Advice sought: How can we move up the ladder?

My husband and I bought a small two bed mid terraced house 7 years ago with a mortgage from HSBC. We currently owe £111,000 and the property is worth about £119,999 (we've recently had three valuations) We have £2,000 in savings. My husband has been a self employed Electrician for 2 years and earns around £27,000a year (£21,000 profit roughly). I work part time as a recruitment consultant (we have a 18 month old daughter) and earn about £12,500 a year (£25,000 pro rata). We have outgrown our house and as we have no garden and the kitchen is so small our washing machine and freezer are in a outdoor shed - it no longer suits our needs. We feel stuck and don't know what to do. We don't have enough money for a deposit for a larger house (£150,000 purchase price roughly). We currently pay £675 a month in mortgage payments and could realistically afford £900 a month. Not only have we outgrown our house our area has unfortunatley gone down hill recently - we have had our bicycles stolen from our back yard and both veichles have been vandalised. I am probaly making this sound worse than what it is. We live in a nice area of York, but sadly a lot of the houses around us have been rented out to students and low income couples who sadly have brought the area down. We don't know what we can do. Can anyone advise? x
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  • Thrugelmir
    Thrugelmir Posts: 89,546
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    Overpay your mortgage to build your equity. Is the first step.

    Also review your outgoings to see where some some savings can be made. Channel this into your mortgage as well.

    By reducing your mortgage you'll pay less interest and therefore pay off more capital.

    There's no quick easy solution. More a question of choices and priorities.
  • opinions4u
    opinions4u Posts: 19,411 Forumite
    Save (or overpay to get debt down). Hard.
  • Daytona
    Daytona Posts: 62
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    It strikes me that you have too little in savings. Do you know where the money you earn is going ?
    http://www.stoozing.com/msoc/soacalc.php

    Forget most high street lenders for self employed income, talk to SE specialists -
    https://www.google.co.uk/search?q=self+employed+mortgage

    MSE mortgage broker guide -
    http://www.moneysavingexpert.com/mortgages/best-mortgages-cashback
  • Thank you for your reply. Yes I do know where the money we earn is going .... Childcare costs us £700 a month (sadly we have no friends or family available to care for our 17 month old daughter when we are at work). The rest is our mortgage (£650 a month) Council tax £147 a month) Van insurance for my husbands business (£97 a month - he is only 26 with 3 years driving experience) Car insurance for me (£30 month) household bills, TV license, water, Gas etc (£130 a month) Insurances (health, life, critical illness £210 a month - sadly my husband smokes and his dad has had cancer, heart diesese and a stroke and therefore his premiums are high) Diesel (for my husbands van which he uses for his self employed electrician business - £420 a month - he roughly travels between 300 a 400 miles across the region per week for work) Petrol for my car (£120 a month) Rest is food shopping and misc (not a lot). Hope this makes sense. Not much left to make overpayments - sadly.
  • latecomer
    latecomer Posts: 4,321
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    tell your OH to stop smoking (cite your 17month old daughter his fathers health problems as ample reason) and put the money saved into mortgage.
  • But if you can't afford overpayments how will you afford the higher mortgage and council tax and bills that come with a larger property? You really need to simulate those extra outgoings by making overpayments to be sure you really can afford. More expensive house. Don't forget you we'd to save for stamp duty, moving costs estate agent's fees etc too.
    I'm a qualified accountant but please make sure you get expert advice as any opinion is made in a private capacity.
    "A goal without a plan is just a wish" Antoine de Saint-Exupery

    Mortgage overpay 2012: £10,815; 2013: £27,562
    Mortgage start £264k, now £232k
  • k3lvc
    k3lvc Posts: 4,175
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    As with the others I'm struggling on how you'll afford £900 a month when you've limited savings and are currently paying £650 :huh:

    Given hubbys mileage does he have to be in York itself (not the cheapest place to live) or would it be better to consider Selby/ Pocklington/Malton/Tadcaster to give you more bang for your buck ?

    If you're already paying childcare then depending where your work is you may find it as easy to commute from one of these.
  • fiesta04
    fiesta04 Posts: 516 Forumite
    Could you change your job to fit in when Hubby is at home?

    If you are now earning £12,500 and you are paying out
    £700pm for child care and £120pm for petrol = £820 from £1000pm earnings, which means you gain £180pm working. And that is if the£1000pm is after tax and not before.

    Good luck

    F4
  • pawlala
    pawlala Posts: 1,416
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    latecomer wrote: »
    tell your OH to stop smoking (cite your 17month old daughter his fathers health problems as ample reason) and put the money saved into mortgage.
    When he's done that, tell him to contact your CI/LI insurers, the premiums will undoubtably be much less.
  • squeeks
    squeeks Posts: 309 Forumite
    edited 13 November 2012 at 6:43PM
    Sanity aside is it worth while working, given all the costs involved?

    The 2K you do have, is this all the money in the world or the actual amout you have available for a deposit? The next step up will probably also incur stamp duty on top of legal/estate agent fees etc... So it gets expensive quickly, or at least will demolish 2k.

    Most lenders seem to be requiring 10% LTV or higher. So after clearing the mortgage it is going to be a struggle.

    If you can't buy the next house up, but need to move to something either larger or in a different area you can sell and move in to rental accommodation. It may not be ideal, but may be better than your current circumstances
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