3 Quick Thicko Questions

gemma1984

Im wondering if someone can answer a couple of questions (they're probably really stupid and simple but I'd like some advice)

We bought our first home in 2007 with a 100% mortgage which included a small loan as part of the package to help furnish the house etc.

Since then we have had our first baby and are planning to try again for number 2 in June 2010.

The house is a 2 bed terrace which we are rapidly outgrowing as it is and I would like to know a few things

1) If we have no money upfront to put to the mortgage- if we wanted to sell and could get back what we paid for the house could we effectivley-move to a bigger house with our portable mortgage if the bigger house was the same price as what we sell this one for?

2.) If no 1 isnt an option, how do you go about remortgaging or is this not an option for us?

3.) Please help, we both desperately want a bigger family and don't want to have to wait 10 years to be able to sell this house to make space.

opinions4u

How much do you owe on the mortgage and how much is the house worth?

I am going to assume that you are in negative equity. To get out of this situation you will need to raise funds to do the following:

1. Repay the negative equity
2. Fund the costs involved in buying and selling (estate agents, solicitors, stamp duty etc)
3. Fund a deposit of at least 10%, possibly more, on the new property.

I am aware that Nationwide have a scheme (restricted and expensive) to help borrowers in negative equity move house, but most lenders have nothing similar.

Get saving. Hard.

Sorry.

kinglewis

Sell up and rent??? At least you will be living in the house you want to until you have saved a decent deposit.

gemma1984

Urgh, I was afraid you were going to say that.

Im scared to sell up and rent as my parents are very big on the fact that we have "an asset" and that we are "very lucky to own our own home"

The house was bought for £79,950 and would probably sell for around the same possibly 1 or 2k more. We owe pretty much the same if not a bit more, I would have to check.

Im scared if we did rent that we would never be able to raise the funds/get a mortgage again.

Plus we pay currently £470pcm and just can't afford much more.

uzubairu

It sounds to me like you want something you clearly can't afford.

If you are in negative equity (which it sounds like you might be), you'll struggle to re-mortgage and you may have to stay put and keep saving as much as you can.
If you can't save much, you will just have to accept that you may have to adapt the way you live in your current home and focus on making baby No.2 (which is what you really want).

If you you could sell up and clear the debt, why not use the £470 to rent something with more space and forget about home ownership for the next few years, especially if adding to the family is more important to you.

When you can't have it all you have to prioritise things.

TrickyDicky

The largest mortgage LTV rates atm seem to be around 90% (therer may be a couple of 95% around). If you still owe around 80k, you'll need to sell the house for around 90k to be able to get a 90% mortgage on a similarly priced house.

Plus you'd need estate agent fees (around 1-2%) and solicitors fees, surveyers fees (£300-400), early repayment charges, new mortgage arrangement fees. Basically its going to be £2-3k in fees alone, that you would need in cash, before you could even think about buying.

gemma1984

poooooooo!!!

Maybe we need to think of a loft conversion lol

CloudCuckooLand

You do not currently have a real asset. It is a liability, in excess of 100% it appears. Waiting for prices to recover will, in time, get you out of this, but not quickly and not painlessly.

Check the rate you will drop onto, i.e SVR.

Conversion/extension is not such a bad idea, except how will you fund it?

Radical thought, wait to have the 2nd child until you can afford it.

As for your signature saying "for our NEXT trip to Disney"...

STOP going to Disney!!, and use the money saved to provide a stable base for your family, instead of fleeting, temporary "lifestlye treats".