Sell up and rent or stay put

vickie17

Hi,

I'm new to the forums and desperately looking for advice. We need to move to a bigger home as we currently live in a 2 bed flat.

We have had the estate agents in to value and they average out at approx £139000
Our mortgage is £97000 and we have a horrible secured loan of £34000.If we managed to sell at £139000 or even slightly less, we could pay off both mortgage and loan and have between £4 - 8K less sellers fees. This doesn't give us enough for a deposit on a new home but we have worked out we could save up approx 15k in the next 6-12 months.
I want to bail out now and pay off and start afresh but my partner thinks getting off the housing ladder is the worse thing we could do. However our mortgage is on a variable rate of 3.75% and the secured loan is on a variable of 11.7%:eek:. Now if interest rates are going to go up like every seems to be saying we will be royally screwed.

My partner just sees it that he has put 10 years into his flat and will not pay someone elses mortgage by renting till we save up again, but if interest rates rise we will end up losing our home possibly.....

What would you do?

Henry_P_Chester

Personally I would sell now. According to Halifax prices have been falling for three months now. You could be in negative equity soon.

I think it's something you have to look into and decide for yourself.

botchjob

Blimey, that secured loan rate is a killer. Can you not play hardball with your mortgage lender to get them to turn it into interest only? And then do everything you possibly can to pay down the secured loan?

I suspect if you sell you will barely break even, possibly worse, so worth doing all you can do keep the flat if you can. But that secured loan is a big old mountain to scale. Good luck.

Eric1

vickie17 wrote: »

We need to move to a bigger home as we currently live in a 2 bed flat.

Why?
My priority would be the loan.

vickie17 wrote: »

This doesn't give us enough for a deposit on a new home but we have worked out we could save up approx 15k in the next 6-12 months.

How? By renting?
I'd use it to repay some of the loan.

PasturesNew

Most EAs value a place higher than you're probably going to sell it for. They bung a bit extra on to see if anybody bites. If nobody bites, he'll be back to get you to lower it ... by £5k? £10k? And even when you get a buyer, they're not likely to offer full asking price, especially for a 2 bed flat which are 10-a-penny in most areas.

So, you could sell and rent, but realistically you might end up in a rented place with a big debt to pay off, which your OH might beat you up about every day.

Or, you might sit in the flat chasing the market down for awhile and having the stress of it being for sale, with no takers.

Plough your spare money into killing the loan and building up a deposit sit it out for 3-4 years.

Yes, interest rates will rise at some point; but most people aren't selling their place just because it's up for sale... they're sitting there waitiing.

You haven't said why you need a bigger home. Do you have too much tat? You could have a de-clutter, get some damned good storage fitted and bung it in there, or rent a local self-storage unit at about £5/week

maria6259

have you thought about re-mortgaging to pay off some of that loan? it does mean you would have to stay put for a couple of years but by then the housing market may be improved.

Doozergirl

Why would you lose your home if you think you can put in excess of £1250 a month into a savings account? If interest rates rise then it just reduces this apparantly disposable income. You won't lose your home.

Presumably your joint incomes are high enough to mean you could actually have a larger mortgage on your flat using the extra to pay off the expensive 11.9% debt. That will bring the monthly repayments down so you can then continue to save even more until you can afford get a bigger place.

I think you'd be making qa knee jerk reaction. It sounds like you can more than afford to live where you are, you just need to save up to clear your debt and build a deposit for the next place. Renting is not fun after you've had the security of your own place. I don't see why you'd give that up because you're panicking about something that hasn't happened yet and wouldn't actually be the end of the financial world for you if it did.

twirlypinky

this is a tough one because i think house prices are going to fall, which means you could end up in negative equity. However, only because of the loan. I'd stay where i am (to save on EA and solicitor fees) and throw every penny i had at that loan.

I understand you want to move, but it could be a lot worse. My boyfriend and I live in a tiny one bedroom house in negative equity - we're stuck.

Mum_of_3_3

vickie17 wrote: »

Our mortgage is £97000 and we have a horrible secured loan of £34000.If we managed to sell at £139000 or even slightly less, we could pay off both mortgage and loan and have between £4 - 8K less sellers fees.
This doesn't give us enough for a deposit on a new home but we have worked out we could save up approx 15k in the next 6-12 months.
What would you do?

What would I do? I would stay put save the £15k over the next 12 months and use it to reduce the loan. then save another £15k over the next 12 months and bingo you are down to just your mortgage again!

M_o_3