Is it worth leaving the property ladder for 2 years?

92203

My girlfriend and I are in a bit of a predicament. We purchased ours house in 2006 for £107,000, but put down a £20,000 deposit, so only needed an £87,000 mortgage. We have cleared approximately £7k from the mortgage so currently owe £80,000.

Since then my girlfriend has returned to education and is currently studying to be a student nurse in a city 20 miles away from where we currently live. Unfortunately driving is the only option due to the time at which she has to arrive at work. This is proving to be expensive in terms of fuel use (travelling through slow moving traffic) and car maintenance.

Our lifestyle is very difficult due to the financial limitations of being on one wage, and having to get up so early. We also had an awkward neighbour who was parking on a shared access way to our garage (though this is now sorted).

All our issues would be sorted by moving house and renting for the next two years.

As a result, we decided to try and sell our house, and ended up accepting an offer of £92,000 at the beginning of November. This offer was accepted on the understanding that we’d have a swift completion from our cash buyer. This has not been the case and we are only just now about to exchange contracts.

Since we accepted the offer a number of things have happened which have made us have second thoughts on selling. These are ;
v Media reporting house prices being on the up
v No other properties within our price range (to buy)being as nice or convenient as where we currently live

I am concerned that if we sell and rent for two years, we may not get back onto the property ladder.

Equally, I’m also concerned that if we don’t sell, we’ll be at the mercy of interest rate rises and further house price falls which could put us in negative equity.

Should we cut and run, or stay put?

Cheers

92203

getmore4less

What cars are you driving and what MPG are you getting.

where do you work, what travel do you do?

Once qualified where is the OH going to be working?

No one around to do car sharing?

If you move how much money will you be saving?

delmar39

Are your reasons for moving strong enough for you to sell your property at a loss (you originally bought for £107k)? If they are then you have no choice other than to sell up. Luckily you're not in negative equity. You come out with some cash in the bank, minus fees to sell (and possibly to buy). Problem is you're selling when house prices are low so if prices rise and you're in rented you may get even less for your money. If you stay put and prices don't move you may regret not taking the £92k. Very difficult one this. If your lifestyle will improve by selling up then do it. Perhaps rent for a short term period if you can (3 months) whilst looking for somewhere to invest. I guess your main problem is that you're selling without having found somewhere to buy. Like I say above, if your reasons for moving are sound and you have no other options, then sell up, otherwise you could hang fire and see if the market rises - but all prices will rise so you stand not to gain anything. My advice would be to stay on the housing ladder that way although you may have lost money you stand to gain when house prices rise.

PasturesNew

You've not given enough information for us to be able to answer your question, or to be able to present you with potential alternatives.

If you fill out an SOA and then choose the format for MSE and paste it here, we can see why you're so short of money. http://www.makesenseofcards.co.uk/soacalc.html

In a sweeping statement opinion I'd say: your house price is cheap as chips, it won't be hard for you to get another house in the future, so it wouldn't hurt to sell it; on the other hand, if you can adjust your spending in the short-term, there's no reason to sell it either.

This comes down to simple £s really and your ability to survive for the short-term. It'd be easier to stay put, it'd be more settled for your partner's studies/focus.

Selling and renting involves quite a chunk of money too, that you might not be prepared for.

nollag2006

No matter whether the market is rising or falling, it's always worth keeping your position on the housing ladder, as the market might have pulled away from you by the time you decide you want to buy a new place.

Why not rent it out, and rent someplace small or share in the town where she is studying? It'll only be for a couple of years, and it would be a shame to lose so much by selling now

PasturesNew

nollag2006 wrote: »

No matter whether the market is rising or falling, it's always worth keeping your position on the housing ladder, as the market might have pulled away from you by the time you decide you want to buy a new place.

Why not rent it out, and rent someplace small or share in the town where she is studying? It'll only be for a couple of years, and it would be a shame to lose so much by selling now

I disagree with quite a few bits in here. It's not always worth keeping your position.

To rent it out, they'd need lender's permission, possibly have to change their mortgage, which they might not get. Lender might say "no" as their LTV isn't good enough or the potential rental is too small. There's a whole raft of costs involved to rent and it's a whole load of stress to get credit checked/etc etc.

If I had to vote, I'd say "stay put". This "town where she's studying" is just round the corner, it's only 20 miles.... it's rarely worth moving for the short-term for the sake of 20 miles.

So, I agree they should keep their current house probably, but, not rent it out.

92203

Hi there,

I take home £1700 per month after tax. My girlfriend receives a £500 per month bursary which is tax free.

A breakdown of how our money is spent each month ;

• £400 - Mortgage
• £250 - Car Loan (Due to finish this June)
• £60 - Virgin Media - (soon to be reduced to £30)
• £75 - Council Tax (Incorporating Student/Single Person reduction)
• £40 - Gas & Elec (Eon)
• £30 - Orange Mobile Phone contract (Will be £10 prepay from Dec onwards)
• £10 - Top up for Girlfried's prepay mobile
• £27 - Barclays Home Insurance
• £15 -TV License
• £15 - Life Ins
• £35 - Water Bill
• £200 - Food
• £170 - Girlfriend's petrol to and from University
• £60 - Girlfriend's parking at university/hospital
• £70 - My train fare to and from work.+
• £50 - Petrol for my car *
• £50 - Insurance for my car*
• £40 - Credit Card

+It is possible that my role at work may be changing and that I will be required to have a car at my disposal. This will involve driving to and from work each day and paying for parking. This will add an additional £60 to the cost of my commuting. However, when on work business I will be paid 40p per mile.
*Irrespective of whether we are staying or leaving I intend for us to go down to having one car only (job sitation permitting) which is going to save money.

Cheers

92203

92203

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household.........
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 1700
Partners monthly income after tax....... 500
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2200
Monthly Expense Details
Mortgage................................ 400
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 75
Electricity............................. 20
Gas..................................... 20
Oil..................................... 0
Water rates............................. 35
Telephone (land line)................... 9
Mobile phone............................ 40
TV Licence.............................. 15
Satellite/Cable TV...................... 10
Internet Services....................... 10
Groceries etc. ......................... 200
Clothing................................ 200
Petrol/diesel........................... 200
Road tax................................ 23
Car Insurance........................... 75
Car maintenance (including MOT)......... 0
Car parking............................. 60
Other travel............................ 70
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 37
Contents insurance...................... 0
Life assurance ......................... 15
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 15
Entertainment........................... 150
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1679

Assets
Cash.................................... 0
House value (Gross)..................... 10000
Shares and bonds........................ 0
Car(s).................................. 1500
Other assets............................ 0
Total Assets............................ 11500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 81000....(400)......2.2
Total secured & HP debts...... 81000.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Car Loan.......................1250......250.......0
Credit Card....................1700......36........0
Total unsecured debts..........2950......286.......-

Monthly Budget Summary
Total monthly income.................... 2,200
Expenses (including HP & secured debts). 1,679
Available for debt repayments........... 521
Monthly UNsecured debt repayments....... 286
Amount left after debt repayments....... 235
Personal Balance Sheet Summary
Total assets (things you own)........... 11,500
Total HP & Secured debt................. -81,000
Total Unsecured debt.................... -2,950
Net Assets.............................. -72,450

Tuscan

problem is that in order to buy again if you do sell up you will need a deposit of at least 10 percent plus the fees, surveys etc etc. if you sell up will you be able to afford to save up for the above..

PasturesNew

92203 wrote: »

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 1700
Partners monthly income after tax....... 500
Total monthly income.................... 2200

Monthly Expense Details
Mortgage................................ 400
Council tax............................. 75
Electricity............................. 20
Gas..................................... 20
Water rates............................. 35
Telephone (land line)................... 9
Mobile phone............................ 40
TV Licence.............................. 15
Satellite/Cable TV...................... 10
Internet Services....................... 10
Groceries etc. ......................... 200 - you could reduce this to £100-150 with a bit of effort
Clothing................................ 200 - really???? I don't spend that in a year. Is this a mistake? If it's not a mistake then you must have enough clothes already surely!
Petrol/diesel........................... 200
Road tax................................ 23
Car Insurance........................... 75
Car parking............................. 60
Other travel............................ 70
Buildings insurance..................... 37
Life assurance ......................... 15
Haircuts................................ 15
Entertainment........................... 150 - you could cut this back easily enough, that's a lot. You could save half that, so £75.
Total monthly expenses.................. 1679


Monthly Budget Summary
Total monthly income.................... 2,200
Expenses (including HP & secured debts). 1,679
Available for debt repayments........... 521
Monthly UNsecured debt repayments....... 286
Amount left after debt repayments....... 235

You can afford it already, so there's no urgency to move.

If you want to cut back on outgoings then there's quite a lot of wriggle room.

Also, the car loan will finish in just five months.

Petrol/diesel at £200/month isn't too bad bearing in mind it's two cars and your partner's needs, although it would help to know a bit more about the whole transport situation.

You're hardly struggling really.

anotherginger

as with the last poster, 200 on clothes and 150 on entertainment is a bit much - if you have money worries then why spend anything on clothes?

i don't see how you really have financial limitiations. you spend a lot on luxurys and still have money left over.