moving from one house to another

danrowling

guys, hope someone can advise me

i bought my first house in march 2007, i have a mortgage for 132500, and i have a second charge on it for 12500, totalling 145000 secured lending. the house is worth in the region of 150000, this is where i get stuck, if i want to move in to a house that is worth more, do i have to have a deposit through my equity to do so??
im a little lost and no longer want to live where i am, with the double dip recession looking more and more likely, im worried that we could slip largely in to negative equity and want to do something now

thanks for any advice

maninthestreet

At the best, you only have £5,000 equity in your property. You may well be in negative equity already.
What cash savings and other investments do you have?

danrowling

hi maninthestreet, thanks for replying.
at present i have nothing but an overdraft facility.

what im struggling with is, do u need to have say 10% or 20% in equity or savings to then move up the ladder, hence my position meaning i can only drift sideways.

maninthestreet

You have little or no equity in your property, and no savings. At the best you have £5000 equity. Even if all that could be used for a deposit on a new property, you would be looking at properties that cost no more than £50,000, assuming the minimum deposit required was 10%.

Eric1

danrowling wrote: »

hi maninthestreet, thanks for replying.
at present i have nothing but an overdraft facility.

what im struggling with is, do u need to have say 10% or 20% in equity or savings to then move up the ladder, hence my position meaning i can only drift sideways.

Drift sideways? How?
In your position, even downsizing seems impossible, can't imagine how you can do it.

Fortheloveofmoney

Plus you will need money for fees which could easily come to £5k+. Without savings and equity I'm afraid your choices are somewhat limited. You could always sell up and go into rented accommodation.

TOBRUK

I really don't understand your thinking. You say you want to move which is fair enough, however you have £145,000 mortgage/loan and your property is worth in the region of £150,000.

Firstly, have you had your property valued? What you believe your house is worth and what it is actually worth may be very different. Also, even if your property is valued at £150,000 you may not be offered or able to sell at anything near that price!

As others have pointed out, you have little or no equity in your property and even if you were to sell at £145,000, as someone said it will cost you at least £5000 to sell and buy another property.

Taking all this into consideration I don't understand that you are saying that you want to move to house which is worth more than your current property - in your words you say you want to move up the ladder!

Even if you have a portable mortgage you would need to look at properties well under the price you believe your house is worth.

danrowling

thanks for all the replies guys, i know i must have seemed a little vague but its all making sense to me now after not really understanding what happens when it comes to moving from house to house.

my biggest predicament out of this is the fact that i moved fast in to the house im now in as my partner was pregnant and now i just want to be gone, ive developed an unhealthy hatred for my house :rotfl:
so the question for me is do i sit pretty in the house and ride out any double dip recession that may come our way in the coming months or do i sell up and move in to rented, interested to know ppls thoughts about moving in to rented from a mortgage, some ppl i have spoken to say its an awful idea to give up on your investment, but i tend to disagree as to me i struggle to see what my investment is worth if its not likely to gain me any equity for around 4-5 years, however unless the government come with an easier way to get back on the property ladder, i cud be sat in rented for a long time.

no1catman

Sorry, but I think you got your priorities wrong. If you're worried about a 'double-dip' then surely the thing to do - would be to concentrate on repaying the loan, and then the mortgage - that then reduces the problem of negative equity.
Negative equity is where the value of the house is less than the loans attached to it.
As others have pointed out, if an agent gives a valuation of £150k, that doesn't mean that's what a buyer will pay! Moreover, you have to budget for the Agent's via - anything from 1% to 2% i.e. £1500+, then there's Stamp Duty, Conveyancing fees, and removal costs!
If you go for a bigger house (up the ladder), that means a bigger mortgage - you don't have savings, what are you going to do if as a result of the Governments attempts to reduce the deficit - you lose your job! You are then in a worse position, then when you started.

maninthestreet

You need to start saving and/or over-pay on your mortgage. Where did the £12,000 second charge on the property come from?

Arthritic_Toe

danrowling wrote: »

thanks for all the replies guys, i know i must have seemed a little vague but its all making sense to me now after not really understanding what happens when it comes to moving from house to house.

my biggest predicament out of this is the fact that i moved fast in to the house im now in as my partner was pregnant and now i just want to be gone, ive developed an unhealthy hatred for my house :rotfl:
so the question for me is do i sit pretty in the house and ride out any double dip recession that may come our way in the coming months or do i sell up and move in to rented, interested to know ppls thoughts about moving in to rented from a mortgage, some ppl i have spoken to say its an awful idea to give up on your investment, but i tend to disagree as to me i struggle to see what my investment is worth if its not likely to gain me any equity for around 4-5 years, however unless the government come with an easier way to get back on the property ladder, i cud be sat in rented for a long time.

I think you've got it pretty much spot-on here. Just because you have a mortgage doesn't mean that you have a good investment.

Many people were so brainwashed by 'Kirsty and Phil' and their ilk during the boom years ('renting is dead money' etc), that they dont even do the maths.