Mortgage - are we burying heads in the sand?

[mumontherun14]

Hi there. Looking for some advice on trying to get our finances in a better shape. Both my husband and myself have built up big debts over the past 10 years. Mainly due to him being a builder and the property crash meaning he was out of work for a while and 2 rental flats we had lost their values and we lost some money. I was also working part time to look after 2 DC plus my mum who has Alzhiemers. He is now working regularly again but self employed so his income goes up and down and it's hard to plan/budget properly. I work just about full time with 2 DC age 12 and 10. We have taken financial advice from Payplan (who I would highly recommend) and we have gone into a Trust Deed with 4 years to pay off our debts and we would be clear of our unsecured debts. We also have mortgage arrears and have had several arrangements with the mortgage company and have now agreed a £400 overpayment on top of our normal monthly payment for next 5 years to clear them which is a bit of a struggle each month. My DH works 12 hour shifts and we are both trying our best to earn more and clear the debts and keep the house. It's in a nice area close to the grandparents (who we help out a lot) and the kids school. We wouldn't get another mortgage at the moment as our credit ratings are not great so if we sold the house we would need to move into rented accomodation which would be around half of what we are currently paying for the mortgage for a 3 bed house. However there is not a lot available nearby and I worry it would be disruptive for the kids. Last week my DH grandmother died who he was very very close to. I felt so sorry for him as he had to keep working as being self employed he didn't get any paid time off and it is very stressful (he did take a few days off to help his mum). I want to make life easier and happier for all of us and don't know whether or not it is time to cut our losses and sell the house. I feel we are working hard all the time so don't have loads of quality time with the kids and feel as if we don't have much to show for it as the house needs lots doing to it which we can't afford to do. We've been in it 11 years and will need a new boiler soon and kitchen could do with new worktops etc but we really can't afford them. My head is telling me that we should sell but my heart wants us to stay and I can't bring myself to make the decision and cause stress for everyone. Any advice? Thanks in advance xxx

If you are managing (even as a struggle) I would stay put. Can you renegotiate your debt repayment with the mortgage co. My mortgage co lets you change the product you are on, so are there any savings there?

Can your husband get a job. Self employed isn't always all it's cracked up to be and sounds like you could do with some security.

Thanks for the reply. Our ideal is to stay put and we are talking to the mortgage company every month so I know we could do it and try and struggle by and in a few years would hopefully be in a better position. My DH did have a job with a building company for 16 years during the recession but changed 2 years ago as my DS was offered a contract with a professional football club. So DH now has the flexibility of being able to start early and finish early to take DS to training (an hours drive away) which he couldn't have done in the other job and overall we are slightly better off due to council contracts he has but it's just a lot more irregular in terms of payments and no holiday pay or sick leave etc. He's also now got his own transport which the other job didn't offer. He says it's only for another year or so until DS moves to a later training time which would mean he could go back to more regular 9-5 hours with a company. I have gone back 32 hours but I like to see my mum at the weekends as she isn't keeping well so every week is a juggling act and I feel we are always skint even though we are working hard. Thanks again for the reply it helps even in my own head writing it all down xxxx

I agree that you should try very hard to keep the house.

Could you just do interest only on your mortgage for the next few years until you are back on your feet.

Certainly wouldn't sell if you can help it

Thanks! Every so often I have a look at rented properties and think it would make things easier on our budget. Just seems like every week we have some big bill - car repairs etc. But my DH definitely wants to keep the house and is working really hard so we can. There will hopefully be light at the end of the tunnel in a few years time.

If you can keep the mortgage going, DO NOT move
the costs of moving alone add up to many thousands

are your card etc debts on standing orders
do you budget all day every day
do not be ashamed to do it in front of the kids - if they absorb budgeting as kids they will never go into debt

Ta1kin is right. My parents got burned badly in the early 90s recession in Australia. We went from being comfortable to rather poor almost overnight. My parents paid off their huge debt, and their mortgage over the next few years by working ridiculously hard and budgeting like no man's business.

I remember it very clearly and as a consequence I am very good with money, know how to budget and actually enjoy it!

I would say stay put and pay off your debts as you can. It's not easy but you are getting there.

Don't sell the house unless you really really have to. As you're in a DMP you may struggle to find a LL who will rent to you and then you will be up the creek without a paddle.

Pop over to the money saving expert forum and visit the debt free wannabe page. The posters on there are fantastic in offering practical advice. Many have been in the exact same situation you are in at the moment.

Pamplona are good. I agree try and keep the house if at all possible Rents are high and be best to have it is possible for the future..

Payplan I mean

So long as you can make the mortgage payments, my advice would be to keep the house.

You say you are paying back your arrears at £400 per month for 5 years? Is that correct? If so, you have £20k worth of arrears? With that I'm guessing your monthly payment is already very high - do you feel the increased payment is realistic?

Hi it is realistic but leaves us tight and depends on my husbands income coming in regularly and on time which it doesn't always. I feel the mort company were pushing us for the 400 as it would get the arrears cleared in less than 5 years. Day to day it's a struggle and means we are on a real tight budget most of the time and things like car repairs or a broken washing machine can throw the budget out of sync.

I would say be a bit careful - you have an agreement with the mortgage company but you really have to be able to stick to it. What's the situation - do they have a suspended possession order? And do you have equity in the house?

Yy to hold onto the house by your fingertips if need be. Things like kitchen worktops aren't a need - they can wait. Could you / DH take on any additional work to bring in another £100/£200 a week - tutoring, ironing, dog walking, an occasional lodger, whatever? That way you can aim to build a contingency fund for a boiler etc.

Don't move unless you really have to. Yes it makes it easier short term, but what about when you're retired, you still need to find the rental income every month, or you could have paid your mortgage off and live off your pensions , uou also give up all future equity if uou do. Don't give up the house and go into rented, it's a very very bad financial decision which is focused on the short term only.

The damage is already done in terms of credit ratings and debt management therefore there is no point trying to please the companies by agreeing to their demands. You need to take charge and tell them what you can afford (and show it on a budget) and let them agree the arrears repayments.

Have you done a budget with stepchange? I'm assuming you have to get this far, I would take the max allowances for each section even if you don't spend that as that allows you to build up a buffer of savings and the. Make lump sum payments into arrears etc.

It does sound right now like you are too tight in terms of budgets because the arrears groups are trying to get as much out of you as possible (which is their job!) so you need to tell them what you can do. I would thoroughly recommend the mse debt wannabe forum and users can help with specifics/experience to help keep the house.

3Thanks so much to all of you for taking the time to reply. I will check out the MSE boards. I have been working closely with Payplan they have been amazing and all our budget allowances are maxed out. I am going to call the mortgage company too and see if we can look at the budget again xxx

Another vote for not going in to rented if you can possibly help it. Most landlords will run credit checks on new tenant and unfortunately would turn you down. Perhaps see if the mortgage company would reduce even to £350 a month to give you a bit of added flexibility?