Query

Leela_G

Hey guys, hoping someone can help me.

I'm currently in a 1 bedroom flat in the city centre. Its worth 180k and we have 162k on the mortgage left to pay. Only problem is we stupuidly got a secured loan for 25k.

Meaning if we sell we are basically left with zero. However, we are really struggling for space and we have been thinking about selling up and renting somewhere bigger. Looked into prices of rent etc and we would be better off (as we wouldnt have to pay the loan) but is it silly to go back to renting.

Also while renting we would be saving thus hopefully getting a deposit saved within a few years and then going back onto the housing ladder.

Is this a daft idea?

sarah_elton

Not completely daft.

I sold my flat in February this year. I had to sell for less than I owed on the mortgage, so I had to pay (1) costs of selling - EA, solicitor etc and (2) the negative equity amount to the bank. So long as you have enough money to pay off any leftover debt and pay the costs of selling, you can do it.

It puts you in a better position when you buy a bigger place in the future. You'll be chain free and in the position of a FTB which is always going to be appealing to sellers.

The one risk you take is rising house prices. If you get out of the market and it goes up, you miss out of course. On the other hand if prices go down, you definitely did the right thing. There's certainly an argument to be made that I got out at the wrong time, as there has been a bounce since the start of this year. Only you can take a view on what you think it'll do and how much difference that would really make to your sale price.

poppysarah

What did you spend a £25k secure loan on? (What did you tell them it was for?)

(only being very nosey)