cut losses and sell ?

E

eyesgreen_1

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hi..ive got myself into a bit of a financial mess..ive recently become unemployed and running dangerously low on money...I bought investment property 2 years ago..paid €198,500 its worth €165,000 now..theres €177,000 left on morgage..repayments are €1018 per month-5.6% fixed rate with ulster bank until nov when they will offer me variable or fixed options....rental income is only €600 per month..so over last 2 years i have to add €418 per month to make up the €1018 monthly repayment ..(€8000 over last 2 years) and even if my new variable rate brings repayments down to around €830 per month that will still be a shortfall of €230 per month (€2500 per year) over next few years that ill have to pay along with the rental income..so im just wondering does it make financial sense to hold onto this investment property ?...also my own home has €81,000 left on the morgage and is worth €160,000 so has around €75,000 equity in it...my question is in the long run would i be better cutting my losses and selling rental property ?..im not working at the moment so dont think bank would allow me to remorgage my own home as things are getting tight...ive thought about selling my own home and putting the €75,000 equity in a deposit account and moving into rental property..id prefer not to sell my own home as its been my childrens family home...also thought about asking bank if i could go interest only on rental property but again dont know in the long run is that advisable and dont know how that affects repayments after interest only period is up?..just wondering what a financial advisor would advise me to do in this situation and which option would make the most financial sense now in the long run? or is there anything im missing or havent thought about...any help on this would be greatly appreciated..many thanks.
 
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could you take on a tenant in your current home to make up the difference until you can go variable on your investment home?
 
Unfortunately not...im a single parent with two teenagers of 16 and 14 and its a three bedroom house so it wouldnt be suitable...but thanks for the suggestion.
 
You need to come clean with your bank and explain your situation to them before it deteriorates any further. They should allow you to go interest only, until you can afford to continue making capital repayments.

Might be worth popping into your local MABS office (www.mabs.ie) to get more specific advice, before approaching the bank. Do this as a matter of urgency.

Sorry for your troubles - but know that all these things will pass in time, even if it doesn't seem like that right now.
 
You need to consider the cost of servicing the interest and other costs associated with the investment property V's the rent.

If you will still be losing money it might be worth considering selling the property.

Might be interesting to put it on the market. Unfortunatly it might be worth less than you think.
 
Thanks guys for your advice and for taking the time to reply...yep a lot of considering to be done...thanks.
 
eyesgreen needs be as needs must, sell the family home take your equity and either pay off lump sum on rented property and move in yourself, or pay off lump sum and rent somewhere. i appreciate that this is very easy for me to say and it is unclear if your rented property is close to where you live at moment. sorry to hear your plight
 
Based on the info provided, it looks like you have no choice but to sell family home and move into the other property, using the spare equity to pay you mortgage for few years. What kind of work do you do and what are your chances of getting some work even if just temporary work, even few hours a week somewhere to bring in some cash.. Best of luck
 
Thanks both for your interest and advice...I work in the arts so my work ranges from somtimes lots of work and well paid to none at all...thats the nature of how it goes...ive been considering both options of having to sell ect and i also realise beggars cant be choosers..but not even sure if house will sell in this market...and you end up in denial thats its got to this and childrenwise its not easy giving up family home but your right if needs must the thats it..theres others far worse off i know that..but its easy for it all to get on top of you so you cant think straight...anyway ive survived this long so ill find a way..but thanks for your advice and for your kind wishes..thankyou.
 
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