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Advice Would Be Lovely

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Advice Would Be Lovely

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Jen7788Jen7788 Forumite
2 posts
First Post
MoneySaving Newbie
Hi, hoping to get a bit of advice.

Long story short, was running a business for 10 years that did quite well. Then in 2016 life dealt me and my family (I'm a single mother of 3) some pretty rubbish hands and was impossible to carry on the business and family took priority. For 3 years I earned very little and lived off my savings.

Fast forward to end of 2018/early2019 and family is now thankfully all fine but savings now virtually gone. Have took out loans and put some things on credit card to get through the last 12 months so I can get my business back up and running. Launched the business in summer 2019. It is in the same market as before and I'm as certain as you can be that it will be a success. Has made a profit from month 1 and is growing month on month so fingers crossed looking positive. But it obviously takes time to build up and I'm still not yet able to pay myself enough to cover all my bills/outgoings and not expecting to for another 10 - 12 months. I've cut outgoings to an absolute bare essentials but my daughter has medical needs which are very expensive so that takes up a large chunk of my outgoings every month. 

Got approx £4500 cash in the bank 

Got loans/credit cards for about £26000
- £11,200 loan @ 3% (44 months left)
- £4,700 credit card which I'm currently paying minimum on. I shamefully don't know the exact interest but it is around 15 - 20% 
- £10,000 loan from an amazing friend @ 0%. No immediate need for it to be repaid but don't want to take the mick 

I have £96,000 mortgage left to pay on my house that is worth around £225,000.
I have a £59,000 mortgage left to pay on another house I rent out that is worth around £95,000.

My mortgages were previously on fixed deals so I haven't been able to remortgage them but these end soon. Though with my past 3 years history of very little incomings I don't expect to be able to remortgage anyway. I'm not expecting to cover my bills/outgoings for around 12 months so need some more borrowing - around £10,000 probably. Does anyone have any opinions on what would be the best way to proceed? I regret piling £5,000 on the credit card and don't want to make the same mistake again.

I'm still a small sole trader at this stage so business funding isn't overly easy, even more so when you say it is to pay yourself enough to cover your leccy bill! 

Jen
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Replies

  • DrEskimoDrEskimo Forumite
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    How crucial is it to keep the rental property? Does it provide a good yield?
    Selling that to realise the £36k equity (minus fees to sell) would clear your £26k debt and provide the £10k you are looking for while you get back on your feet.

    That's my first immediate thought, but appreciate the situation is likely to be more nuanced...
  • Jen7788Jen7788 Forumite
    2 posts
    First Post
    MoneySaving Newbie
    DrEskimo said:
    How crucial is it to keep the rental property? Does it provide a good yield?
    Selling that to realise the £36k equity (minus fees to sell) would clear your £26k debt and provide the £10k you are looking for while you get back on your feet.

    That's my first immediate thought, but appreciate the situation is likely to be more nuanced...
    I dont have any kind of pension so if possible want to keep hold of the house as part of my pension plan. 

    If in 12 mths the business isn't making as much as I'm assuming it will be, then I'll sell the house to get everything back on the level. But the aim is to claw through the next 12 months if possible as pretty sure after that will be OK.
  • DrEskimoDrEskimo Forumite
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    Jen7788 said:
    DrEskimo said:
    How crucial is it to keep the rental property? Does it provide a good yield?
    Selling that to realise the £36k equity (minus fees to sell) would clear your £26k debt and provide the £10k you are looking for while you get back on your feet.

    That's my first immediate thought, but appreciate the situation is likely to be more nuanced...
    I dont have any kind of pension so if possible want to keep hold of the house as part of my pension plan. 

    If in 12 mths the business isn't making as much as I'm assuming it will be, then I'll sell the house to get everything back on the level. But the aim is to claw through the next 12 months if possible as pretty sure after that will be OK.
    Ah right I see.

    My concern is that your situation might mean it is very difficult to borrow the money you need (considering your income and current debt levels), or if you can, it will be at eye-watering levels of interest.

    As such, I wonder if you have any choice but to consider options that do not involve credit? The most obvious one would be selling the second home. Although this might also not be viable given how long the process may take and your immediate needs for funds.

    I'm afraid you have exhausted my very limited amount of advice, and hopefully those more knowledgeable than me can provide some answers. As an aside, I would personally be looking at trying to build a private pension rather than relying on a single property. It is much higher risk, comes with it a lot of uncertainty in terms of value and guaranteed rental income and is not exactly the easiest thing to maintain going into retirement age.

    Perhaps selling it now is the catalyst to not only help you in the immediate future, but to also start making other provisions for your retirement. But again, I strongly urge you to seek more in depth advice (perhaps in the investment or pensions forum) or even independent financial advice from experts.

    Wishing you all the best.
  • edited 12 February at 10:00PM
    DCFC79DCFC79 Forumite
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    edited 12 February at 10:00PM
    You should post over on the debt free wannabe board.
  • steve003steve003 Forumite
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    took out personal loan to buy car,turned out to be right lemon,approached dealer usual response went to CA and-TS,unable to help, the point i am making is that i was ripped of,could it be made more clearer about PL that if anything goes wrong you are on your own  with no support from lender, thanks
  • zx81zx81 Forumite
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    steve003 said:
    took out personal loan to buy car,turned out to be right lemon,approached dealer usual response went to CA and-TS,unable to help, the point i am making is that i was ripped of,could it be made more clearer about PL that if anything goes wrong you are on your own  with no support from lender, thanks
    Good stuff.

    No idea how it relates to the OP though.
  • steve003steve003 Forumite
    6 posts
    First Post
    MoneySaving Newbie
    SORRY WHAT IS OP?
  • MallyGirlMallyGirl Forumite, Board Guide
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    steve003 said:
    SORRY WHAT IS OP?
    Original Poster
    I'm a Board Guide on the Debt-free Wannabe, Loans & Credit Cards boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Board guides are not moderators and don't read every post. If you spot an inappropriate or illegal post then please report it to [email protected]
    Any views are mine and not the official line of MoneySavingExpert.com.
  • steve003steve003 Forumite
    6 posts
    First Post
    MoneySaving Newbie
    SORRY YOU HAVE LOST ME,
  • edited 13 February at 2:27PM
    zx81zx81 Forumite
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    edited 13 February at 2:27PM
    Is your caps lock key stuck?
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