Advice do i move and rent out house to pay some of mortgage or stay?

[exasperated]

Note - I have edited this post to remove very specific details which identify her neighbours which is the main reason she wants to sell the house


Ok i'm not sure if im in the right forum or not but either way am looking for some advice.
Have been living in the UK for the last 3.5 years and am due back to Ireland in August. We had our house rented whilst in the UK but only ever got half the amount we were paying on the mortgage. We have been on a fixed rate of 5.36% which is due to expire in september with UB and from what i believe their new rates are as high if not higher.
My spouse has already returned home in april to try and find a job which they have but its on a casual contract so his weekly income is not guaranteed, once i return my weekly wage will be reduced by 200 per week.
Our current monthly mortgage payment is 1450 my weekly wage will be 300 and my spouse will get around the 300 a week also although he has been advised this is unlikely as his hours will drop once the summer period is over. Aside from the mortgage we have a personal debt of 10000 and we are due our first baby in November so thats an added expense.
Our house is in negative equity by about 100000 i think so we cant sell either.

So basically what im looking for advice on is someone suggested to me to rent out our house again try and get as much rent as possible, we were getting about 800 a month and then try and get somewhere cheaper to rent ourselves and try to make up the difference for the mortgage ourselves. i have been looking online at an area we would potentially like to live in and we may be able to rent somewhere smaller for around 500 amount thus having to make up a potential shortfall on the mortgage of 650. Do you think this is a good idea or am i completely mad?

 

[Brendan Burgess]

Hi Exasperated

First of all, check your mortgage agreement. Did you have a tracker before you fixed? If so, you may be entitled to get a cheap tracker when the fixed rate ends.

If you are paying the full standard variable rate, then UB will proably allow you to switch to interest only for a time.

How much is the mortgage? Multiply that by 5% to work out how much the annual interest will be. For example, 300k@ 5% = €15,000. So if you are getting €10,000 a year in rent, you are short about €5,000 or €400 per month. Obviously UB may insist on capital payments, but at least they will be reducing the mortgage and the negative equity.

You can tell UB that you need to sell. They may well allow it as long as you agree to pay off the €100,000 shortfall. This may be the best solution. Get rid of the headache altogether.

 

[Greta]

I don't think it's a good idea to rent out your house while renting something cheaper yourselves, as the difference will be easily swallowed by extra expenses - letting agents fees (if you use an agent), PRTB registration fee, NPPR charge, insurance, repairs and tax. Only 75% of the interest is tax deductible, so even if your rental income just covers your interest payments, you'll still have to pay tax...

In order to pay tax, you'll need to file a tax return each year - are you really prepared for that, with the new baby coming etc? If you can't do it yourself, you'll need to get an accountant to do it - extra expense...

And so long as you rent out your house, you run the risk of getting a bad tenant who could cause huge financial damage to you.

I think you are really better off moving into your house yourselves, and maybe renting out a room under rent a room scheme to bring in some extra money. (Though you'll still need to file tax returns for rent a room scheme, but at least they are more straightforward and no tax to pay.)

And coming to an agreement with your bank regarding your ability to repay your mortgage and loan. You should also contact MABS.

Have you any family in Ireland who can help you with the baby so that you will be able to go back to work without paying a fortune for childcare?

 

[Bronte]

As you're in the UK you are perfectly located to go bankrupt if necessary. But you need to look into this carefully. Interest rates are only going one way, Ulster being one of the worst and they raised the rates again this month, we're not allowed to discuss property prices but it's something you need to consider.

 

[Greta]

Unfortunately, OP's husband has already returned to Ireland, so he can't go bankrupt in the UK unless he returns there.

Not sure why they are returning to Ireland at this time, I have a feeling it's to be near their family for when the baby arrives, but in the grand scheme of things it may be better to stay on in the UK for another year or two, if it means wiping the slate clean and getting rid of the huge debt they cannot afford to pay back.

 

[exasperated]

ok the reason we have to return to Ireland is my contract is up and have no choice but to do so.
we dont have any family where we are living so dont have anyone to help with childcare costs so thats also unavoidable.
the tax returns are not an issue i have been submitting them myself also so am prepared to do that.
we dont particularly wish to go bankrupt either here or the UK i would rather pay my debts as we have nobody to blame for getting into the situation but ourselves.
aside from the possibility of been unable to pay the mortgage the situation with the neighbours is very stressful and we fear either i will lose the baby from the stress or our marriage will suffer which obviously neither of us wants to happen.
we've been through a lot in the last 2 years details of which i wont go into here but partly to do with the sudden death of my mother and personally i dont know if i could handle any more stress than i am already dealing with so we want to get away from that situation.
For some reason the tenants we had in the property whilst we were away never complained about the parties and were always happy to renew the lease.
if i thought there was any way we could sell the house now even at a loss i would but there have been a number of houses on this estate for the last 4 years which havent sold in that time and they are in showhouse condition so i dont envisage ours selling anytime soon. Its a lovely estate aside from my neighbours but i think people are just not buying at the moment