# Sell second home to pay off debts?



## el88s (23 Nov 2008)

HI there. this is my first time to post so im hoping i may get some advise.
i have 2 houses. 
one is family home worth 460 (before the recession bit) with 60k still owing on the property.
the other is an old renovation project with potential for developement worth 260k with no mortgage. 

sounds great ??  problem is, im flat stony broke. i dont know what to do. 


i recently divorced and have to pay my ex his portion of house which is 155e. 
i reckon solicitors fees are going to be in the region of 40k (had to purchase the freehold and had to go to court for that as well as the divorce.) 

the capital gains tax if i sell the 2nd property is approx 40k and the freehold is 15k. 

I have a lot of personal debt trying to keep up with everything on my own. 

currently my income is about 25k per year. 


i dont know if i should sell the 2nd house, if i do, i reckon ill still owe money and will not gain enough to get me out of debt. 

im wondering if i should try to raise money from the bank and renovate the property, maybe even knocking down the old house and building 2 small townhouses?? would it be worth the grief or would i be putting myself deeper in trouble. any advise ? greatly appreciate it if you have. Cheers.


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## Brendan Burgess (23 Nov 2008)

With an income of €25k, you cannot afford to have €720k worth of property. It is just too risky. 

The banks will not lend you for the renovation project. Even if they did, it would be financial suicide for you to undertake such a risky project. 

Sell the development project for whatever you can get for it. That will get rid of most of your debts. 

You can then decide if you can justify retaining the family home or not. With an income of €25k, are you able to make repayments on the €60k mortgage? 

Can you rent a room? Even better, can you rent the entire house and find somewhere cheaper to live for yourself?  

These options might not appeal to you, but financial engineering won't solve your problems. 

Brendan


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## el88s (23 Nov 2008)

Brendan, thank you so much. its difficult to know what to do when youre on your own in a situation. cant see wood for trees. hadnt thought of renting. maybe might be an option for me.... appreciate it, if you have any further thoughts, id love you to post them.


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## el88s (23 Nov 2008)

thank you


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## Diziet (24 Nov 2008)

The first thing to do is to get realistic valuations (not pre-recession ones, which are just wishful thinking). Your family home is unlikely to be worth 460K at present.

One you do this (as the auctioneer to price for quick sale), hen write down exactly how much you owe. Ask the solicitor for what the bill will be. 40K is a lot of money to be unsure about.

As for undertaking a renovation project, as others said, don't go there. You are on a lowish salary and to be honest you don't seem to have a particularly good grasp of your financial position. Work on really understanding exactly what your financial position is, your income and outgoings, and price up some alternatives. or example, sell the project and pay your debts, rent the family home and you rent somewhere else, or sell both properties and buy something  smaller (hopefully mortgage free or with a small mortgage). 

Do you have kids? This is another factor to consider.


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## Lou34 (24 Nov 2008)

Sorry if this is the incorrect forum for my question but I am new to the site and unsure how to start a new post!!!

 Hi All

  Would be grateful for advice on the following.

  I have a joint mortgage with my ex-partner (also joint names on Deeds etc.)  We split over 2 years ago and I have been making all mortgage payments myself (currently on interest only and due to revert to interest and capital in April 2008).  At the moment I can just about manage the payments but in April they will go up to €1,800 a month which I cannot manage.  I rang the bank to see if I could extend the term of the mortgage however due to his age (42) it was declined.  They suggested that I transfer the mortgage to my name and remove him from the deeds.  At the moment the mortgage outstanding is €263,000.  We would be lucky to sell the house for that in the current climate.  In fact it has been on the market for 5 months with  not one viewer.  

  I have applied to the bank for the equity transfer and it looks likely they will approve it as I have proven my track record by keeping up all payments myself.  If approved I could extend the mortgage term and things would start get easier.

  However, my ex seems unwilling to agree to this.  I am worried the house will go into negative equity next year and told him this.  I thought he would be happy to not have this worry.  I have tried everything, I cannot sell it and I am really not comfortable to keep paying a joint mortgage by myself and then if say in 5 years the property had risen a bit in value, hand over half the proceeds when he has invested nothing (also I put up the original deposit of 30K from the proceeds of the sale of my previous property).

  Any advice would be most appreciated.   I have also offered the house to him but he doesn’t want it as he now has another mortgage and house with his new girlfriend and also is likely to lose his job shortly –  I really think I am being fair here.  I don’t want to continue with the current arrangement for the foreseeable.  In addition I also have a loan of €20k which I am paying off (this was accrued as a result of being left to pay the  mortgage by myself.  The whole thing just seems really unfair.  Am I being realistic and fair by offering to take on the mortgage especially when I run the risk of taking on possible negative equity?  The house is probably already in negative equity by a few grand.  I could have just walked away leaving him liable for his share of the mortgage but I honoured my responsibilities (both our responsibilities in fact).  I am just about at the end of my tether with it all and any advice or comments would be appreciated.


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## Purple (26 Nov 2008)

Lou34 said:


> Sorry if this is the incorrect forum for my question but I am new to the site and unsure how to start a new post!!!
> 
> Hi All
> 
> ...



Yes, you should have started a new thread.


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## Purple (26 Nov 2008)

el88s said:


> HI there. this is my first time to post so im hoping i may get some advise.
> i have 2 houses.
> one is family home worth 460 (before the recession bit) with 60k still owing on the property.
> the other is an old renovation project with potential for developement worth 260k with no mortgage.
> ...



You say you have a lot of personal debt. What's "a lot" and how is it structured?


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