mortgage, rent and finance?


Hmm, just wondering if anyone had been in a similar situation really... I've just started my PhD after working for three years. I bought a flat with my husband a few years ago. We moved away from about a year ago (because of work), and we put our flat up for sale. We were lucky enough to get jobs in the same city and doubly lucky that we had relatives to live with rent-free whilst we waited for the flat to sell.

Unfortunately, the flat has been sitting empty for a year now and is very unlikely to sell. Thankfully my PhD is in the same city as my husband's work so we've decided to a) rent out our old flat, and b) rent a new place for six months and see how things are like then.

So we found a new place, signed a contract, spoke to our estate agents back home, everything was fine... until this morning, when our mortgage lender refused to let us rent out our flat.

This is pretty disastrous... it means an extra £500 a month paying the mortgage and council tax (no student exemption on an empty flat), plus paying rent on somewhere near to Uni (even if we hadn't signed a contract on our new place, it would be impossible to live with family any longer). Even with us both getting paid, that's more than half our combined income just going on accommodation. Doesn't even cover travel costs, etc.

Student services stared at me blankly and handed me an Access to Learning Fund form, which I will apply for, but that means telling my supervisor I'm in financial difficulty because he needs to sign my application. I've only been here three weeks!!

I'm not asking what I should do, I just wondered if anyone else had been in a similar situation with finances, hardship and accommodation? I don't really want to tell my supervisor but I suppose I'm going to have to. I really don't want to be seen as a "problem" when I've only been here a few weeks.

Avatar for sneaks

======= Date Modified 17 Sep 2010 13:36:42 =======
You don't have to pay council tax on a vacant property - just inform them.

On another note, how many bedrooms is your flat?

If its more than one, then you can rent it out to a 'lodger' and say that you are still living there. That way you do not have to have a 'buy to let' mortgage, because its a lodger, not a tennant, an important distinction.


Quote From sneaks:

======= Date Modified 17 Sep 2010 13:36:42 =======
You don't have to pay council tax on a vacant property - just inform them.

On another note, how many bedrooms is your flat?

If its more than one, then you can rent it out to a 'lodger' and say that you are still living there. That way you do not have to have a 'buy to let' mortgage, because its a lodger, not a tennant, an important distinction.

Be very careful about doing this as if your insurance / mortgage find out they could consider it fraud.


Thanks both of you. I'd thought about the Rent A Room scheme but the flat is only one bedroom so I don't think anyone would fall for it.

Council tax exemption on an empty flat is only short-term. The flat has already been vacant a year, so we didn't have to pay council tax for the first six months, then it went to a reduced rate for the next six months. Perfect timing being what it is, it goes back to full rate next month, which is a bugger.

I'm just frantically trying to figure out exactly what my deficit is, and whether I can make up my costs with teaching or applying for grants. If it's a hundred quid or so a month more than we can afford, the situation might be annoying but manageable. If the costs go way over, it's going to become serious pretty quickly.

My bank has already refused an overdraft extension (but they have made HALF of my existing overdraft interest-free).

Just when I want to devote all my attention to EndNote and Web of Science...

Avatar for sneaks

======= Date Modified 17 Sep 2010 14:39:49 =======
Do you know why your flat isn't selling? Does it need a whip round with some (dull) magnolia? or the price dropping? I guess you need to work out whether you'd be better off losing a bit on the flat against not being out of pocket every month. Rubbish situation though.

ETA: if the flat has a separate living room, it could become a 'bedroom' - as we did for many years when renting out all the rooms of our house (apart from the one we used as our own room) to students.


Thanks Sneaks.

Well, we've dropped the price twice, and can't go any lower without getting into negative equity. I completely redecorated the place about five months ago: new carpets, kitchen tiles, magnolia walls etc.

There are two problems with the flat:

1) It's a first-time buyer property. We bought it on a 100% mortgage -- which no longer exist -- and very few people, if any, have a deposit right now. Someone would need £10-15K going spare, which few first-time buyers have.

2) It is in an area with a depressed housing market: a small commuter town with no large employers. There is also a saturation of available property in the town, as there was a large housing development completed just at the start of the recession, so the market is already saturated with unsellable homes.

All in all it's a bad combination. Only four people have looked at it in a year. We did have someone put an offer in about six months ago, but they were turned down for a mortgage in the end.

Avatar for sneaks

sounds a bit like my place - we put it on the market and had to drop it a few times. In the end we just kept it as we didn't see the point of selling it for tuppence and buying a much smaller property for more money! (moving nearer london) so now we just commute.

I'd have another go with the mortgage company. You could ask for a payment holiday, or another advisor might be more sympathetic to the buy-to let thing - try talking to a supervisor, as the guys you talk to on the phone are just filling in forms anyway to get an answer for you.


This seem quite a horrible situation. Your action, i suppose depends on how likely you think it is to sell within the near future. If you can afford to keep paying rent and morgage in the hope it will sell in say six months time then its best to carry on in the hope it will sell. if however your overdraft is getting larger and larger , then you will just get deeper and deeper into debt and it may be the case that you have to cut your losses, take a hit on it and sell it in negative equity.

You could rent it unoffically to family/friends cash in hand... though as mentioned this may be a little naughty...


Thanks. Sneaks -- I phoned them up earlier and asked for a payment holiday but they said no because we haven't paid off enough of the mortgage (it needs to be below 85% -- we've only reduced it to 88%. grrrrrr). And we can't adjust the rate because it's fixed term (and a pretty good rate anyway).

I'm going to leave it over the weekend and reapply on Monday. In the meantime I've been looking at our finances: I think we might just about manage (at least for six months or so) if I can get an ALF grant or I can get some teaching work. But I'll definitely have to tell my supervisor...



ps I really don't believe it's going to sell, at least not in the near future, which is why it seemed so important to rent it out. There are other houses near our flat that have been on the market for two years.

Apparently the buy-to-let rules are very specific with this lender, and they will only allow it if the rent is guaranteed to exceed the mortgage by an extra 25%. In our area, we wouldn't even cover the mortgage, let alone make a profit, so I doubt they'll budge. It's so frustrating. I just feel like they've said "no" at every stage, without even trying to listen to the situation.

What worries me is leaving it empty then having to deal with some huge structural repair cost (boiler, roofing etc). We've already paid out for damp-proofing and timber treatment this year. It's becoming such a drain.

Avatar for sneaks

Could you borrow money from family to make 85% up to 88%? It may make you better off in the long term.

Just remember to turn off the water and the gas. Do you know a nice neighbour you could leave a key with and your phone number in case they see anything 'suspicious'?


Yeah, that's kind of what I'm thinking -- borrow some money and pay off more, then take a six month payment holiday, whilst living on a budget and saving up anything left over at the end of the month. It might be the only option.


Poor you, what a nightmare. My sister and her husband are in exactly the same situation - they've been trying to sell their old place for a while, but with the current market being what it is, just haven't been able to. In the meantime, they've had to move across the country for his job. She can't get work there, and they have 2 kids, so it's a real trial.

Back to your situation: if the bank won't let you take a payment holiday, and assuming it's currently a repayment mortgage, could you try and transfer it to interest only? OR, would they let you extend the duration of the mortgage? When we got our place, they wouldn't let us have it on a 30 year term, but they didn't mind if we paid it back over 31 (?!) It worked out cheaper on a monthly basis for us, but obviously they're winners in the long-run (no surprise there then.)

If it's really not affordable (and yes, I realise this is technically not cool and fraudulent, but if desperate...) I'd be inclined to rent it in short term bursts on the quiet and on the cheap to needy mates.

Good luck x


PS Don't mean to add to your headaches here, but don't forget to clear everything with your insurance company. Most have a get-out clause if you leave the property for more than just holidays. It'd be awful to have to deal with that on top of everything else if anything were to happen (and fingers crossed it won't).


Thanks, I hadn't even thought about the insurance situation.

I've spent the day trying to make alternate arrangements. It looks like we're stuck for the next six months, although our estate agents suggested we still let it through them without telling the bank. I don't mind the suggestion of quietly renting to friends and family (though I don't think I would because I went through an eviction as a teenager and I'm terrified of getting caught), but I'm extremely unhappy at my estate agent recommending that I break the law, and so overtly (the propertly would be advertised through them... think of all the databases that would show up on!!).

I decided against complaining to the Financial Standards Authority on that one, but I was rather curt with my estate agent.

Anyway, I've decided to give it six months until the end of my new tenancy (if I still get it with all this going on -- won't find out until Wednesday), and see if we can survive financially without getting into arrears.

Of course, six months time is precisely when I am due to go overseas for fieldwork for six weeks. Great timing, but then, it would have to be...

I've spent the day searching desperately for schemes, funds and services. I've applied for two grants already and shortlisted five others. There are a few I will keep in the back of my mind in case this really does get scary.

The thought of mortgage arrears, CCJs or bankruptcy during my doctorate doesn't appeal to me, so I'm eyeing the situation nervously.