Personal Disaster Looming.

dualdealer

Hi All,

The credit crunch has taken it's toll and I can see serious problems for our personal finances starting in approximately 6 months time.

We have very poor pensions - me, because I have always had low paid jobs and couldn't afford decent pension provision (although I do have a small pension), it will only be a drop in the bucket when we retire - my wife, has a similar rubbish pension.

We're both in our early 50's so we decided about 2 years ago to remortgage and buy 2 buy-to-lets to help finance our retirement and cashflow the properties with their increase in value by continully remortgaging - a risky strategy, but desperate times call for desperate measures. BTL is a long term investment and we certainly never believed it to be a get rich quick scheme, but the recent credit crunch developments have thrown a whopping great spanner in the works.

The reason everything has gone awry is the double whammy of fewer mortgages available, and only with higher rates and and less LTV allowance, coupled with the continuing decline in property prices - both due to the credit crunch.

This means that when the cheap deals finish (Homeloan and 1x BTL at the end of the year) we will not be able to jump ship for a better deal as we don't have the extra deposit now required, and due to the reduced values of the properties, the remortgage valuation would be lower than the loan amount required.

I am a atruggling self employed person and earn about £12K (equivalent to about £15K employed) and my wife was on £25K but was made redundant recently. We believe she will get a reasonable job before the redundancy money runs out but due to shortage of jobs will have to probably accept £20K. I am trying to get a proper job as I am qualifed both in mechanical and electronics engineering but will probably only get about £20K - £25K around here in the west country.

We live life very modestly, dont drink or smoke, rarely go out (perhaps once a month) have about 1 weeks cheap holiday once a year. We are not at all materialistic and only buy things when needed and the best value we can find. We buy food at Lidl's and Aldi and have no debts, loans or credit card debt and the only loans we have are the 3 mortgages and a couple of endowments, one which has 7 years to go and the other about 15.

So we have a pretty boring, hard life, which we could put up with knowing it will be worth it in the end, but......

Anyway, we have a squeaky clean credit score and 6 mths before the stuff hits the fan, so maybe that is in our favour.

What we are hoping to do is to come up with a couple of plans, one where we manage until things improve (probably 3-5 years) and one as a course of action if we can't manage.

I have talked to some of the non-profit debt problem sites, but because we are not actually in trouble at the moment, thay can't offer much advice.

I haven't done a proper SOA because there is really very little we can cut down on. I'm sure we could save a few pounds here and there, but the figure we need to achive is far more significant.

My question is this..... Is there anywhere or an individual that we can go to with all our details - who knows the various laws - where we can get advice on our options and what we should be doing now towards disaster avoidance. We are both seriously stressed out and it's starting to affect our health.

Thanks for having the patience to read this and any help information or advice is very warmly welcome.

standupguy

I would think there are lots of people who have planned for retirement with the BTL's.

The concern is that the way prices and inflation are going things are going to get worse before they get better.

From what you say your income is limited to pay excessive mortgage repayments.

I suppose I would do as you are doing and take stock now.

I would get settlement quotations on both mortgages.

Get an Estate agent to value the properties.

Use a Mortgage calculator online to get some idea of your future mortgage payments on the BTL's.

Investigate by how much you can put up the rents on these properties.

Look at the dates the leases are up and potentially when they could be available to sell?

If your sums tell you that you can weather out the storm that will give some comfort - if not try and offload now before the economy deteriorates further?