To think that dh is crazy for thinking paying off the mortgage is a good idea?

[bytheMoonlight]

We brought our house in 2007, we very niave and got ourselves into a big mortgage which we put down a 10% deposit on.

We could both afford it as we were working full time, but then I fell pregnant just as we moved in and within 9 months I was on mat. leave and then had to go back to work part as we couldn't afford childcare, so I work a PT shift around his hours.

Fastforward 2 and half years, we have had to drop the mortgage down to intrest only (after our 2 yr fixed deal ended) and can barely afford that (our building society hasn't dropped their SVR rate dispite the drop in interest rates). At this rate this mortgage will never be paid off, as it was under the original deal it was a 30 year mortgage meaning dh would have been in his sixties by the time it was paid off.

We constantly argue about money, its such a stress on our relatioship. On top of that we hate the area and have the neighbours from hell which causes us more stress and arguments.

Now we have just unexpectadly found out I am 8 weeks pregnant.

I think we need to get out, either sell or rent it out. And then we could rent which would mean never owning a house again as I doubt we could ever save a mortage deposit again. I'm ok with this but dh is not happy to move his family into a home where we would only have 6 months security at a time.

DH thinks that when I am able to return to full time work we wil be able to start paying the mortgage of again and that selling to rent is madness.

But even if we do start paying down the mortage we would never be able to sell this to buy a house in a better area as we have such a high mortgage it would be donkeys years before we had paid enough off to be able to buy another property - and then we would be stuck with another really high mortgage. I sometimes feel as if we are in over our heads.

He is not keen on renting it out as doesn't think we would be able to afford repairs etc if we were landlords which is a valid point.

But I am so desperate for things to change, improve and to feel happy again.

So is dh being unreasonable for thinking if we stay it will all work out?

How much is your mortgage at the moment? Could you realistically rent it out for mortgage + 10%? You need the 10% for repairs and costs. Can you afford to rent somewhere suitable for less than you pay on your mortgage at the moment?

If you can rent your place for mortgage + 10%, and you could rent somewhere decent for less or the same as you pay now, I think that's the best idea. Plenty of people raise children in private rents, it's not that bad. And surely you need to pay repairs if you live in your house nyway?

Gosh, i am not sure. We got off the property ladder, and never got back on, this was in 2001.

We are now split and i rent. Being off the ladder was a relief at the time, but the insecurity of not having a settled place was horrible.

Perhaps it is worth looking into renting your place out for say 2 yrs, but only if you'd be making enough to make more payments on your mortgae, AND able to subsidise the rent if you rent prvately.

If i was in your position, I'd stay where I was. Esp as your life is going to be changing again. congrats on your pregnacy btw. I am sure it will all pan, out but it is worth having these discussions with you DH.

It depends if we wanted to pay the mortgage off or not.

On SVR we would need to add about £80 a month to the rent we recieved to pay the mortgage.

On an interest only mortgage we would have the 10% to cover costs and repairs. But then we are relying on house price increases as we wouldn't be paying the mortgage off.

We could rent for about the same price as our interest only mortgage.

Would having a lodger be an option for you?

Spoke to dh about that a few weeks ago Luby, but now I'm not sure if a lodger would want to share with a toddler and a newborn!

I'd stay put, the security of owner occupied compared to renting is massively different. Unless you are a council tenant you have bugger all rights as a renter. The costs of moving are large and you could be doing that every 6 months.

would you make a loss if you sold now? You do realise if you sell you have to pay back the bank the full amount straight away, even if you get less than you borrowed, so you'll have to take out a loan for the difference, and it's unlikely they'll give you that at mortgage rates.

Can you shop around for a better deal on your mortgage? If you can rent it for more than you'd pay in rent elsewhere, and you really hate the neighbours then you should do that and save the difference for repairs etc.

Remember, your DH could earn more in the future, you could go back to work full time when your DC's are at school, inflation could effectively reduce your mortgage debt. (your neighbours could move!)

They are council tennents so a move is not likely!

If we sold we would make enough to pay the mortgage off and cover the fees.

dh, who is already 60 and a finance director, says (apart from 'poor b*ggers, how awful' - sorry!): "Borrow on your pension to do it up, rent it out & get a job overseas."

Would that be possible? Sorry for your mess but congrats on being pg AND being able to discuss things with your dh. At least your marriage seems solid, which is the main thing!

x post, sorry. So you could rent it and get enough to cover interest only +10% for repair costs? I'd go with that. Treat it as a long term investment, if the rental prices in your area go up, you can up your rent in the future and pay down some of the debt. If house prices go back up (which if you say, 10 years time, it's pretty likely) you can borrow against the equity you've got in your rental property to use as a deposit for a new family home. Interest rates charged by the bank could change and you would have some spare cash.

I just wouldn't step off the ladder at the moment, the economy is still a mess, but chances are 5 years or so, we'll be back in a boom and houseprices will be going back up.

Can you extend the term of the mortgage? This has the affect of lowering your monthly payments.

I would recommend that you stay put.

View your interest only mortgage like renting it. If at the end of the term you can't afford to pay off the mortgage in full you will have to sell and downsize/rent but in 30 years time with the affect of inflation etc your debt will not be the huge amount it is now.

It is hideous to rent privately once your children are at pre-school and school as you can be forced to move every 6 months, very very stressful indeed.

Erm why on earth are you on SVR? After your 2 yr fixed deal ended you are free to move to any other bank or even choose a different product from your own building society.

agree with shopping around for a better mortgage.

do you hate the area or just the neighbours? can you repair your relationship with them?

if you want to move, can you move to a cheaper area? make sure that this isn't a knee-jerk reaction to a stressful situation.

I think you need to seriously crunch the numbers here rather than loking at it from an emotional POV. Things to look at include:

• current sale valuation and costs of moving
• chances of your incomes increasing over the next 5-10 years substantially and/or your costs decreasing (eg promotions, childcare costs reducing at school age?)
• possibility of remortgaging and what rates you could get
• what you could get in rent for the property, what likely management/repair fees/insurance etc fees would be, tax on anything less v what you'd be paying in rent elsewhere.

The housing market crashed and lenders wouldn't touch anyone with less than at least 20% equity in their house.

Even though we had 10% and had spent 2 years paying down the mortgage, due to the crash we only had 2% equity in our house so no one would touch us. We applied through brookers such as lonodn and country, went to the banks themselves and no wanted to take us on.

Last time we shopped around was a couple of months ago and they still said we didn't have enough equity.

Sorry not 2% equity, I meant 2k equity. We basically lost our deposit in the crash.

Do you have much in the way of cash savings? Because if you don't you may find the costs involved in selling and/or renting out are more than you can afford.

You should keep the remortgage situation under review. If house prices are going up in your area than you may find that in 6-12 months you are back where you need to be.

How about getting students in? My parents did this when we were young (3 children under 5 including a baby) and my sister-in-law does this now (2 year old plus newborn that doesn't sleep at night).

Renting to students is similar to having a lodger but for less of the year.

Definitely get a lodger if you can. You can receive £4250 in rent (plus certain expenses) completely tax-free under the "rent a room" scheme.

Choose a nice sympathetic girl and take your time over finding the right person who will fit with your family. If she is sweet enough and rents are high in your area you could bargain for some babysitting time as well. Maybe a nursery nurse might fit the bill?

Then put every penny of the £4250 each year into repaying the mortgage. 3 years, nearly £13k and the housing market will have recovered by then. You and your family may even have made some new lifelong friends in the process.

Sorry, being dense: no expenses are deductable under the Rent a Room scheme.

OP - I would say battle on. Things might take a turn for the better for you and if you give in now, you'll be at scratch again. What Waltons says makes sense, I stayed with a young family when I was a student. There was no arrangement but we became quite close and I helped the mum with babysitting and used to help her out cleaning and stuff, we were really close and still in touch now, many many years later. They never put my rent up though, they were lovely to me.

Oh, and shopping round for a better deal makes sense too.

Just a comment here that we got off the housing ladder last year and it was absolutely the best thing for us to do and I have no regrets. It can be the right thing to do, I really hope you guys can make the best decision for your family; I remember how hard we found it

Congrats on your pregnancy. Agree with Monty that you could shop around for a better mortgage deal.
Also - re the lodger thing. You are only 8 weeks. Can you get a lodger for 6 months?? (Plough all that money into mortgage?) Or would you consider something like a language student (in our town there are plenty of adult ones, so you don't need to 'look after' them - just provide meals etc).

MHO is to keep on going and not get off the property ladder. Can you get some non-Relate type counselling about money, like CAB or something?

Can I ask how you know you have lost that much equity?

do you live near a school of english? they are often crying out for very short term accommodation for foreign school age students.
also i know it's really tough for you now but it really won't be this tough forever. by 2015 both your dc's will be at school and it will be much easier to work without childcare worries. i know that may seem like a long time, but if you pay interest til then you can resume payments when the dc's are at school. or you could look into having students (uk or foreign) to pay the mortgage until dc's are at school.
we had both uk students and foreign students in our house while growing up and it was definitely a good thing.