the powerhouse
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Hi Folks,
I'm looking for a bit of clarity as I'm getting conflicting advice and I'm completely confused. My situation is as follows:
I am divorced with 4 kids. Two are in college and the other two are in secondary school. The divorce was amicable and we went through mediation beforehand. My ex-wife and I had the family home and 3 buy to lets. It was agreed that she would keep the family home and I would keep the buy to lets. They were cross secured against each other and were on a tracker. Combined, they just about broke even but the tax bill and management fees etc. crippled me every year.
There wasn't much equity in them but this has improved the last couple of years as the mortgage balances decreased. I decided to hang onto them until there was a decent amount of equity in them. I had managed them throughout and my plan when I bought them 20 years ago was to have them as a pension and an inheritance for the kids. This obviously changed with the divorce but if I had given into pressure at the time I would have walked away with very little. There is equity now so last year I sold one of them. The bank told me that I had to put the money I made into the remaining properties. I had a small credit union loan as well and I had to repay that as well. They allowed me money for fees from the sale. I lost the tracker rate.
I chose to put all the profit into the property that was running at a loss. The balance went from 143k to 65k. It meant that for the first time ever I was making a profit from this Buy to let. Up to that point I had to supplement it from the profit the other two had been making. However, it was difficult to maintain and the rental market where it is located fluctuates and there's always hassle renting it out. I decided to sell it In December 2020 and it had a buyer within days of going on the market.
As it stands I would make a profit, after fees, of 105k from the sale. I had to get permission from the bank to sell it and asked them if I could take the profit for myself with a view to putting it towards a house. I do not want to be lumbered with a huge mortgage at this stage.
I assumed that the remaining Buy to let would be viewed as being viable (Mortgage 145k, rent 1400pm, mortgage repayments 1250pm, value 260k). I've never missed repayments on any of them, have no personal loans, no car loans, and my rent is 350pm. They told me that they want to put approximately 50k into the remaining buy to let. This would leave me with approximately 55/60k. The mortgage repayment would reduce to 800pm and I'd have a profit of approximately 600pm. There is about 9.5 years left in the term.
I'm at the point now of wondering if I should just put the profit (105k) from this sale into the remaining buy to let. This would reduce it down to 40/45k, repayments would drop to 400pm and I would have a profit of 1,000pm. If I maintained the present repayments of 1250pm I'd have it paid off in about 2.5 years.
The other option is to sell it as well. I bought it for 190k in 2002 so I'm not sure how much CGT I'd have to pay if stamp duty that I paid at the time is taken into account. If I sold it as well I reckon I'd have about 200k profit.
This would obviously mean that all my plans regarding an inheritance for the kids would go out the window. However, the last few years have been very difficult in every sense and I have struggled to keep the head above water. I earn about 60k per year apart from the buy to lets. My ex wife sold the family home and is intent on moving about 2 hours away with her new partner. We get on well but it was always a battle to keep things calm and I've had to concede a lot to maintain that. I lived in dread of her taking the kids away before this. I've managed to build up and maintain a great relationship with them and I'm content that they are anxious to remain part of my life. I have lived hand to mouth for the last few years and I've been struggling financially.
The positive news is that I have a new partner. We both want to buy a home together. My kids are very happy about this and we want it to become their new home. Where we live a budget of about 300k would buy a substantial property. My new partner is a first time buyer and earns about 45k.
My question(s) are:
(a) Should I just sell up everything and start with a clean slate?
(b) Should I try and convince the bank to give me the profit from the present sale and try and hang onto the remaining buy to let?
Thanks in advance and sorry if it's not clear.
I'm looking for a bit of clarity as I'm getting conflicting advice and I'm completely confused. My situation is as follows:
I am divorced with 4 kids. Two are in college and the other two are in secondary school. The divorce was amicable and we went through mediation beforehand. My ex-wife and I had the family home and 3 buy to lets. It was agreed that she would keep the family home and I would keep the buy to lets. They were cross secured against each other and were on a tracker. Combined, they just about broke even but the tax bill and management fees etc. crippled me every year.
There wasn't much equity in them but this has improved the last couple of years as the mortgage balances decreased. I decided to hang onto them until there was a decent amount of equity in them. I had managed them throughout and my plan when I bought them 20 years ago was to have them as a pension and an inheritance for the kids. This obviously changed with the divorce but if I had given into pressure at the time I would have walked away with very little. There is equity now so last year I sold one of them. The bank told me that I had to put the money I made into the remaining properties. I had a small credit union loan as well and I had to repay that as well. They allowed me money for fees from the sale. I lost the tracker rate.
I chose to put all the profit into the property that was running at a loss. The balance went from 143k to 65k. It meant that for the first time ever I was making a profit from this Buy to let. Up to that point I had to supplement it from the profit the other two had been making. However, it was difficult to maintain and the rental market where it is located fluctuates and there's always hassle renting it out. I decided to sell it In December 2020 and it had a buyer within days of going on the market.
As it stands I would make a profit, after fees, of 105k from the sale. I had to get permission from the bank to sell it and asked them if I could take the profit for myself with a view to putting it towards a house. I do not want to be lumbered with a huge mortgage at this stage.
I assumed that the remaining Buy to let would be viewed as being viable (Mortgage 145k, rent 1400pm, mortgage repayments 1250pm, value 260k). I've never missed repayments on any of them, have no personal loans, no car loans, and my rent is 350pm. They told me that they want to put approximately 50k into the remaining buy to let. This would leave me with approximately 55/60k. The mortgage repayment would reduce to 800pm and I'd have a profit of approximately 600pm. There is about 9.5 years left in the term.
I'm at the point now of wondering if I should just put the profit (105k) from this sale into the remaining buy to let. This would reduce it down to 40/45k, repayments would drop to 400pm and I would have a profit of 1,000pm. If I maintained the present repayments of 1250pm I'd have it paid off in about 2.5 years.
The other option is to sell it as well. I bought it for 190k in 2002 so I'm not sure how much CGT I'd have to pay if stamp duty that I paid at the time is taken into account. If I sold it as well I reckon I'd have about 200k profit.
This would obviously mean that all my plans regarding an inheritance for the kids would go out the window. However, the last few years have been very difficult in every sense and I have struggled to keep the head above water. I earn about 60k per year apart from the buy to lets. My ex wife sold the family home and is intent on moving about 2 hours away with her new partner. We get on well but it was always a battle to keep things calm and I've had to concede a lot to maintain that. I lived in dread of her taking the kids away before this. I've managed to build up and maintain a great relationship with them and I'm content that they are anxious to remain part of my life. I have lived hand to mouth for the last few years and I've been struggling financially.
The positive news is that I have a new partner. We both want to buy a home together. My kids are very happy about this and we want it to become their new home. Where we live a budget of about 300k would buy a substantial property. My new partner is a first time buyer and earns about 45k.
My question(s) are:
(a) Should I just sell up everything and start with a clean slate?
(b) Should I try and convince the bank to give me the profit from the present sale and try and hang onto the remaining buy to let?
Thanks in advance and sorry if it's not clear.