is 85% a good deal?

emmaroids

ok i have found a local home buyers company that is given the thumbs up by 2 people who lives near my mother that they don't kick you out after 6 months (one did it 2 years ago and still lives in the house)
spoke to a guy today and they give 85% of your value and let you rent back indefinitely (im skeptical but 2 people have said it works)

with my mortgage going up to pay arrears this seem like the only option open to us as we would be able to pay off the mortgage and another dept and that would be a saving of nearly 900 quid a month :T 4-500 a month after rent.

our mortgage is crippling us financially and we have come to a point that we don't care if we rent anymore, even if they kick us out after 6 months we could find somewhere else during that 6 months

this came to a head today as i had to ask my 85 year old grandmother to lend me some money just to put some food on the table for the kids.
my OH looks like shes gonna get depression again as we cant take the kids out places cos we have no money and that gets to her.

gonna try and get some sleep now, just wanted to get that off my chest.

dad-of-4

if your so fed up that you are prepared to rent at the risk of being out of the house after 6 months, why not just be out of the house asap for 100% market value rather than 85%?

pay your debts, put your problems behind you, and enjoy having a bit of money in your pocket.

emmaroids

thought about that but where would we go?
edit: its a good idea though and i spoke to a guy from national debtline and he said if i did that i should put my mortgage onto a interest only one to save a few quid while my house is been sold, so in theory this is a good idea but whats to say my house wont sell and i might not find any where to rent.

if we sell and rent back we would get some cash (albeit not as much) straight away and we can stay here at least for 6 months maybe longer.

emmaroids

another option i thought was to declare bankruptcy and then rent as most of the equity in my house would be swallowed by my debts, but what advised that some rental places don't accept folks who have gone bankrupt?

maybe if i spoke to the rental company ask if they will let me rent if i DB if they say yes then sorted surely?

withabix

How much equity do you have in your house?

ie

What is 'market value'? (and hence what is 85%)

How much is the outstanding mortgage?

What is the total of your other debts?

The answers to the above would be a guide as to whether 85% is a good deal (in terms of a way out of your debts).

There have been so many homes bought as BTL, there is no shortage of rental property and in a lot of areas landlords will soon be glad to rent to anybody as the value of their 'investments' start to go down.

Round here, properties are still selling to investors who just leave them empty.

emmaroids

i reckon its worth around 100k, i owe 73k mortgage, 10k secured loan and 15k unsecured shiz through my DMP with CCCS.

i have found a house that nearby that would be ideal if the company accepts tenants who have gone BR.

withabix

85% won't clear all your debts.

Better to get your mortgage changed to interest only and put the house on the market IMHO. On £73k the change to interest only will save you about £300/month (I assumed about 20 years to go on mortgage) - I bet that would help!!

That way you could sell your house, clear your debts and make a fresh start. That £300 would let you eat and keep the creditors away.

I did this (when I divorced) 6 years ago. We had over £40k of unsecured debt at the time.

Selling the house didn't clear everything, but I started from scratch again, paid everything off by last year and now have no unsecured debts and a house worth (currently!!) about £140k on a mortgage of £48k.

So it can be done (without resorting to BR) !!

emmaroids

but isn't BR a quick fix? as the houses that i may want to rent may be gone by the time i have sold my house.
and going BR as appose to selling then renting seems ok cos with all my equity tied up i wont be losing any capital.
if i did try to switch to interest only should i tell the bank my reason or will that jeopardies my chances?

crikey theres a lot to take in lol.

i appreciate all comments.

withabix

Going bankrupt is cheating (yes, I know I will get flamed for saying that). Everybody else effectively pays your debts - is that fair?

Your mortgage lender will probably have no problem in switching to interest only. The reason will be fairly obvious!! They still get the return on your borrowing by way of interest. They would much prefer to do this than reposess your house, that's for certain, as everybody (you and the lender) loses when that happens.

emmaroids

withabix wrote: »

Going bankrupt is cheating (yes, I know I will get flamed for saying that).

not by me mate

it just seem the easiest option as we are just so pished off with living `hand to mouth` every week.

Lunar_Eclipse

emmaroids wrote: »

not by me mate

it just seem the easiest option as we are just so pished off with living `hand to mouth` every week.

Hi there

Sorry to hear of your financial worries.

Just thought I'd mention (from family experience) to think long and hard before going down the bankruptcy route. It has long term repercussions (credit/loans/mortgage choice & interest rates applied to them) so really needs to be more of a last resort than a quick fix if at all possible. It stays with you (in the financial world) for quite some time. Good luck. Wishing you all the best.