how to get equity out early??

[boschy]

I dont know if there is any answer to this, but I will explain.

We have about 200k equity in our house. However, we are really struggling with debt and have been for a while, so our credit records are rubbish. No mortgage arrears.

We got our current mortgage on the strength of an excellent business year I had about 4 years ago and we re-mortgaged, since when my income has fallen by about 75%. DHs business is a start-up, and his income is pretty rubbish. Just this year we have qualified for WTC for the first time.

We dont want to sell our house; its still a work in progress and quite frankly wouldnt be an easy house to sell in the current state of both the market and the house itself.

I wouldnt mind selling it in say 5/10 years, when the girls are through school and hopefully the house more finished and the market improved, but selling it at the moment wouldnt be easy and would be very disruptive.

We are not old enough for traditional equity release (I'm 51, DH is 50). Is there any way we can access the equity to keep the roof over our heads til things improve??

Thanks in advance for any suggestions!

I don't want to be the dome figure, but changing the mortgage as a self employed person currently is really, really difficult. I have just switched from myself and ExH being on the mortgage to just me. 6 years ago it was nearly all on my income dead easy. This time round even though my income level has risen and the mortgage amount has dropped by £70,000 and the property value risen it was really difficult and I had to provide a lot more evidence not just of income, but also expenditure.
The only suggestion I have is if you could take a holiday from paying your mortgage for 6 months and pay of some of your debts as the APR on other debts are likely to be much higher than mortgage.

Yes the self-employed thing is a bugger, I am well aware! Taking a payment holiday would not be enough in terms of the debts... am wondering if I should ring the b. soc and chat through the options - but then worry that I might be flagging up an alarm with them and would they want to take our current mortgage away??

I think that talking things through with your current lender would be a good start. They are principally concerned with getting their money back and, if you explain that the house is not worth so much at the moment because it is only half-finished, they may find ways to stretch out the payments in the short-term rather than any drastic measures.

However, you're also going to have to be realistic. It may be that the most pragmatic solution is to sell up, deal with any shortfall, and move somewhere more affordable. No-one wants disruption if they can help it, but if your respective income-streams stay at their current level, no bank is going to be patient for ever.

Sell up and rent?

Speak to your building society, you are not in arrears with them and it is more hassle and money in the long term for them if you do go in to arrears. Explain you need to release funds to clear debts, at least see what they have to say.

Well I spoke to them and they were not unhelpful. However if we go ahead they want all our income etc for last 3 years, and it will not look good, but I guess that is the next thing to do. They didnt start an application because of the credit searches etc etc.

The problem with selling is that this house is the kind of house that needs someone to fall in love with it, it's not like choosing between 4 or 5 different but similar houses on the same street/estate. It's fabulous, we love it, but it is not what many people would choose (big, old, loadsa maintenance, 1.5 acres etc etc etc). There is a similar-ish house reasonably nearby which has been on the market for a year now... We need the house to be more finished and the market to be better in order for it to sell at all. And even if we sold tomorrow at the 'bottom' price, it would not be enough to clear the mortgage, all our debts and buy somewhere else in the same area.

We need to stay in the area because my 82 yr old widowed mother lives here and depends on me; and girls are doing GCSE and A-levels over next 3 years. Renting looks difficult - lots of pets, who are part of the family.

If I was 4 years older, we could do an equity release scheme.... its not often I've wished to be 55!!!

I don't know how this would work for you but maybe you could get some lodger/tenants in if your house if large? When I was growing up in the 1970s it was a fairly common way of people sustaining larger houses that they otherwise couldn't afford...