Mortgaged until Sept 09!

russell320

Hi there,

I own a 1 bedroom flat with a mortgage of £84,000 left. If I move before I have to pay ERC of £5000. Which I don't mind paying if I get the right amount back on my property. Which having had it on the market with a useless estate agent for 4 months didn't even get a viewing. It was on for 98,000 and we paid 95,000 for it. Now in my mind it is probably only worth 92,000 with the current climate. But estate agent said 99,950 but I dropped it after 2 months.

I want to move to a rent property after the mortgage ends, is this a good idea? As if I sold for 92,000 we would only have 10,000 for the next house which in my mind wouldn't get me a 130,000 mortgage.

What is my plan of action until Sept 09?
When should I put house on the market to stop me incurring charges?
Should I try and get a mortgage instead of renting?

Another thing on my mind is that I'm only paying interest only at the minute but can probably afford repayments. Should I and could I swap to repayments?

Russell

stagey_2

In the present climate I would sit tight especially if you don't have to move at least until Sept 09.

CountingPenniesClaire

I agree with Stagey. You don't really say why you want or need to move. Financially (and particularly at the moment with the economic climate and your ERC) it doesn't make sense, although you don't mention what your interest rate is. If you can stand the financial losses then fine but I would definitely suggest you sit tight at least til your fix expires. If you believe the the financial experts are saying the chances are property prices will be lower in Sept 09 so if you are absolutely adamant that you are going to sell then you might be better doing it now. But remember it is a buyers market and you will almost certainly make a loss and any offer you do receive may only just meet or even be below your mortage balance - leaving you to make up the shortfall. If you decide to ride out the house price fall (which may mean keeping the flat beyond Sept 09), and you can afford it, swap to repayments (as opposed to interest only payments). That way you'll start eating into the capital owed and increasing your equity in the flat so if you decide to remortgage rather than sell up, you'll have better rates available to you. Hope this helps.

Peelerfart

If it was me, I'd switch to repayment and take the £5K you were willing to pay in ERC's and whack that off the mortgage too.

Then I'd sit down, put the kettle on and wait for all this to settle down,
happy in the knowledge that you will owe less money.

In my opinion that is

silvercar

Don't switch to repayment, you never know when you might need the money. Instead put the extra (that repayment would be costing you) in an ISA savings account and build up a tax free cash reserve.

£5,000 is a lot to throw away on ERC. In percentage terms it will be 6-7% of the property value. Sit it out til at least Sept 2009.