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Original poster

Advice on money please, I’m in a mess

75 replies

rainawf · 26/08/2023 08:56

Please can I get some advice, I will be contacting a professional on Monday but just need to ask some outside advice whilst waiting.

when I was in my 20’s my parents had a rental that they wanted to sell they sold it to me for tax related reasons. I didn’t ask for it but being a naive 22 year old I didn’t think. I then got married and myself and husband couldn’t get a first time buyers mortgage due to me having a property already so already this decision affected me.

now fast forward to my 40’s the rental property has about £35k mortgage still left to pay but it’s okay as the rent covers it (I don’t see a profit ever it goes directly to mortgage). I’m in a bit of a tight spot and need about £15k to clear my debts and another £15k to last me till I find a job. Plus things are broken in my home which need fixing, Also our car is at breaking point right now. There’s no benefits as husband works and I do work but part time and not paid well but I have qualifications that will get me a good job but right now I can’t due to childcare.

my mum suggested I take a re-mortgage out in the rental property so if I take 80k I will give £35 to clear the mortgage and leave me with £45k which will be used to clear my debts, help with other things etc. she made it sound good till I worked out I’ll be giving back over my lifetime near £180k. The mortgage will be now slightly higher but the rent is increasing so it will cover the new mortgage payment.

I don’t know what to do and cannot discuss with DH as he will go crazy and I don’t really trust my mums business sense.

what should I do? I could find out the figure for £60k which will leave me with £25k

OP posts:
CherryMaDeara · 26/08/2023 08:59

Could you sell the property?

Original poster
rainawf · 26/08/2023 08:59

The interest rate is 5.69% for 2 years fixed. I was advised by the financial advisor to only do 2 years fixed as interest rates are very likely to come down.

OP posts:
Divebar2021 · 26/08/2023 09:00

why would you sell a property?

what is the value of the rental property? Did you buy it at market value or did your parents give you a deal on it?

Isyesterdaytomorrowtoday · 26/08/2023 09:00

I’d sell it and get out of this mess completely. Have you being paying tax on the income and doing all the landlord safety certs/deposit protection etc?

Original poster
rainawf · 26/08/2023 09:01

@CherryMaDeara we tried that sorry I forgot to mention in OP. It was on the market for a year and no interest. So decided to rent it out again

OP posts:
BennyBlancofromtheBronx · 26/08/2023 09:01

When you say you would remortgage and clear the £35K mortgage, is that what is outstanding on your own home that you live in?

Original poster
rainawf · 26/08/2023 09:01

Yes I pay tax, it’s managed via a lettings agent so they do all the certification etc.

OP posts:
Original poster
rainawf · 26/08/2023 09:03

No it’s not the home I live in the £35 clear is the rental property.

OP posts:
GandTtwice · 26/08/2023 09:03

Why can you not discuss with your husband? What has caused you to be in debt? Is this not a family debt not solely your responsibility? You are enabling him to work by looking after the children so the money you earn between you should be family money

Original poster
rainawf · 26/08/2023 09:04

@Divebar2021 at market value but I realise now after trying to sell it that they could t obviously get a buyer that’s why sold to me!

OP posts:
Original poster
rainawf · 26/08/2023 09:05

@GandTtwice i don’t want to derail the thread but that’s not the issue. It’s not his problem, it’s mine. The rental was before marriage and nothing to do with him.

OP posts:
Fleetheart · 26/08/2023 09:05

the fact that you can’t discuss with husband is more worrying. why would he go mad? i think you could probably sell it for the right price- surely that’s an option - putting it on at a much lower price than you originally did?

BitOutOfPractice · 26/08/2023 09:05

But if you remortgage on the property of £85k you’ll now have a £120k mortgage surely?

mindtheGAAP · 26/08/2023 09:05

You wouldn't be "clearing the mortgage" on the rental though. Just remortgaging to a higher rate and bigger mortgage.

This rental property is doing you literally no favours, you're making no money on it and you're in debt. You need to sell, and use the proceeds to clear your debt.

If it struggled to sell when on the market for a year it likely was overpriced. Price to sell so you can clear this debt...

Original poster
rainawf · 26/08/2023 09:06

OMG! Please people sorry ignore the bit about not discussing with DH.

OP posts:
Original poster
rainawf · 26/08/2023 09:06

Does anyone have any advice please?

my question is “ do you think a re-mortgage is a bad idea”

OP posts:
Original poster
rainawf · 26/08/2023 09:07

@mindtheGAAP thank you

OP posts:
mindtheGAAP · 26/08/2023 09:08

Yes it's a bad idea, moving short term debt to long term debt. You need to sell the rental.

Boomboom22 · 26/08/2023 09:08

It is a bad idea. You wouldn't clear the 35k you would add to it by 80k. Plus interest. Sell it, it clearly has a lower market value than it was on for.

weathervane1 · 26/08/2023 09:08

I'm sure I read this exact post a week ago. If I understand you correctly, you want to re-mortgage the general property - in effect increase what you owe on it so that you have some money to spend - and then use some of this money to get rid of the £35K you originally owed on the rental property? Is that correct.

Is so, by borrowing another £80K against the rental property, you'll actually then owe £35K + £80K on the rental property. Maybe I have misunderstood your question and situation.

MNHQ
PipMumsnet · 26/08/2023 09:10

Hi OP, we're not sure if AIBU is the best board for your thread. It might be better placed in Property and DIY - we can move it over there if you like, simply let us know by using the report feature on the opening post.
Best wishes,
MNHQ

lapsedbookworm · 26/08/2023 09:11

It sounds like the crux of the issue is actually the current situation you are in. The rental house is cost neutral and once the mortgage is paid off you will get an income from it.
You say you can't get a well paid job "due to childcare". What's the issue? I'd look closer at that.

Borrowing lots against the rental is high risk . Tenants could leave or default on payment and you will still have to pay the higher mortgage repayments

Earning more seems a better solution

Houseplantmad · 26/08/2023 09:11

As others have said, bad idea. Can’t you up your hours and clear the debt in that way, which is cheaper?
You also need to look at why you’re in debt as otherwise you’ll be in the same boat in a few years. Moneysavingexpert.com has good advice.

Divebar2021 · 26/08/2023 09:12

You’re £30k away from owning a property outright. How long will it take to pay that off? After that time any income you get will go to you obviously. I wouldn’t sell and I would only remortgage for the minimum amount I needed to although it seems tempting. This is not a cheap time for loans so I’d explore low interest finance options for things like cars. However what the hell do I know? We have a rental income but it just chugs away in the background but I know if we had an actually emergency it’s a huge life saver.

Beenaboutabit · 26/08/2023 09:12

If you remortgage for 80k, your payments will go up substantially and the rental income will no longer cover your rental mortgage.

If you’re struggling to make ends meet now, this is not a great idea. You’re storing up bigger problems once you’ve spent what you’ve taken out.

better to sell the property at a lower price.