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

Optikal

JasonLVC wrote: »

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.

I understand that it seems complicated.

With regards to refurbs... When you put in for a RTB, from the moment you put in the claim, the council refuse to do any repairs or maintenance. Our claim for RTB lasted a year, in that year the house had a wiring fault, a drainage issue, an underfloor pipe leak, a dated bathroom and high winds had destroyed fencing. All of those we then had to fix ourselves and pay for out of our own pocket (before completion, we had no need for buildings insurance so it was all at our expense).

That was just the tip of the iceberg. All in, we spent just under 10k fixing everything up to a proper standard. The 2K that is left outstanding is the remnants of that debt (which we want to clear)

Now we never intended to move at all (at least for the five years of council pre-emption), so pumping money into the house was not a concern. Until the family next door moved out and we faced our current personal situation. Now, of course if i had my way we'd sell up and move out and start over but we have to make sure that we can afford to. My wife is apprehensive because the 25k was supposed to be for a nice deposit on a bigger house in a nicer area. If we sell up now and move away with only around 5k left over, then we'll be having to purchase around about the same sized house in the same area and she's dead set against that.

Optikal

InMyDreams wrote: »

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.

After hearing what everyone has had to say, i think selling up and starting over is probably the only real option we have, other than stay here another 4 years. I guess it's going to be a case of sitting down tonight and having a heart to heart with the OH.

InMyDreams

Optikal wrote: »

After hearing what everyone has had to say, i think selling up and starting over is probably the only real option we have, other than stay here another 4 years. I guess it's going to be a case of sitting down tonight and having a heart to heart with the OH.

Yes. It must be galling to loose most of the £21k freebie you were given a year ago, but it really doesn't sound like it's worth it. Hopefully she will be able to see that. I hope you find a suitable resolution. At least you weren't planning to stay there for ever and it sounds as if there won't me much love lost when you leave. Even if you do have to settle for similar house in same area, at least you won't have the neighbours.

JasonLVC

Optikal,

I was an ex-Right to Buy Manager at a County Council so know the rules inside and out, all the scams tenants play and all the horror stories after people have bought.

Your biggest mistake was paying additional fees to the 'right to buy' agent as the council offer all of this advice for free, rather than the usual £2k these agents add onto their over-priced mortgages. Second mistake was before submitting application was not to check with local authority what their maintenance plans were. No doubt the 'agent' pressurised you into closing the deal asap so that they could get their [strike]commission[/strike] application into the Council in case you lose your right to buy (which you cannot as it is in enshrined in the law).

The wiring, drainage and pipe leak SHOULD have still been attended to by the Council as they were still your landlord and they had a legal obligation to make these repairs/maintain habitability of property. The old bathroom and fence damage would not be considered essential and so I can see why they left you with a manky bathroom - but less than £2k should have fixed that to a very high standard.

So if you've made £10k improvements to the property then this will not be included when deducting your discount....and the 'agent' did another great job on you by convincing you to borrow more for 'refurbishments' either via loan or mortgage repayments on a property that would increase in value automatically anyway once it is no longer 'council owned' (ask any surveyor, they'll concur that they are valued less when council owned but thereafter are valued in the same context as any other private owned house). Having spent such money on the property it is harder to realise a better profit as these costs eat into your margin.

You can still make money out of this (which is not a popular thing to say on this subject) and it is a shame you cannot have £25k for a deposit on a new house, but £5k is still £5k more than some 90% of those wanting to get onto the housing ladder and I dare say your intention would have been to move in year 5 anyway (as very few RTB's remain occuiped by the purchaser beyond the discount period). many people would kill to have no debts, £5k pure profit and the freedom to start again.

So you are still fortunate, unlike other folks who haven't got £5k deposits and cannot obtain council housing (or any kind of housing) as the council stock has been sold off to people who then flip them for a profit.

Optikal

JasonLVC wrote: »

Optikal,

I was an ex-Right to Buy Manager at a County Council so know the rules inside and out, all the scams tenants play and all the horror stories after people have bought.

Your biggest mistake was paying additional fees to the 'right to buy' agent as the council offer all of this advice for free, rather than the usual £2k these agents add onto their over-priced mortgages. Second mistake was before submitting application was not to check with local authority what their maintenance plans were. No doubt the 'agent' pressurised you into closing the deal asap so that they could get their [strike]commission[/strike] application into the Council in case you lose your right to buy (which you cannot as it is in enshrined in the law).

That's exactly what he said! They told us that they managed to get us an offer, but it was restricted and for a limited time only, so we had to sign asap or risk losing our right. Being first time buyers with no experience or relationship to anyone else with experience, we ate up everything he said!

The wiring, drainage and pipe leak SHOULD have still been attended to by the Council as they were still your landlord and they had a legal obligation to make these repairs/maintain habitability of property. The old bathroom and fence damage would not be considered essential and so I can see why they left you with a manky bathroom - but less than £2k should have fixed that to a very high standard.

So if you've made £10k improvements to the property then this will not be included when deducting your discount....and the 'agent' did another great job on you by convincing you to borrow more for 'refurbishments' either via loan or mortgage repayments on a property that would increase in value automatically anyway once it is no longer 'council owned' (ask any surveyor, they'll concur that they are valued less when council owned but thereafter are valued in the same context as any other private owned house). Having spent such money on the property it is harder to realise a better profit as these costs eat into your margin.

Again, the agent told us that the council wouldn't touch the house so we had to rush the application through. Near completion, he convinced us to reclaim the money we'd spent by adding it to the mortgage! The house (less discount) cost 45k, with 10 on top for the fixes. Though we only got 8k cash as fees were deducted from the 10 too.

You can still make money out of this (which is not a popular thing to say on this subject) and it is a shame you cannot have £25k for a deposit on a new house, but £5k is still £5k more than some 90% of those wanting to get onto the housing ladder and I dare say your intention would have been to move in year 5 anyway (as very few RTB's remain occuiped by the purchaser beyond the discount period). many people would kill to have no debts, £5k pure profit and the freedom to start again.

So you are still fortunate, unlike other folks who haven't got £5k deposits and cannot obtain council housing (or any kind of housing) as the council stock has been sold off to people who then flip them for a profit.

Buying the house was never about exclusively making money, but rather a way to get on the property ladder and have the ability to buy a bigger home when our two young children got old enough to need their own space. I understand that financially, it's not the worst situation in the world. But it's also a bit of a downer that we essentially bought into what was sold as a dream opportunity and now are dealing with the reality of it.

I guess you don't realise that you've been stung until you feel the pain. Ah well, i think the best thing for us to do is to speak to an expert about selling up. Do you have any ideas on where to turn Jason?