Debt Advice

We are becoming in need of some sensible and preferably unbiased advice regarding our debts.Some 3 years ago with the help of our bank, we took out a foriegn mortgage to buy a retirement property in France.The plan is/was to use it as a holiday let until retirement and so we set up a loan to refurbish it.The costs were more than we could get abroad,so after using up the sum loaned to us in France we plundered our savings and ran up an overdraft with the so called understanding of our bank,and felt sure that once business started to come in we could manage all our debt.In the meantime I was made redundant,the bank failed to honour their payment protection,adding further debt;our "free" tied house here became subject to a whopping rent,more debt.The bank seems unable to grasp the excellent earning potential of the properties (£17,000 p.a. at a conservative estimate) and now, just as we are ready to start renting have stopped our standing orders,requested we take a "managed loan"which over a 12 year span will cost us £30,000,because we exceeded our temporary overdraft facility.We have some savings from another direction (£13,000) which we thought we could clear the overdraft with. Q:Better to do this and clear the overdraft and credit card (about £6,500) or to take the managed loan option ;no overdraft,credit card,and the massive interest to boot?Are these type of loans repayable sooner to cut down the amount of interest?Our income just about supports all our outgoings but not by much;however we are certain we are sitting on a goldmine if we can get the time to get rolling.Does anyone know if its possible to remortgage in France(methinks not).

Comments

  • One thing that jumps out at me from your post is your reference to the Bank failing to honour payment protection after you were made redundant.

    You need to pursue this. If you were paying for this product, WHY exactly, are you not covered now that you need it? Someone is not reading the small print and if it is the Bank, then you could be due for some much needed funds.

    Before you take out the type of loan the Bank is steering you towards, you need to shop around as you may do better.

    It seems to me that the property in France is to be run as a business FOR NOW and therefore you need to possibly approach the Bank, or other lender with a business plan for it. All the Bank can see is a pipe dream at the moment - when what they need are the real maths.

    If you have savings than can help you out in the immediate future it would be cheaper for you to use them. But don't leave yourself with nothing to use as emergency money.

    If you have other debt as well as this you need to prioritise and the house in France may NOT be the priority.

    Before you do anything, it may be better for you to take all your details of income and expenditure to your local CAB where they will be able to help you at greater length.
  • System
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    Ta for the response.Firstly;the payment protection was not honoured as you correctly assume due to small print.Although a letter of redundancy was presented and I made steps to register as unemployed,and signed on once,we made a decision to use the 2 months paid redundancy (a period in which I was told I could not claim)to go to France to oversee work on the house,thereby advancing the date when we could start renting,and stand on our own feet.The bank even thought this was a good idea.Depending on your perspective I was technically not seeking work in the UK and the banks insurers used this to deny payment.My view is that we took out protection against redundancy,not against being unavailable for subsequent employment,but it seems that they would have preferred it if I had parked myself on the sofa in England for 13 1/2 days out of 14,signed on for dole in that 1/2 day;rather than tried to start a new life.Honesty didn't pay in this instance.
    As for the house in France being a pipe dream, both the bank here and their partners in France,have had letters and documents from us showing projected annual rentals income,weekly pricing breakdown,copies of the advertising which we have now done,research into the market.Short of kidnapping punters we are now relying on the eventual market which is very strong in this area to wit there is not a place to be had in this region in the summer months.In fact they strung us along with promises of support for what we are trying to achieve then pulled the rug at the finish.We and they new that a full years bookings would not materialise in the short term but with another house to do and the prospect of putting further accomodation on our land the projected incomes can be multiplied by 2 or three times,but some vision is necessary to see this potential?If they can't do the maths from what we have shown them,and it seems they cant then it puzzles me why they are in business.
    The savings could be used as a possible deposit on a property here,which would mean our exhorbitant rent could be a mortgage payment,maybe even slightly reduced,and give us something to show for this money in the long term.
    The loan they are proposing would encapsulate all our outstanding debt,with the exception of a credit card balance with another company,but all this is feasible within our income(just),we are just checking if we can repay quicker than the 12 years without incurring any financial penalty-we are now reading all small print in detail.
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