Please advise.... if you can!!!!

M1977

Hello all.

I am after some sound advice if you can help. I will try to keep this simple as best as I can. My wife and I currently live in the Midlands and we HAVE to move back to Kent by the 1st September as my wife starts her new job then and my lad starts school. (I already work in London).

Here lies the problem. My house up here is currently on the market for £185,000. We have dropped the price as the market here has died but still no joy. We live in a lovely little village and to be fair a year ago we could have got around £220,000 for the house and it would have sold in a month!!!!

We have gone for a new build house in Kent and initially they offered us £150,000 part exchange. This is far too low as this will not clear the mortgage. The other option availiable is to get a second mortgage. We have been approvaed for this alredy and I have the paperwork sitting in front of me.

Barrats wanted £290,000 for the house but I managed to get them down to £250,000. (We have a 10% deposit)

I have spoken to two very good friends who work in the financial markets in the square mile. They have both said that this is a silly thing to do and quite frankly, financial suicide. The problem is that we HAVE to move, we don't have a choice about it.

With regards to the re payments, we can cover them but we will have to tighten our belts considerably but hey ho, thats life.

Please can anyone here adivse me on your thoughts....

In summary, we need to move and we have the option of a second mortgage but as you will all know, we dont know when the housing market is going to recover therefore we dont know when our house here will sell.

Thanks in advance....

M1977

Rikki

Can you rent out the property you are leaving till it sells?

M1977

Unfortunatly not, the mortgage company wont have that. I have tried plus it would cost a fortune to get it all registered....

To be fair, we have tried every route possible to sort this one out. It has go to the point now where we just want it all sorted and we dont care how we do it!!!!

I suppose we are after some independant reassurance.... We know it is going to be tough but we really do have no other options apart from renting but I am against that as will be throwing money away.....

JayZed

Do you really have to buy this particular house in Kent right now? It seems that you can't really afford it at the moment. Besides, I think that new-builds are still being sold at inflated prices and are going to lose more value that other properties (especially N-B flats, but also houses). That's just my opinion, though.

How about renting in Kent for the first year? You could either let your house in the Midlands or (preferably) sell it and put your deposit and any profit from the sale of the house into a high-interest account for a year. If, as seems very likely, house prices continue to fall over the next year, you'll be in a much better position to buy a decent place in Kent in a year's time.

Of course, this is risky: there's a danger that if you can't let or sell your place in the Midlands you may be left paying the mortgage in the Midlands and rent in Kent for a few months. But if you think you can sell the Midlands house fairly quickly by, for example, knocking another 5-10K off the asking price, then I would seriously consider this option. Frankly, if Barratt is willing to offer £150K for your house in part-ex, I reckon you should be able to get £175K from a "real" buyer, even in this falling market.

sdooley

The safest, sanest option for you would be to sign up for a 2 year assured shorthold tenancy on a nice house in Kent. You will sell your house in the Midlands within 2 years and then you will have a good period of time to watch prices drop and re-enter the market.

Second best would be to rent a house for six months with a view to buying quickly in Kent, if it all works out well you'd be sorted but with this market you might not even get a sale and purchase sorted in the next 6 months.

Locoblade

Its been said before and alluded to in some of the above posts, but its worth pointing out that you shouldnt necessarily look at renting as "throwing money away" at the moment. Say you rent for a year and "throw away" £1k a month (ie £12k) with nothing to show for it at the end, in that time house prices could easily drop £15k or more, so if you buy now you could be left with a house that's worth £15k less in a year's time, PLUS you still have a mortgage that's only reduced by a couple of thousand capital as you're mostly paying interest in the first few years anyway.

If you wait a year before buying and prices continue to fall, you'll need a smaller mortgage to buy the same house so could actually end up in a better financial position than if you bought now and "invested" that same £1k a month into the mortgage on a depreciating house.

Fergie73

I don't quite get this. You say you can't afford to take the £150,000 part exchange as it won't pay off your mortgage, but yet you're willing (and able) to get a second mortgage for £250,000 on top of the existing one?

Personally, I wouldn't leap into buying right away, but would rent for a while. It's not dead money for the reasons above, but also gives you a chance to look around the area more and with prices falling, why race to buy now? If you really are dead set on buying straight away, however, can't you just take the £150,000 part exchange and negotiate a bigger mortgage with the lender to cover any shortfall?

Jonbvn

As other posters have commented why must you buy in Kent now? Surely you can find somewhere nice to rent, and it would not be financial suicide.

BTW, your friends in the Square Mile are right. A second mortgage in this market would be like digging a financial hole you will never climb out of!