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Lizzy D update for 2018

lizzydripin
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Lizzy D update for 2018

#112662

Postby lizzydripin » January 22nd, 2018, 9:47 pm

Hi All,

I just thought I would give you a quick update on my life going into 2018.

I no longer have any credit card debt, which is very good news.
As you know my OH had been made redundant last year and we have been living in tied accommodation, we have been able to rent the house but the rent is now going up so we have decided to buy somewhere. so after nearly four months of being debt free we are now going to take on the mother of all debt and I am terrified.

All the best
Lizzy

midnightcatprowl
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Re: Lizzy D update for 2018

#112862

Postby midnightcatprowl » January 23rd, 2018, 7:10 pm

Hi Lizzy,

Great that you no longer have credit card debt. Re: the mortgage, only you know if you can afford it (plus of course others more expert than me on this board!) but there is a great distinction between mortgage debt and credit card debt in the sense that unless you go for something stupid such as 'interest only' you are actually buying something with a genuine value and which will - mostly - increase its value or at least hold its value.

The big catch obviously is people taking on a mortgage and then starting to build up debt on credit cards again...often prompted by a desire to have new kitchens and so forth.

The other big catch of course, is if you own a house on mortgage and then for employment reasons need to move out of the area. You can be caught if there is a recession and house prices start to fall and/or you just can't sell. But I assume you'd get round that by letting it out?

I'm sure you are savvy about this but please please tell us that the property you are buying is freehold rather than a leasehold set up where you pay ground rent and that rent doubles or more every x years eventually making the property impossible to sell as no mortgage company will lend on it?

Lynn

lizzydripin
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Re: Lizzy D update for 2018

#113117

Postby lizzydripin » January 24th, 2018, 7:37 pm

Hi Lynn

Thank you for your reply.

My mortgage broker has told us we can afford this mortgage and we would be paying as much in rent after August but I thought I would post an SOA on here for advice, is this the best place? As I said the idea of such a large debt terrifies me. :cry:

We have chosen a house that needs nothing doing to it apart from an oven housing unit, we have an oven, and hob in the kitchen as the vendor is taking their oven with them. The property is a shared ownership house that is being staircased by the vendor and then we are buying 100% from them, it will be freehold. Our old furniture is coming with us, we will not be buying new stuff. We still have one child at Uni hat we need to support and who lives with us during holidays etc.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 3
Number of children in household.........
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 1537
Partners monthly income after tax....... 2400
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3937

Monthly Expense Details
Mortgage................................ 1190
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 146
Electricity............................. 50
Gas..................................... 50
Oil..................................... 0
Water rates............................. 44
Telephone (land line)................... 0
Mobile phone............................ 90
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 25
Groceries etc. ......................... 670
Clothing................................ 150
Petrol/diesel........................... 120
Road tax................................ 26
Car Insurance........................... 70
Car maintenance (including MOT)......... 80
Car parking............................. 5
Other travel............................ 25
Childcare/nursery....................... 0
Other child related expenses............ 60
Medical (prescriptions, dentist etc).... 50
Pet insurance/vet bills................. 43
Buildings insurance..................... 55
Contents insurance...................... 20
Life assurance ......................... 50
Other insurance......................... 0
Presents (birthday, christmas etc)...... 70
Haircuts................................ 18
Entertainment........................... 80
Holiday................................. 75
Emergency fund.......................... 150
Routine pet care........................ 10
Other................................... 11
pet food................................ 60
Total monthly expenses.................. 3493


Assets
Cash.................................... 0
House value (Gross)..................... 250000
Shares and bonds........................ 0
Car(s).................................. 8000
Other assets............................ 0
Total Assets............................ 258000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 225000...(1190).....2.74
Total secured & HP debts...... 225000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Total unsecured debts..........0.........0.........-


Monthly Budget Summary
Total monthly income.................... 3,937
Expenses (including HP & secured debts). 3,493
Available for debt repayments........... 444
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 444

Personal Balance Sheet Summary
Total assets (things you own)........... 258,000
Total HP & Secured debt................. -225,000
Total Unsecured debt.................... -0
Net Assets.............................. 33,000

Created using the SOA calculator at http://www.stoozing.com.


Thank you
Lizzy

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Re: Lizzy D update for 2018

#113274

Postby robbelg » January 25th, 2018, 12:16 pm

I don't think you've got anything to worry about.

A mortgage is VERY different to an overdraft/Credit card etc.

Don't think of it as £225000 of debt but £250000 - £225000 = £25000 of assets. ( and almost certain to increase )

Lots of people in this country would kill to be in your position


Rob

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Re: Lizzy D update for 2018

#113281

Postby Alaric » January 25th, 2018, 12:25 pm

robbelg wrote:A mortgage is VERY different to an overdraft/Credit card etc.


Assuming it's been set up on a repayment basis, every month you are nibbling away at the debt.

lizzydripin
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Re: Lizzy D update for 2018

#113364

Postby lizzydripin » January 25th, 2018, 6:37 pm

The mortgage is a repayment mortgage with Santander repaid over 21 years, 62 payments of £1180.44 due to me being nervous and locking in to a 5 year fixed rate, then remaining payments will go to £1338.65 unless we remortgage at this point.

Any way this assumes we ever buy the house as there have been numerous obstacles:

Originally we just wanted to buy the house as a shared ownership property and rent part, it felt much more affordable. We were unable to proceed with this as the current owner had extended the property, kitchen extension and conservatory, they wanted extra money to cover this and we couldn't find a mortgage company that would lend under those circumstances. We should have walked away!!

The current owner decided to staircase the property and then sell the whole property freehold. First problem was they had not got building regs for the extensions. They now have obtained this for the kitchen extension but maintain it is not needed for the conservatory.

I had also stipulated when I offered them the full price that it was on condition that it included the summerhouse, which was extra when it was only costing us £118,000 for the 40% fair enough, they accepted my offer but have since said they want £400 for it.

Now we have a further hold up as the housing association want to retain some rights over the property and want to charge us a management fee for the communal areas. Our solicitor is raising some objections but who knows where it will go. All the other properties at that end of the road are still owned by them.

If we do not exchange contracts by the 9th of Feb the housing association will revalue the property.

We had been given a provisional exchange date of tomorrow originally but obviously this will not now happen. I have already given a date to the internet company and most my possessions are in boxes. No wonder they say buying a house is so stress full, I feel at rock bottom. The up and down roller coaster this has been has finally got to me. :cry:

Seriously considering pulling out but have not got the funds to start over.

All the best
Lizzy

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Re: Lizzy D update for 2018

#113372

Postby midnightcatprowl » January 25th, 2018, 8:58 pm

Now we have a further hold up as the housing association want to retain some rights over the property and want to charge us a management fee for the communal areas. Our solicitor is raising some objections but who knows where it will go. All the other properties at that end of the road are still owned by them.

If we do not exchange contracts by the 9th of Feb the housing association will revalue the property.

We had been given a provisional exchange date of tomorrow originally but obviously this will not now happen. I have already given a date to the internet company and most my possessions are in boxes. No wonder they say buying a house is so stress full, I feel at rock bottom. The up and down roller coaster this has been has finally got to me. :cry:


Mmmm Bad behaviour on the part of the housing association - as they should have said this up front, but also some degree of negligence by your solicitor who should have been in a position to know this was a possibility. Lean hard on your solicitor, ring them every day or twice a day or better every couple of hours! If necessary take time off work if you possibly can and go and sit in the solicitor's office and make it clear you are not going away (take a flash of coffee and sandwiches with you) until they get it sorted. Solicitors are notoriously slow at doing things - and will always tell you it was the other party or the other party's solicitor who is to blame - unless you light a fire behind them! Solicitors can actually get things sorted remarkably fast when they realise they've no choice.

I'm sorry Lizzy about how you are feeling. All I can say to you is that anyone who has ever bought a house is familiar with the degree of stress involved and with the even greater levels of frustration involved. No one who has not bought a house can ever truly understand just how bad it can get and even people who've sold and bought many over the years still often find it incredibly stressful and unbelievably frustrating. After my third buy I swore I would never move again and haven't - if I end up in a nursing home the authorities will have to sell my house, it won't be me :D But seriously all the time younger friends and acquaintances are telling me about their awful house buying experiences and the delays and frustrations and stress. Something radical needs to be done about the house buying process in this country. It won't be in time to help you but I think it does help if you realise your feelings are quite natural and shared by so many. I can remember when I bought this house and there had been endless delays for no reason at all, I had to go into town to the solicitor and there was some excuse given for yet another delay in completion even though by then we'd exchanged contracts and I can still remember sort of waking up in floods of tears upstairs in the clothing department in M&S. I am not a tearful woman and I never buy clothes from M&S as they simply don't fit me even if I liked M&S clothes which I never have. I could only assume I was in a zombie like mode which was how I came to be upstairs in M&S. Not to mention that they didn't have a cafe then so I couldn't even drown my sorrows in coffee and cake!

lizzydripin
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Re: Lizzy D update for 2018

#115293

Postby lizzydripin » February 2nd, 2018, 6:31 pm

Thank you Midnight for your kind encouragement. I do realise I am not alone in this and it is a very stress full thing to do in any circumstances even if you are moving out of your own choice.

We are still not there yet though, the solicitor has managed now to get the restriction on internal alteration removed, totally ridiculous on a freehold property, but we still have the problem where it says that we may be liable for charges for repairs to the road, paths and communal areas. Apparently the way forward might be to ask for indemnity insurance. Although it now sounds unlikely that we can complete before the deadline as it takes time for the money to be transferred from the mortgage company.

I am just wondering if anyone noticed if I am missing anything from my SOA that I should have in as I really want to know that I can afford this and that there isn't something I have forgotten.

I should know by the end of next week one way or the other and on a positive note at least dry January is over. It took me ages to find the box I had packed the Gin in last night!! :lol:

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Re: Lizzy D update for 2018

#118553

Postby Pastcaring » February 16th, 2018, 11:43 am

Hi Lizzy

As a long term investor I think it depends on the view of debt.

I now live in Australia,when I left the UK in the mid 1970s everybody was terrified of debt,we all lived in council houses,fooling ourselves that nodody could afford to buy a house,the terror of debt.

A friend I worked with bought a house for around 16,000 pounds,around 4 years wages at the time,how did he sleep at night I thought.The house is now worth around 150,000 pounds,six years wages?.I don't know.








The real returns on property look far less than the nominal return.

Now the debt,if you rent a house for your life then it is a debt you cannot see,so you don't worry about it.However the unseen debt is still there and still has to be paid.Shall we say your debt is 400,000pounds for your life of renting.At the end of it you have nothing.Shall we say the mortgage you repay is 500,000 pounds ,at the end of it you have a property say worth 500,000 pounds.Does it seem worth it now,does that ease the worry?

The risk is equal,life happens,for me a case of leaving the North east to a different country rather than town or city.I thought the industry I worked in would die,sadly it did( heavy engineering) .My friend managed to pay off his mortgage,like myself he is now retired,he went through spells of unemployment but survived.

For the first 30 years of my life I also was terrified of debt ,then I changed the way I thought,so I fully understand your fears.The last 40 yes of my life were knuckle down and pay the debt back.Asset prices rise over the years,what looks really expensive now will look very cheap in 30 yes time.In 30 yes time time most people will be scared of debt and saying exactly the same thing.How can anybody afford a house.

Other friends rented houses all of their lives,they could not see how the debt of rent worked out far more expensive than buying the house.When they were offered their council houses at half price in the late 1980 ,s they would still not buy them,the fear of debt.

The house they could've bought for around 10,000 quid back then may now be worth around 120 K.They still cannot see it,I hope you can.

Good luck


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