I bought a house in 2012, in a mid-Wales coastal university town, for £147k.

Put in £23k of savings into it as a deposit.

Was on fixed rate mortgage for 3 years (at around 3.9% I think). I moved jobs and had to let the property out, which meant I had to let the property out – and the fixed mortgage lapsed to an ‘ordinary’ mortgage (4.5% ish I think), with ‘permission’ to let.

Fast forward a year later with the tenants failing to pay rent, getting them out of the property – and the resolution that I would have to ditch the property and sell it.

It’s been on the market since October last year, started off at £149k (on ES advice), which I have gradually reduced in £5k chunks down to £129. In the last month I finally had an offer from some buyers of £125k, which I accepted. (This followed a previous buyer offering £115k).

At that price, I’ve pretty much written off my original £23k savings for the deposit, plus all the other fees and costs and other costs and parasitic licence-to-print-money stuff..

In the last week, having instructed and paid conveyancing fees, etc, the potential buyers pulled out, citing concerns with the survey report. Something about ‘firewall’, ‘roof’ and ‘wiring’ was mentioned.

So I’m back to square one. Paying out mortgage payments on the property (£620 pm), plus rent (£570 pm), on a £33k income. I’m keeping my head above water, just… but probably eating into my savings.

Not sure any of this is sustainable, or particularly good for my state of mind.

The trouble is, I’m not even remotely interested in financial stuff. I find it all immensely dull and impossible to get my head around. (I’m much better at riding bikes and thinking about them). Possibly why I find myself in this situation now…

I’m hoping I can pay someone for an hour’s chat about this – and they will be able to say ‘Yes, well, you need to do X and Y and Z – and then you will leverage A to reap the rewards of B, getting you out of situation C.’

Is this what an IFA can do?

IFA not really. Mortgage advisor can talk about loan deals and options.

Personally I would steel yourself and get it rented out again to better tennets and perhaps with a larger deposit to protect yourself ?

People here are generally helpful and creative, I suspect stw will deliver more good ideas than an IFA

I was in a similar position to you.

I ended up renting a flat in Bristol out for nearly 10 years whilst living 150 miles away.

Don;t forget that any expenses you incur (mortgage interest, fees, cleaning costs etc) on the property can be offset against *all* of your income so you can make a loss on the house and then reclaim PAYE from your salary.

tbh, if you would be ok with it let then I’d get it let asap and wait until the housing market is more favourable for you. You won’t have to ‘write off’ your personal investment and you’ll be rececing an income that should at least cover your costs.

The only issue is if you then want another mortgage – obviously the first one is included in any affordability calculations.

Id’ talk to a tax expert before deciding to sell.

Work out what expenses you have, and which are assets and which are liabilities.

Assets:
Mortgage payments
Anything you could sell on at no loss (or near no loss)

Liabilities:
Gym membership
Meals out etc
Anything that is bought then immediately worth zero.

Bikes, cars, etc are somewhere between, you can sell them, but at a huge loss, and they have costs which are mostly liabilities (petrol, insurance, parts).

Aim to strip out everything from the second list that you can possibly live without (probably everything that isn’t the car). I found that I was spending a small fortune on bikes, beer and takeaways and a gym membership every month. Probably cut that down from about £350 to a £10 sim only phone contract, cancelled the gym, and resolved to make do and mend bikes rather than buy anything new for the bikes, swapped eating out/takeaways and the pub for inviting friends round for dinner, etc.

I got made redundant a two months ago, and since then I’ve only spent about £300 on top of the joint account payments (mortgage, energy bills, council tax etc), and a fair chunk of that was on petrol! It’s amazing how cheaply you can live when you try!

For context, my half of the joint account is £1500/month, and probably had comparable takehome pay to you, so even when earning you would have had more disposable income than me, so it is possible.

Is it an interest only mortgage? If not change it to one asap.

Plus 4.5% is a rubbish rate! Standard variable is a lot lower than that.

Interest only and rent out.

I appreciate you might find financial stuff dull. I’m the same but having to go through it now I’m self employed and in need of some kind of pension plan that doesn’t involve eating out of bins. The trouble is you need to step up and take an interest. We are talking about quite a lot of money so its worth putting a bit of effort in. I’d certainly lean towards getting it rented again. You need to see if the numbers add up but if that pays the mortgage, expenses, etc and puts a few quid in your pocket it really is a no brainer. Bad tenants will always be a risk but should be manageable. You should be able to get a better mortgage deal than the standard rate, you also need to look into the potential tax advantages. They aren’t as good as they were but are still pretty good for a basic rate tax payer.

No advice to add but thoughts / positive vibes going out to the original poster – it’s a rotten position to be in.

I’m co-incidentally dealing with something similar right now albeit a property that couldn’t be sold due to crystallising negative equity – the latest tenants have finally moved out and left £000s in damage behind.

Anyone choosing to do Buy to Let (we didn’t – just couldn’t sell the house when redundancy happened) needs to have their eyes open to the massive costs that can be incurred by a single “bad” tenant.

Thanks for replies – and support – guys! 🙂

It’s good to know that – at least – I’m not alone in this situation.

Wouldn’t I have to pay out another £1.5k – or whatever it was – on mortgage ‘arrangement fees’ if I took out a new one though?

Then I’d also be locked in for another more few years? And wouldn’t be able to sell up if I wanted to, with out incurring more fees?

Surely I can’t just take up another mortgage as easily as that?

The house is pretty much un-rentable to the right kind of professional tenant though, unless I were to spend around £5k getting it redecorated up to a professional standard.. (My best guess, given that the EAs were completely unable to find any tenants – the moment I suggested I wanted ‘professional only’ tenants, rather than ones who worked in McDonalds, or ones on housing benefit though.. 🙄 )

We are talking mid-Wales coastal town here, economically deprived area, EU stimulus funding, etc. Whoop-de-Dooo, great place to buy a house 🙄

I just want to be able to get on with my life and draw a line under what has been the most dumb-ass financial decision I’ve ever made. This whole thing is totally draining… 😐

Perhaps a mortgage adviser is the way..

What you want is tenants who pay the rent and won’t wreck the joint.

How they earn the money is irrelevant, surely?

A number of LA’s operate ‘guaranteed rent’ schemes and will also ensure the place is returned to it’s original state after the tenancy. alternatively you need an agent who will regularly visit the premises and monitor the tenants and the building.

‘drawing a line’ could be an expensive way of exiting this – there’s a danger of adding another ‘dumb ass’ decision to the first one?

Wouldn’t I have to pay out another £1.5k – or whatever it was – on mortgage ‘arrangement fees’ if I took out a new one though?

No. There are lots of different deals out there. Some with no fees, some with small fees.

The interest rate you are paying is very, very high.

http://www.charcol.co.uk/ or http://www.moneysavingexpert.com/mortgages/ could be good starting points.

The rate isn’t that high for a buy to let mortgage, people on here are comparing the rate you’re paying to residential mortgages, you aren’t living there ao it isn’t a resdential mortgage. You will likely get a lesser rate though and you don’t have to pay fees if you don’t want to. If the mortgage isn’t interest only then switch it to one, the house is the repayment vehicle.
I would keep it for the moment and your motivation is to get back your 23k investment. That is also your motivation to get on the internet and sort out a new mortgage. You could remortgage to a new lender, switch it to interest only (if it isn’t already) and borrow against it to do the works that are required to get professional tenants in.
Hope it all works out for you.

I can borrow against it to get the work needs done? 😯

Really? I hadn’t a clue I could do that. I know how to pick up a great set of Kashima Fox’s on eBay for a great price, but I really just do not have the first idea what I’m doing here.. 😆

Okay… This could work out. Nice tips!

OP you are trying to sell a house in such poor decorative state it won’t rent to “professional” tennets 😯

Have you never watched any of those property programmes, did the EA not say smarten it up a bit ?

Honestly mate it’s no surprise you are getting sh.t offers. If the place looks a state the buyers will assume all the important maintainence hasn’t been done and/or what they can’t see will be worse. Can you use a paint brush, can you learn ? £5k in a deprived Welsh coastal town would seem to me to be a bl00dy high quote too ! How about getting a decorator in for 2 or 3 rooms or difficult jobs and offering to labour / help and just watching and learning. You could do the prep like cleaning woodwork, sanding prep, removing wallpaper if that’s required. In your financial state you need to ne learning a bit of DIY and adding or at least protecting value of your property by keeping it in good order. That’s basic stuff for young people, buy a property, do it up in their spare time and sell on for next project or love happily knowing it’s their handy work.

On mortgages you do not have to get one with early exit fees. That depends on the deal and rate you go for. By the way I would guess a lot of people don’t tell their mortgage company they are renting the property out. Too late for you as you now have a job in a different town.

Anyway good luck and hope you appreciate its just advice not trying to wind anyone up !

Out of all the advice I have read here, the one I agree with is getting it on an interest only mortgage as soon as you can.

Perhaps a mortgage adviser is the way..

It is! A good independent advisor with whole of market exposure. They’re probably twiddling their thumbs right now wondering where their next deal’s coming from.

Then choose your tenant carefully. Meet their kids. They’re often a good guide to their parents outlook on life. Get someone wanting a steady, stable home for a few years and you’re laughing.
Don’t let one wrong’un put you off. They’re part of the learning curve.

Decorate it to get the right tennets ! Been trying to find Royle Family Mambo No 5 Decorating Scene to lighten the mood 🙂

Wouldn’t I have to pay out another £1.5k – or whatever it was – on mortgage ‘arrangement fees’ if I took out a new one though?

Not necessarily. Fees vary significantly, and high fees don’t necessarily mean a bad deal. You may very well save the value of the fees through a better interest rate, but that will depend on how much you’re borrowing. You can usually add the fees onto what you borrow. A decent mortgage adviser can show you exactly what you’ll pay over a given period and show you which deal makes sense.

Is it a terrace or a semi? The “firewall” is probably the party wall that doesn’t go right up to the underside of the roof covering so giving you no fire separation from next door. Very common in older houses – you can walk right along some rows of terraced houses….

it sounds like youre fed up and I cant say I blame you. I’m not in a dissimilar position but quickly realised the house market is a bit crap and although I wasn’t in the negative equity position like you I still wasn’t going to easily sell at the price I’d like. So, I’ve rented it out again. Its vaguely my pension plan. So I spent some cash, got the place up to spec and got family in. fingers crossed.

Anyway, it sounds like you want out and if that’s true it might be worth talking to these guys:

Adito property

They do an interesting rent to buy for people trying to get on the ladder but also have investors who buy properties on the assumption bricks and mortar are still a good investment. Might be worth a chat. Not a scam. Pretty much god folks.

Yep – it’s a semi, 1905 era, so god knows whether it has a firewall, or anything else that might be up with it.

The whole tenant thing is not really the route I want to go down. I’m prepared to accept it as a possible solution, if absolutely necessary, and it would seem a more attractive option if I could borrow on the house to get the redecorating done.

All in all though – this just seems a bit like throwing good money after bad though? Does it really make sense to put more money into something that has clearly been a depreciating asset? Surely that’s the best way to lose even more money.

The house isn’t in a bad way – I’m probably making it sound like a basket case! It’s just the previous owners seemed to have got a bit enamoured with their interior decorating panache – and filled the downstairs with feature walls, bright paint, etc. It didn’t bother me at the time I bought it, but it clearly puts some buyers / potential tenants off. Rectifying all this – and putting carpets in over the wooden (in one room purple painted) floors, looked to be around £5k all in.

At the end of the day, I’m prepared to write off the £23k deposit and put this one down to an expensive life lesson. (It’s brought me to tears many times in recent months – especially as £10k of the deposit was from my deceased Father – who I thought would have wanted me to buy a house with the money). I thought I was doing the sensible thing. The most important thing to me now, however, is getting my life back.

I used to be relatively happy on £33k pa. With no kids or other financial constraints, it’s not a bad life. I haven’t got that now, and haven’t had it for the last two years.

Just want my life back.

(I’ve tried the Ajito thing – linked above – thanks! I may have just signed myself up for a lifetime’s spam though 😆 )

Take a week off, go down to it and take a critical eye. It needs to look smart inside and out. Its human nature, people look after something nice and don’t do the same for something scruffy.

You can paint it in a week, you can make sure the garden looks tip top.

Then either get it rented, or get new photos and back on the market.

BTW its stressing you because you are not controlling the situation. Once you have a solid plan and its in action the stress will go…

Personally I’d be looking to try and keep it as a going concern but you’d need to do the numbers to make sure that is realistic. If you really want out, and that is understandable, sometimes its nice to draw a line and move on, then its worth spending a bit of time and money. I’m sure there is no need to spend 5k, though. You can get carpet fitted very cheaply these days or paint the floor brown to cover the purple and stick a £20 rug in there. Lots of white and magnolia paint on the walls. Deep clean in the bathroom and kitchen, tidy up outside. Very dull but it does sell houses. Take a week off work, take the bike and sneak in a few rides, or get some mates over for a long weekend with beers and chili/bbq.

If you bought it for 147k with a deposit of 23k, then you borrowed 124k. You have a repayment mortgage on it so if you were to sell tomorrow for 125k you should end up with around 10k in your hand after fees.

However, as others above have mentioned it’s definitely worth you spending 5k and a couple of weeks holiday working on it and then selling it for 145k

With a lick of neutral coloured paint and perhaos sanding the random floor colour off or carpet you could well find its worth quite a bit more than current offers. It’s my view buyers are knocking you back a lot more than £5k

Have all the houses in the area gone down a similar amount (zoopla is your friend here), if so then it wasn’t the best buy, of yours is down more then that’s evidence of condition / presentation.

Its a tough call as quality of life is worth a lot.

Take a week off work, take the bike and sneak in a few rides

The house is just 15 mins from Nant.. 😆 😉

…trouble is, I can’t get time off now until the end of November!

Surprised no one has mentioned holiday letting. Mid Wales coastal sounds like a nice holiday let. I do ast and holiday rentals and my rule of thumb is you should get the annual Ast return in a holiday rental season of 6 months. So you get your financial return and have a house to enjoy for the remaining 26 weeks.

Look at holiday-rentals.com and see what local similar houses are going for. Go cheap in year 1 to get some reviews and as the income comes in upgrade to wifi, log burner, sauna maybe…you could be dog friendly, keep bikes for guests, do a bit of guided walking.

Look at laymyhat.com, lots of good ideas on there.

Good luck, don’t whatever you do crystallise your losses.

Is there any chance of getting a copy of the survey that was done to see what exactly the issues are?

Also, where did the figure of £5000 come from for remedial work?

Have you contacted the university to see whether they have a market for student accommodation? They may be in a position to provide some sort of surity regarding the rental payments.

I guess the town begins with A?

Rich.

First there is a stack of money available at the minute and 2.3-2.4% should be what you are aiming at, you could remortgage pay less than you are at the moment and wrap the five grand into the new mortgage.

Mortgage brokers or ‘Financial Advisers’ cost money, it comes from your mortgage, negotiate yourself, first check if your existing mortgage supplier has a business retention unit to leverage.

Last I looked Halifax were doing the best deals round my neck of the woods. You have equity it should be a shoe in.

Better to do it up regardless of letting or selling, each way you’ll do better.

Thanks guys, some good ideas here. I guess I’m probably on a very bad mortgage deal – so will have to sort that out asap. Yep, town does begin in A 😉

You could probably find the house in question too, quite easily too 😆

They probably put you on some sort of buy to let mortgage