Advice needed...should I stay or should I go?

Dusk_is_Falling

Hey there, I need some good advice. Here is the background....

My boyfriend and I have split up. He is signing over his half of the house to me. I am waiting to hear from the Building Society if they will let me take over the mortgage on just my income. (They have got to consult with their underwriters as it is a bit more than they allow as standard, should know Monday or Tuesday, looks hopeful though)

The question is when the house is officially mine should I stay put, which will financially stretch me, or should I downsize?

I love the house but don't really need 3 bedrooms. But is now really a good time to sell with a recession looming?

Here are the figures...
I bought the house in 2004 for £135,995
There is roughly £122,000 owed on the mortage.
I reckon if I could sell it I could get around £145,000 for it.

The smaller 2 bedroom houses on our estate which I have been looking at are for sale at £114,000. If I was going to sell I would put in an offer of around £95k as the for sale boards have been up for a while and I know one was bought for that amount a couple of months ago.

Is it better financial sense to go down the property ladder or should I try and stay put ?

Help!

Doozergirl

It's about what you can afford. Can you afford to deprive yourself of something else to live in a three bed house?

Enough is as good as a feast IMO.

If you do sell, look at the possibility of part exchanging/house swapping if you are downsizing. It might help you get the best price rather than having 10% knocked off the price of yours and you knocking 10% off the price of something smaller. Unless of course you can successfully negotiate a better deal than that on your purchase.

House price falls are good for upsizing, bad for downsizing but you can try to mitigate your losses. Paying out an extra £300 a month for the sake of living in a three bed by yourself isn't great for you financially either. If you paid that extra into the mortgage on a smaller place, you'd knock a fair bit of time off.

Or maybe rent out a room if you could bear that?

ad9898_3

I think honestly, if you could sell and its a big if, you might be getting really close to the amount you owe

Andy_Hamilton

Could you cope with a lodger? The £300 difference would be covered and would save you thousands moving.

McKneff

seems silly if you count in EA fees, solicitors fees, and the rest of the costs of moving. I would be tempted to get a lodger

gauly

I doubt you could sell a 3-bed for £145K and then expect to get a similar 2-bed for £95K - that's just too big a difference for one more bedroom. If 2-beds sell for £95K then I guess you're going to get about £120K for a 3-bed at most. You can always put it up for sale and see, but of course you do now have to pay for a HIP so this isn't a cost-free option.

Dusk_is_Falling

Thanks for the reply.
I think you are right. I guess I was just dreaming that I could make a decent profit on the house, get somewhere smaller but still nice and have money to spare to do the whole 'I don't need you, see how great I am doing without you thing!' But with house prices falling, the amount still owed on the mortgage and the fees and costs of moving I guess it it will probably leave me with not a lot.

I am considering a lodger. I've had one in the past and is does work ok as it is a 3 storey house so they have their own bedroom, bathroom and spare room, it's just the thought of having someone else in the house when I really just want to be a miserable hermit! I am going to have to do something though coz if I do get the mortgage approved I will only really be able to afford it if I extend the life of the mortgage from 21 to 33 year, which I know is very very bad from a 'money saving expert' point of view.

Anyway thanks again. I'm off to try and sell the 'holiday of a lifetime' I booked for us but now can't afford to go on, on ebay.

Debt_Free_Chick

Dusk_is_Falling wrote: »

Thanks for the reply.
I think you are right. I guess I was just dreaming that I could make a decent profit on the house, get somewhere smaller but still nice and have money to spare to do the whole 'I don't need you, see how great I am doing without you thing!'

Oh-oh ..... sounds like a very unhealthy mixture of "business and emotion" to me.

Please ... don't use the house to "show him you don't need him". I hope that's not why you agreed to take it on, in the first place. He may have just bagged himself an easy way out of negative equity!!!!!!!

Don't ever get/stay emotionally attached to a property when a relationship sours. It's very difficult to make cold, calculated business decisions in that situation.

Extending the mortgage term isn't permanent - you can always cut it back later. Also, you can go interest only for a while - but weigh both options up very carefully in a falling market! Either option can be useful, in the short term, to ride out a storm, but you are really just building up potential problems for the future, unless you know what you're letting yourself in for.

Dusk_is_Falling

I would say I am emotional but realistic. We agreed that I should have the house because I lived here for 2 years before he moved in and paid the mortgage and utility bills by myself for half the time he was here. I was feeling quite guilty until you mentioned negative equity, at least that is something I can respond to his family with if they ask why we are not splitting the house....nothing is better than owing money!