Is there a flaw in my plan?

tjak

I have had a lightbulb moment which I think is the way forward, but before I discuss the full details with OH (who is understandably a negative person), can anyone spot flaws?

Our house is worth about £235k, and mortgage is £185k
Debts are about £30k
I am about to take a job with a salary of £28k, plus commission. My OH is a student, but earns about £5k
Just now we are drowning and can barely keep up with payments.

If we sell the house and clear all debts, we would be left with about £20k which could be used for a deposit on a smaller house, with a smaller mortgage. I would then be able to cover all expenses with my basic salary so commission would be a bonus, and let me save to the long term goal of moving to New Zealand.

Am I being simplistic? Please point out the flaws, as we had been thinking we would need to rent and not be able to buy, but this looks feasible.

Thanks

in*the*red_6

Hi

Have you factored in all the fees for selling and buying - came to nearly £10k when we moved in 2004? :eek:

bydganwil

Sell the house, settle your debts, stick whatever is left in a high interest account and rent somewhere!

House prices are sat on a knife edge at the moment, you could possibly buy a rather nice house, for considerably less than it costs now, in a couple of years.

Rents are very cheap at the moment. I rent a house for £750pm - the landlord paid £240000 for it last year. I'm not even paying the interest on a 85% LTV mortgage.

Think about it........

CLAPTON

without knowing your mortgage payments, debts payments, council tax, utility bills, living costs, actual take home pay, your and OH prospects of earning more, it is not easy to say whether it is a good financial plan as such.
also whether you rent or buy rather depends upon property prices and rental costs in your part of the country and of course when you plan to go to NZ.
But clearly if it allows you to live within your means and not to increase debts then it has to be a good thing.
I dont really understand about the long term goal of saving to move to NZ ....why can't you go now (once you sell and clear the debts)?

tjak

We need to wait a year or so after OH finishes his degree, to gain experience and line up work. We also want to have somewhere to come back to if NZ doesn't work out, which is why renting is a non starter for us.

Thanks though!

bydganwil

Presumably you're going to rent the house out?

Rather you than me......

Good luck!

Justin_Credit

I think a flaw in the plan could be that you intend to keep a property in the UK that will have a fairly hefty mortgage on it, and you will either rent or buy property in NZ, thereby shelling out to run 2 homes.

I know you could let out the UK property whilst you are over in NZ but this may not be problem free. Letting & management agencies don't come cheap and even though you may choose to use one, it is no guarantee that you will have trouble free tenants.

Think things through very carefully.

HTH

Regards JC

lynzpower

Also, by law you HAVE to have a management company in the UK if you are letting out a home and living abroad. I found this out by my old landlady living in Dublin ( practically UK in terms of travelling time) and managing the property from there, It got her into rather a lot of hot water.

climbgirl

Also, you need to consider the tax implications of owning a property here in the UK and working in NZ. I'm a NZer working in the UK and any income I have in NZ (including rent) means that I can't be a non-resident in NZ (for tax purposes) so I'd have to declare my UK income in NZ as well.

I don't know enough about the tax laws here in the UK, but presumably there's something similar in place. So you'll need to check out things like that before you dive into anything...

Annie_Fanny

hmmm interesting advice - makes you think....thanks climbgirl and lynzpower

Scully's_Girl

Another thing, remember when you do finally move to New Zealand, you must ensure you are completely free of debts in the UK. And I mean completely. Nothing will be harder than trying to pay for Stirling debts while earning New Zealand dollars.