Thinking of selling up to rent rather than buy a new property - advice pls

ElleWoods

My house has been on the market since the end of July, and I’ve had two viewings but no offers. I know it’s early days so I’m trying not to panic but I’m aware that prices keep dropping and it concerns me that my house is constantly dropping in value. The reason I want to move is to be closer to family as I’m a single parent and they help out a lot, plus I want to be in the catchment area for a good school for my son. It will be further away from work but I can live with that!

I’ve been wondering lately if I should sell my house and rent for a while in my preferred area. That way I'll be able to pay off the credit card debt I have with some of the equity and put the remainder into an account as a deposit for when I buy, putting me in a good position as a buyer. It would also give me time to save a bit more towards a deposit. As house prices are still dropping, I thought it might be a good idea to do this because I could hopefully get a decent-ish price for my house before prices drop more, then if they keep dropping I'll be able to buy one for a cheaper price than they are at now. Also, if I were to rent, I would be able to drop the asking price on mine to get it sold, as I wouldn’t have to worry about having enough money to buy another property straight away.

I have a 2 year fixed rate mortgage where the fixed rate doesn’t end until Jun 2010, so I know I’ll have to pay a penalty if I pay it off early, but this would probably be offset by the fact that if I leave my house on the market for months on end, the eventual drop in price would probably account to more than the fee.

My only worry about renting is I don’t want to have to keep moving every 6 or 12 months as I have a toddler and don’t want to keep uprooting him, plus it would have to unfurnished as I have a house full of stuff! Also, what would I do if I sold my house but couldn’t find a place to rent in my preferred area prior to completion? Plus, I have a cat and a lot of landlords don’t allow pets. Apart from those concerns, I’m not overly fussed about whether I own my own home or rent – the area is more important to me than the ownership!

Just in case it helps, my mortgage currently stands at around 89k, and places for rent in the area I want to live in are rented out for roughly the same as my monthly mortgage payment, dependent on type of property. This is the link to my current house:
http://www.rightmove.co.uk/viewdetails-22479005.rsp?pa_n=1&tr_t=buy

What are your thoughts on doing this? Is it a good idea? Pros/cons? Has anyone done this and got any advice for me?

CC x

Ellie279

I am thinking of doing the same thing. My parents predicted correctly the property market and sold two years ago. They have been renting ever since, and the interest from the house sale, which they owned outright, covers the rental on the rented house.
I think it is a good idea, you dont have to move every 6 months, most landlords would prefer a longer term tenant.
And as for pets, I used to rent with my cats. The landlords for both my rental properties just put a condition on the tenancy that I had to get the carpets cleanedwhen I left. Which cost me around £30 with a hired carpet cleaner.

poppysarah

Mortgage 89k
CC debt is?

What do you think it'll sell for in today's market? Seeing as it's been online over a month with only 2 viewings and no offers.

I suspect you're better off staying put.
You'll have not enough equity in savings to cover rent on interest alone so you'll lose money, plus the instability of possibly moving frequently.

What's the difference between where you live and where you want to live?

Why don't we all try to make where we live better rather than move to somewhere else? (Grass is always greener don't you know. )

Especially if you add in legal costs of selling and then buying and then moving costs etc.

pinkshoes

My only worry about renting is I don’t want to have to keep moving every 6 or 12 months as I have a toddler and don’t want to keep uprooting him, plus it would have to unfurnished as I have a house full of stuff! Also, what would I do if I sold my house but couldn’t find a place to rent in my preferred area prior to completion? Plus, I have a cat and a lot of landlords don’t allow pets

Finding a landlord that will allow a cat will probably be your biggest problem!! You might want to consider giving it away to a friend or your family!

Could you not try paying your credit card off by posting your ingoings and outgoings on the DFW board, so you can make some cut backs in your spending?

Swift1_3

Looks a nice house but if you definately want to move, concentrate first on selling this one, then, when you have an offer, move your effort into finding somewhere new based on the climate at that time and the value you will be realising. At the moment any thoughts are pure speculation as there are dozens of 3 bed semis for sale in your area, virtually none attracting bids.

IMO either decide to stay or reduce your property to a price where its features are head and shoulders above the opposition, having valued plenty of similar houses in that area I would say approx 10-15% lower than your current asking price. If it didn't attrat attention at that price in July you can be pretty certain it won't before Xmas 2008 or during 2009.

Sorry to sound harsh but until you take action, any plans of renting or buying elsewhere are pointless. Either price to sell or plan to stay.

ElleWoods

Ellie279 - thanks for that, never considered the possibility of putting a clause into the contract to cover cleaning for the cat!

Poppysarah - CC debt is around £5k (see signature). I reckon it would sell for around £105-110k. Quote: 'You'll have not enough equity in savings to cover rent on interest alone so you'll lose money'. This is what Ellie279's parents have done but not what I would do - I would rent and pay the rent out of my salary, just as I currently pay my mortgage. I've explained the reasons why I want to move in my OP and am definitely going to move - just trying to decide whether to rent or buy.

Pinkshoes - I posted on DFW a while back, and I've already cut back to a point where I can't cut back any more. I pay more than the minimum on my CCs but it will be May 2011 before I pay them off altogether. If I pay them off with the equity I'll be almost £200 per month better off and will be able to use that money to start saving.

Swift1 - Good advice thanks! Think I might drop the price to see if it attracts more interest. I was wary of doing this before now because I knew I would need a certain amount of profit from my sale to move to the area I want and I was concerned that the vendors I buy from wouldn't be willing to drop their prices to a point where I could afford to buy there, but if I know renting is a possibility then selling for the highest price possible is no longer an issue.

Good points so far guys, thanks!

CC x

ali82

Can I just say you have a lovely house OP, nice garden!!!

poppysarah

I'm just going to add into the mix again.

You have 5k of CC debt, You'd end up with about 10k in the bank. Do you think you could live without spending that?