equity and moving on

[sheldo]

Hi guys just after a little advice from people.

Me and my mrs brought our home four years ago and have since had a kiddy. Its a two up, two down with shower room/wc downstairs and family bathroom upstairs. Big kitchen/diner and decent lounge with a smallish but adequate garden. Its got off road parking and is ten minutes walk to town and five minutes to the local train station. The thing is we are starting to get a bit tucked up for space and would like to move on.

Here's the problem, ive got some savings ready for a deposit on a new home, but we have no longer got any equity in this home, we owe nearly exactly what it is worth now due to house prices falling, despite making extra repayments. So what are my options i dont want to just give away what i have worked hard to have for the last four years. Its a new build so extending is not an options for at least another 6 years.

I have no other outstanding debt and have an excellent credit history. This home would make a fantastic buy to let in a market that seems to becoming more in demand at the minute. Should i just cut my losses and move on, put my savings into this house and then try to pay off more and more of the loan early. Put my savings into this home and then try and get a let to buy mortgage. Or buy an ivestment property and try to make that work hard for me over the next few years and grin and bear it here?


any advice/critacism welcome

[Eric Mc]

Loft extension?

[sheldo]

not an apex roof so wouldn't work but thanks

[Eric Mc]

Wasn't trying to be cheeky or anything.

In our area there are quite a few house and loft extensions under way at the moment. Obnviously, not every house is suitable for such development but it is an option sometimes if you need more space but actually selling and moving is difficult.

[bogie]

Id pay as much as you can off the existing mortgage and sit tight another year or so, see what happens to the market

[Road Pest]

My advice would be rent this property out and find somewhere new to rent yourself.

ETA obviously depending on the figures, i.e. rental income vs mortgage and costs vs rent payable on bigger place.

Edited by Road Pest on Wednesday 29th December 16:00

[Eric Mc]

Not always possible - and you would have to consider both the lender's rules on letting your home and the income tax (and possible Capital Gains Tax) implications of letting your former residential home.

[sheldo]

It was a good suggestion Eric but its just not an option for this house. Have thought about putting my savings into this house and tyring to get a buy to let mortgage and then rent something bigger for us. Only thing is we have two dogs but im sure there's landlords out there that will rent with pets.

Just felt like this option was abit more like going backwards than going forwards. I just don't know how other people have managed to do it.

[Eric Mc]

Not much point on traying to climb a ladder that itself is falling faster than you can climb up it.

[otherman]

If you want to move then do it. Houses are for living in number one. If you're having to sell in a low market you also get to buy in a low market so you haven't really 'lost what you worked for'

[princeperch]

otherman said:

If you want to move then do it. Houses are for living in number one. If you're having to sell in a low market you also get to buy in a low market so you haven't really 'lost what you worked for'

but it's not that simple is it assuming you are not coming in with a bag of cash - a falling market not only impacts on your ability to move up the ladder but it also causes problems when you need to refinance in 2 years (or so) time - thats when any significant paper loss crystalises itself in the form of a jolly big kick in the nuts from your lenders surveyor and a nice letter saying you will now be paying upwards of 6% unless you write us a fat cheque to bring it within x LTV (and I have sued 3 surveyor's firms for dodgy valuations in the last 18 months)...

[princeperch]

anonymous said:

[redacted]

Well I moved jobs after issuing on the last one so can't comment on that one. The other two settled for about 60% of the issued claim without going to trial (and I thought we were on a bit of a sticky wicket to be honest on both of them)

All that is now behind me and now I concentrate on trying to dig the home office out of the st heap it finds itself in within the administrative court on a daily basis..

[LeoSayer]

Your house sounds perfect for your family's needs.

Make the most of the space you have by clearing out clutter and then spend the money on a Cerbera.

[otherman]

princeperch said:

otherman said:

If you want to move then do it. Houses are for living in number one. If you're having to sell in a low market you also get to buy in a low market so you haven't really 'lost what you worked for'

a falling market impacts on your ability to move up the ladder

actually falling markets make it easier to move up the property ladder because the differentials erode. Its only because people rely on rising prices to make up the deposit on a bigger house that inflation looks attractive. Other than that house price inflation is a dog just like any other inflation - it makes stuff harder to afford.

[princeperch]

otherman said:

princeperch said:

otherman said:

If you want to move then do it. Houses are for living in number one. If you're having to sell in a low market you also get to buy in a low market so you haven't really 'lost what you worked for'

a falling market impacts on your ability to move up the ladder

actually falling markets make it easier to move up the property ladder because the differentials erode. Its only because people rely on rising prices to make up the deposit on a bigger house that inflation looks attractive. Other than that house price inflation is a dog just like any other inflation - it makes stuff harder to afford.

Which is all well and good if you have a big bag of cash to present to the buyer.

But if you dont, it comes back to the risk of the surveyor violating you once again...and that's if you can actually sell your place...

[NoelWatson]

sheldo said:

Hi guys just after a little advice from people.

Me and my mrs brought our home four years ago and have since had a kiddy. Its a two up, two down with shower room/wc downstairs and family bathroom upstairs. Big kitchen/diner and decent lounge with a smallish but adequate garden. Its got off road parking and is ten minutes walk to town and five minutes to the local train station. The thing is we are starting to get a bit tucked up for space and would like to move on.

Here's the problem, ive got some savings ready for a deposit on a new home, but we have no longer got any equity in this home, we owe nearly exactly what it is worth now due to house prices falling, despite making extra repayments. So what are my options i dont want to just give away what i have worked hard to have for the last four years. Its a new build so extending is not an options for at least another 6 years.

I have no other outstanding debt and have an excellent credit history. This home would make a fantastic buy to let in a market that seems to becoming more in demand at the minute. Should i just cut my losses and move on, put my savings into this house and then try to pay off more and more of the loan early. Put my savings into this home and then try and get a let to buy mortgage. Or buy an ivestment property and try to make that work hard for me over the next few years and grin and bear it here?


any advice/critacism welcome

sheldo said:

i dont want to just give away what i have worked hard to have for the last four years

Not sure what this means??

sheldo said:

This home would make a fantastic buy to let in a market that seems to becoming more in demand at the minute

By fantastic assume you mean you could get a gross yield of around 10%?

sheldo said:

Or buy an ivestment property and try to make that work hard for me over the next few years

Why do you want to double up in a falling market?

[NoelWatson]

otherman said:

actually falling markets make it easier to move up the property ladder because the differentials erode.

But you will be increasing the downside.

[sheldo]

LEOSAYER i have done as you said and removed any clutter but with the growing amount of stuff our son has i am worried that before long we wont be able to move. This is all thinking ahead sort of stuff for the near future when we deffinatley will be out of room. Who do you work for Leo as i have a CP with your exact user name?

NoelWatson, what i meant by not just giving away what i have worked hard for means not just giving away the deposit i saved, all the fees, stamp duty and 4 years worth of interest and equity i have paid out just to sell it. I didn't just go out and get a 100% mortgage and load all the fees onto it and not worry about the consequences. It was a case of needing a home to live in and no choice, however bad timing.

As a rental property i meant it would be easy to let not only due to the market but also the location, size and quality of the home. As for the yield i need to get some more accurate valuations of the property and look into exactly what i could rent it for, and then weigh up the btl rates and see if i have enough cash to get a good ltv rate for a mortgage.

As for doubling up this is the reason i am after advice from people more in the know than myself. The sort of investment property i would look to buy would probably be a flat and they seem to have dropped to what i feel is as low as they can go and i know i could get a decent yield from one.
I bought our home 4 years ago just as the recession hit and was bad timing perhaps now i could capitalise on a market they may go the other way?

What would you suggest? keep it in the bank, pay more off this mortgage?

[sheldo]

By the way after selling my chimaera 18 months ago, the urge to go out and get the cerbera i wanted is growing, hence why im after sensible advice from many sources

[Road Pest]

sheldo said:

It was a good suggestion Eric but its just not an option for this house. Have thought about putting my savings into this house and tyring to get a buy to let mortgage and then rent something bigger for us. Only thing is we have two dogs but im sure there's landlords out there that will rent with pets.

Just felt like this option was abit more like going backwards than going forwards. I just don't know how other people have managed to do it.

I'm sure you'll be able to find a landlord OK with pets. You get to keep on the property ladder (renting the existing house) and get the home you need by renting somewhere from someone else, I don't see what the issue is? If you take on a second property on BTL then you're leveraging yourself on two properties in a very uncertain market so I guess the question is what's your view on financial risk...

Edited by Road Pest on Friday 31st December 17:20