Mortgage v rental

rendezvous

Hi I currently have an interest only mortgage and am coping with the repayments as they stand now, unfortunately i think i may struggle if the rates go up more than a percentage so should i consider jumping off the property ladder, investing my equity and rent hoping for a decrease in property prices or hang in there paying the mortgage?:rudolf:

shortchanged_2

Is looking for a cheaper property an option?

rendezvous

As a family of four we currently live in a modest 3 bed now. My kids arent able to share a room so we cant downsize. We moved to our current area as house prices are more affordable and since living here we are not happy with the area!!

shortchanged_2

I take it you have no repayment vehicle for your interest only mortgage which in essence means you are really doing nothing more than renting anyway as you will not be able to pay off the capital at the end of the mortgage term.

In which case renting might be the best option because at least a landlord is responsible for the maintenance of the property you are in.

rendezvous

yes you are perfectly correct!! The only thing that worries me is once ive jumped off will i ever be able to get back on again. I have done the calculations on how much a bank is willing to lend me at todays date and i would only be entitled to a 120k mortgage although my current mortgage is 185k!!!!!!

rendezvous

or maybe rent out my property and i rent elsewhere!!!

shortchanged_2

rendezvous wrote: »

yes you are perfectly correct!! The only thing that worries me is once ive jumped off will i ever be able to get back on again. I have done the calculations on how much a bank is willing to lend me at todays date and i would only be entitled to a 120k mortgage although my current mortgage is 185k!!!!!!

What rate are you currently on because you are very unlikely to be able to remortgage judging by what you say?

rendezvous

3.8% variable with Northern Rock and possibly 30k equity in this property which i would invest if i sold the house

BitterAndTwisted

Do not consider renting out your property and renting elsewhere unless you are fully able to pay both the rent and the mortgage! As it sounds like you are currently stretched to the limit already I would not advise this in a hundred years.

Interest-rates will rise eventually and if you're not currently either making over-payments or setting aside funds towards the capital repayment then I would suggest that renting might be the only option if you are unwilling to down-size. I certainly wouldn't be willing to refuse to consider downsizing just because your kids would be unhappy sharing a bedroom. Financial security is a tiny bit more important than a bunk-bed.

shortchanged_2

rendezvous wrote: »

3.8% variable with Northern Rock and possibly 30k equity in this property which i would invest if i sold the house

So that is a 3.3% above base rate deal is it? That is pretty poor and you are quite badly exposed to interest rate rises.

How long is your mortgage term?

rendezvous

20 years left