Re-apply for interest only or return to paying body of loan

G

Glocke

Guest
Dear all,
Three years ago I took out a tracker mortgage for €230,000 (€20K deposit) in Ireland. I then lost my job in the recession and had to move to the UK to find work. The house has been on the sale/rental market for over a year. Not even a nibble of interest. It took me nearly a year to apply for 6-months interest only. This is coming to an end. I can afford to return to full payments but only just, UK salaries being much lower in the public sector. I am wondering whether to battle for another interest only period or take advantage of low interest rates. However, I am really worried about what would happen if interest rates rose beyond what I could afford. In addition, my employer is threatening to decrease our salaries by 5%. Any helpful advice out there?
Thank you in advance.
 
I can understand no interest from buyers but why has there been "not even a nibble of interest" from renters? Are you demanding too high a rent or insisting on "professional tenants only, no kids, no pets, no smokers etc"? Try and get your house rented, at whatever rent you can achieve - it will be great help to you!

You should build up emergency fund to help you cope with future interest rate rises and other extra expenses. Do you have any money saved? If not, then it would be good to get interest-only extension and use the difference between full repayments and interest-only to build up the emergency fund.

Also look for ways to increase your income, even just in the short-term, e.g. part-time work. Save all extra income for the emergency fund.
 
Rental

The house is up for rental at less than the mortgage at a level recommended by the estate agents. There is a glut of rental properties in the area.
 
Glocke said:
The house is up for rental at less than the mortgage at a level recommended by the estate agents. There is a glut of rental properties in the area.
Click to expand...

Tell the agent to reduce the advertised rental, if it doesn't attract any interest, reduce the rent further etc, until it rents out! It's better to get smaller rent than none at all.

If there is a glut of rental properties in your area, this is your only chance - to undercut the competition:) You can also advertise to accept pets, a lot of landlords seem to forbid pets even in the current market. While I think the extra damage a pet can cause is probably not as bad as a long void, it's also possible to cover yourself by demanding a higher deposit from pet-owners.

Though pets or no pets, just drop your rental. See what similar properties rent for, and reduce your rent to just below that.

Also what state is your property in? If it has awful decor or something else, that is putting off prospective tenants but is relatively easy to fix, it may be worth your while getting it fixed, so it will rent.
 
You should as previous poster advised reduce the rent in order to get some income. If you can make full mortgage payments you should also do this as you are only storing up problems for yourself further down the line.
 
Make sure you have photos up if you have the property on Daft. If you don't, people will just go straight past it, that's my experience as a tenant anyways, I never give 2nd notice to the ad if no pics.
 
Another thing to consider is that your mortgage protection is adequate to cover the mortgage outstanding. After having 2 moratoriums and 6 months interest only, I was unable to explore interest only again as I would have had to take out a new policy - this would have cost a lot more in the long term due to health problems of Mr ACA.
 
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