Can't see how this is sustainable. Have you considered the possibility of cutting your losses on one or both of the investment properties? Did you ever have a reasonably viable business plan for these investment properties and if so what happened to throw it so off course?
PDH; - Your'e on an interest only agreement for another 32 years. This is somewhat cheaper than equivalent rent (assumption) and further assumption is that the property is either in negative equity or closeto it. Why are you worrying abount paying off this mortgage. You have a great deal. Why not sit on it and keep paying the interest.
Investment1 & 2: Given your lack of repayment capacity go to each Bank and give them a summary of your financial position. The RI from the properties will cover the interest plus a little capital. Offer to pay them the RI for 12 months. If your financial position does'nt improve next year extend the deal. I'm approving deals like this all the time. we're generally happy if we get the RI from the properties.
Don't present this as an appeal to the Bank. They really have little option but to accept it as alternative is to proceed for re-posession. We generally don't do that if we are at least getting interest cover on the facility.
Stand back & think about this. Currently your financial position is such that you are unable to afford any capital reductions on the mortgage. Given your deal with the lender, you have the option of paying no capital for the next 32 years. I.e. in 32 years time you will owe 450K on the property in today's money. Given the cheap mortgage available I would not want to pay anything off the principle. As time progresses the economy & your own income will improve. Rather than paying off the mortgage you gradually put surplus funds into a pension investment. Yield, will be betttter than mortgage interest. The value of the property will also increase over time. That will give you plenty of options by then. Don't believe me, go to an independent financial advisor on this.
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A lot going on there.
Focus on one issue at a time. I think the UK property is the one to deal with first.
Question 1
Are you in negative equity? If not, sell as quickly as possible. If yes, have you any hope of making up the difference if you sell it?
You will be in serious trouble if you have to make capital repayments on that property.
Question 2
How are you subsidising the UK property if rent is £600pm and mortgage is £265pm?
Negative equity is about 30-50k. Have personal loan of 15k so don't think I'll get a sort term loan nor do I think I could afford on. Yes, there is no way I can afford capital repayments. It's about £1300.
The rent is £600, mortgage is 265. Management fee is 50, ins, ground rent, maintenance etc is about another 100. I then have to pay tax on that income. So breaking about even
You are ignoring my advice! Would you not consider getting a 2nd opinion on it!! In my opinion you don't need to take the dramatic step of applying for bankruptcy. However, if you are proposing to take this extreme text I suggest you look at Steve Thatchers posts on the issue & perhaps consider contacting him!
can you advise what will happen 'if' in 31 years and 11 months time when we are 'potentially' facing an outstanding mortgage of, lets say, 250k??
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