No end in sight

[Maverick66]

Hi,
I need advice on where to go for advice iykwim.
We invested in a property for rental as a pension pot. We bought at height of a housing boom where prices were massively inflated.
Recession hit and now we have negative equity of £70,000.
We have a good tenant and the rent services the mortgage but I can't help worrying about the 70 grand deficit.
We are mid fifties and husband will only be able to work for another five years max because of health.
So who could best advise us with a way forward.
We have no loans, Hp or credit card debt but we live a very simple life.
No holidays, cars, clothes or extravagant things just live very basic but have no savings.

The rent services the mortgage, but is the mortgage repayment or interest only? How many years are left on the mortgage? At what age are you hoping to retire/need the funds?

Unfortunately mortgage is interest only.
Had hoped to retire at 60. Husband has arthritis and is in construction industry. We have no other pension in place as this 'investment' was to be our pension.

If you are in UK, I would suggest you both request a state pension forecast on www.gov.uk. This will tell you date that you will receive your state pension & how much you will receive

So if say you are both 55, you probably have another 13 years to work until state pension

Do you work ?

What's your own housing situation? If you rent, one option may be bankruptcy as this would wipe out the negative equity, but may lead to the tenant losing their home, unless the house can be sold with a tenant in situ. However, whether this is the best solution very much depends on your whole situation so you should only go down this route after seeking advice from a professional adviser or at least on a good debt forum like Moneysavingexpert, but you'd need to post your full picture of assets, income and outgoings.

How much is the monthly mortgage on the rental property and how much rent is paid? Is there a good surplus that could be put into savings to repay the mortgage on the property - there should be, interest rates are virtually nothing at the moment, so I would have thought that an interest only mortgage would be not that much each month. When did you buy it and when does the mortgage term end? The value could go back up, so the negative equity may go away on it's own, if you are able to keep paying the interest only mortgage for the next few years.

Rent covers mortgage repayments.
Dh is self employed.
We have used the surplus from rent to pay off all other debts we had, credit cards, car loans, etc. Hence the reason we have no other debt.
We have 8 years left to run on our home mortgage and we have £50,000 equity in our home. We bought rental property in 2006 when prices were booming my husband had a very profitable construction business and I was a sahm. Our family are now all adults and independent I have been temping sporadically and am in process of upgrading my skills. I am in full blown menopause and my confidence for getting back into workplace us at an all time low.

Oh dear, it sounds like you are stuck with it. All you can hope for is that the value increases in the future but that's why investments always come with a warning that values can go down as well as up.

But now that you've paid off your other debts, can you afford to convert the BTL to repayment, to hopefully get it repaid before the end of the term? If the property is a desirable rental, at least you should be able to continue renting it out for the rest of your lives if necessary to bring in an income.

You will need to keep an eye on the interest rates of your borrowings, both the BTL and your main mortgage, to make sure they're on the best rate possible. As the BTL is in negative equity you're probably stuck with whatever product you're on now, but there might be the option to remortgage your main home if it qualifies for a better product and use the money released to pay down the BTL, if the interest rate is higher.

As an aside, if your DH is self employed, has he applied for the coronavirus grants that he should be entitled to? There's one running now, and a second portion that will be available soon.

And even though it's far from the right time, and your confidence is low, you looking for work might be necessary. Is there any chance of any of the temping contracts you have done opening doors to permanent positions?

50 percent of population are probably female, suggest if you have issues make appointment with your GP

@BarbraofSeville
Thank you for all your helpful advice.
I was in process of starting a full time temp position just before lockdown .my services will not be required until things are up and running again.

I guess I just need to know is it a good idea to slog on and get as much paid off the BTL mortgage as we can or should we cut or losses and let bank repossess

Our accountant is dealing with any self employed payments we may be entitled to.

@Cooler
My Gp is seeing emergency appointments only ..menopausal symptoms are not classed as an emergency but thank you.

You can get phone appointment with nurse at your GP who can refer you to GP or assist you

First off, flowers virtual in your direction. My wife went through a difficult menopause, you have my sympathy. Your best bet as I see it is to keep your outgoings as low as possible, make absolutely sure you are both keeping up with your N.I. contributions and if the tennants are good, keep them. If you can afford to not raise the rent or at worse keep the increase to minimum, do so . As others have said, see if you can convert to a repayment mortgage. Word of warning about converting, it's a one way process, you cannot in most circumstances convert back. If you have been paying off your other credit agreements, consider using the money that went to them to make payments off the CAPITAL. Emphasise capital, don't put it by to make mortgage payments. We did this with our home for several years and it really made a difference, plus if money gets tight you're still left with the option to just pay the interest as you are currently doing. I can't think of anything else at the moment, but best wishes that it works out for you. And don't give up any hopes of work for yourself, my wife managed to work part time during the worst years and every little bit makes a difference.

You can't sell your home and move into your rental property?

@Aquamarine worth considering.

@tiredmedic very good advice