with this lifestyle and in this property OR change your lifestyle and save money. Honestly I think this question is a joke, it's very clear what they need to do
How is the property worth so much less? Property prices haven't dropped really

It is a flat in London and flat prices have dropped from what I have seen. It was a new build back in 2019 and I purchased through the help to buy scheme.

Cuticuraser

400ixl said:

So are you saying that due to negative equity and wanting to move you want to rent out your current property and then rent somewhere new in a nicer area. The challenge is that the difference between the mortgage cost - any rental income will be less than the rental of the new property and this may not be affordable due to high outgoings and lower incomings due to partner not working?

Well, most of this is in your control.

Stop living beyond your means, that is simple and totally in your control, be it you may not see the full impact until you see out the commitments you have made. Gym membership wise, are you in a long term contract, or can you cancel and either not have a membership or at least go somewhere affordable. Holiday wise, what are you committed to? Is it something you can cancel or change to a lower cost?

On your current house, will the rental income cover all of the costs that you currently pay?

Simple answer could be that moving at this time is a pipe dream. It may be that costs need to be brought under control and firstly put into reducing the negative equity to then be able to sell in a few years and to be able to move to the desired area.

Ideally I wish to sell my current property (even if that means a loss) and then rent out in a desirable area to keep my partner happy. And hopefully overtime we can save up for our home

Cuticuraser

The flat cannot be be rented out as the existing mortgage does not allow to do so. Cannot be converted to a buy to let as the equity isnt enough. Also the rental income gained is more or less the same as the existing mortgage payments. Really struggling here as I made committments to my partner and not sure what I can do now...

elsien

You may have made commitments to your partner, but your partner needs to explain how she believes you can meet those commitments when you have no money and she has no job.

You both need to lower your expectations until you are in a position to pay the mortgage off, negative equity and all. You can’t save up for a new property until you have paid off the old one. 
There is no magic solution for this. 

Uriziel

Your partner is not your child. Why are you promising her anything? Are you her father? She is an adult. Explain to her the problems and figure out a solution together. You write that you are concerned about your future but also that you go to an expensive gym and an big yearly holiday. It sounds like you also are able to leave your home and continue paying a mortgage and rent of a new flat? It does not sound like you have any faith in your partner or any expectations financially.
You write that you have bought this flat yourself which means that you own it and you have gotten a mortgage on this yourself. Get your partner to get back to work and then get a new mortgage with her which should easily allow you to buy something else and then sell your flat at a loss. Getting your partner to foot a mortgage with you will increase your budget by a lot more than the 50k you are losing from the sale.
Having said that I have the impression that you like to pay for your partner and you are trying to desperately keep her happy.

sheramber

The option you have is to sit down together with your fiancé and go through your income and expenses.
  One up with a joint budget and a plan to save for the future.

It is not up to you to provide your finance with a new house on a better area. It a joint process , with both of fully committed to i
proving things.

What is your fiancé doing about getting a job? Most supermarkets have vacancies on a regular basis. Any job that brings in money will do. 

If she is being choosy about what she does she is not committed to your relationship. 

Time for  tete a tete.

caprikid1

It looks like you are on the verge of making a spiral into debt. In attempting to please your partner in the short term you will destroy your future. Negative equity with your existing home will not be solved by renting it out, with voids , tax and damage your £50K negative equity will become a £70K issue with associated credit card debt when to try and provide a life you cannot afford.

This is very much a turning point. Move when you have £50K in the bank to pay of the negative equity. Anything else you do before that has only one outcome.

If your partner pressures you into any other decision it's at your peril.