Am i doomed?

clasophlia

Hello,
I am in desperate need of some impartial advice.
My other half and I remortgaged 2 and half years ago to pay off some debts. We got a northern rock together mortgage. - (Stupid i know!)
We have a mortgage for 109000 and a "unsecured loan" part for 20000 (house was valued at 125000)
We have sold our house for 116000 as we deperately need to move, after having an addition to the family we need space.
Our plan is to now longterm rent and try and pay off the loan in a few years when i am working fulltime.
So we will be paying off the mortgage part and keeping the loan. We will have about £4000 leftover after paying fees.
Lots of people are telling us to stay put but we have literally no room and i know it wont be long til we are in serious negative equity and i don't want to be stuck in a house not big enough for years and years.
Surely there is no point being on the housing ladder so to speak if i cant afford to be? But all i get off other people is "you will never get back on the ladder again" and "you will always make money in the end"
I have pointed out to them that in three years when i qualify from uni, i will be earning a decent wage and i am only 28 so surely i am not doomed? Should i stay in my house and ride it out, should i buy new build on a shared equity scheme where they pay your deposit? Or should i rent, like i think is the right thing to do?
Any advice would be greatfully received.

housesitter

Sell like it's on fire and rent away.

You're inital thoughts are utterly the right ones.
Shared Equity is not a good idea. Read around the forums, but in your case it would be like out of the frying pan and into the fire.

ruggedtoast

Shared Ownership is the biggest scam inflicted on the working man since the poll tax, Labour should be utterly ashamed of it. I'd stay well away from it.

The housing "ladder" is a housing slide at the moment, I fail to see what you'd lose by bailing out and renting if you have no equity in the property.

clasophlia

Thanks, my thoughts exactly. Just other people sticking there noses in i think, makes me question my own judgements. I know i have lost out money wise but still better than losing out further

housesitter

If you can sell for that now then biting their hand off up to their shoulder seems like the best course of action IMHO and you think that too!

Ignore the beaks.

Richard_Webster

You need to check the details of the unsecured loan - my recollection is that whilst there is a mortgage on the property with Northern rock the interest on the loan is at more or less the same rate - but if you pay off the mortgage then the interest rate rate on the loan goes up dramatically (I recall it is something like an 8% pa increase in the rate - so if it was 6% it will be 14%!) - so you will need to take increased loan payments into account in doing your sums.

clasophlia

Thanks - yes i know this and have accounted for it unfortunately it will go up alot but i am not getting stuck any further with northern rock! Can't believe i went for this mortgage/loan thing in the first place and just took the advice of my broker. Anyway we live and learn as soon as i pay off the loan - asap, i wont be touching northern rock with a barge pole!

GDB2222

Is your buyer insane or do you live somewhere very very special? Your house was valued at £125k 30 months ago. Since then, in most parts of the country prices have fallen more or less 20%, implying a value today of around £100k. Your buyer is paying £116k. What's going on?

ukcarper

I thought the peak was Sept 2007 18 months ago not 30 months ago

Kez100

Renting is more flexible as you can up and move after a much shorter time if circumstances change rent is too expensive. If interest rates go up or they lose overtime, homeowners are stuck without a sale.

I would rent as small a place as will fit your family and pay off loan as fast as possible (assuming the rate will be quite high) and then, when it is finished, use the money not now repaying the loan to save for a deposit on a place of your own.

GDB2222

ukcarper wrote: »

I thought the peak was Sept 2007 18 months ago not 30 months ago

Yes, I was exaggerating. I knew it when I wrote that but CBA to look up the figures, as regional variations are important. Can't get away with sloppy thinking round here, can I?

Prices are still down a fair bit from 30 months ago, so the £116k offer sounds pretty good, but we'd need to know more about the property.