Right to Buy... Remortgage... HELP!

beecher

An £80,000 mortgage at 6% is £400 a month. Don't you have to show you'd make more than the interest costs from rent? What about covering voids? Sounds really risky to me.

Optikal

Yeah... when you put it like that... it kinda does.

Do you think it'd probably be better to take a financial hit on this house and buy a new one straight-up?

beecher

Optikal wrote: »

Yeah... when you put it like that... it kinda does.

Do you think it'd probably be better to take a financial hit on this house and buy a new one straight-up?

I suppose it depends on how desperate you are to move and how your wife feels about the possibility of staying for another two years until you can get out of your fixed rate without any charges - by then you'd 'only' have to pay back 40% of the discount.

If it is going to cause huge stress though, I'd take the hit and start again. That's just my advice though and it has to be noted that I'm very risk averse!

Optikal

Me too... which is why took the fixed!

Well, we've had them next door since January, and for the most part, my wife insists it's okay. But when "He" is around visiting, she's terrified to leave the house. I'm also concerned about having a less than stellar credit rating and going for a 3.5x 100% mortgage on a new house without any hard cash for support...

beecher

Optikal wrote: »

Me too... which is why took the fixed!

Well, we've had them next door since January, and for the most part, my wife insists it's okay. But when "He" is around visiting, she's terrified to leave the house. I'm also concerned about having a less than stellar credit rating and going for a 3.5x 100% mortgage on a new house without any hard cash for support...

That's a real shame for you and your wife. It must be very difficult for you both.

I do think you're head is telling you that it isn't a good idea to take this huge risk in order to get away though, and I think you should maybe have a look at what you could afford if you took the hit on the discount, though I think it'd leave you with very little in the way of a deposit. Good luck in whatever you decide.

Optikal

Cheers mate, i appreciate your advice.

lynnexxxo

Could you not rent it out and move into rented accomodation yourselves? And then when the five years is up sell it , without ERC and anything to the council?

JasonLVC

Optikal,

Reading your posts again, there is an air of confusion (certainly in my mind at least). You paid around £55k for the house (after a £21k discount) so your mortgage will have been for around £55k.

In your first post you say you need to remortage becuase you had to spend money on renovations. But why do that if you're not going to live in it and no amount of refurb will increase the rental yield that much.

In Post 3 you say you are re-mortgaging to clear debts and then also say you will use it to unlock equity to purchase another house. You can't clear debts and have a second mortgage. A mortgage is a debt. And £2k is hardly a crushing debt liability.

You also state you think house is worth around £80k so even if you sold it today, you'd make £25k profit of whch you'd have to repay £17.5k thus a pure profit of £7,500 which would clear your £2k debt and act as a small deposit for the new home.

Any discount clawback is less any owner made improvements so if you've spent £15k on a conservatory then that is deducted from the 'sale' value of the property when calculating the discount you have to repay.

Personally, if the reason for you wanting to move is as you state, then surely mental health, safety and happiness over-ride everything else, including a loss of money.

I guess what I'm trying to say is that you are trying too hard to justify the numbers and so you must know the numbers don't work out/high risk. Stop trying to justify it, decide what's more important - health/happiness or profit and then decide.

JasonLVC

lynnexxxo wrote: »

Could you not rent it out and move into rented accomodation yourselves? And then when the five years is up sell it , without ERC and anything to the council?

There is generally a clause which prevents the proeprty from being let out for financial gain (although how they'd ever find out is another question).

Also, if the house is not the main residence and is a source of income, then it will be likely subject to income tax (and capital gains tax upon disposal).

InMyDreams

What an awful situation to be in. But I agree with JasonLVC. You need to think about your own health and happiness. At the end of the day, even if you were to sell now, you will be better off than you were a year ago before you bought the property, even if you do have to 'pay back' some of the free equity you received. And if the market does crash, you will be thanking your lucky stars that you got out when you did.