Mortgage v rental

shortchanged_2

BitterAndTwisted wrote: »

The OP is not in negative equity. Yet. They say they think they have about £30k equity in the property.

Sounds like wifey might need to get a part-time job, perhaps in the evenings.

This is the key thing though in that they think the property has £30k equity. It may be a different story in reality.

Henry_P_Chester

You can't just keep tanking on more jobs as interest rates increase, you'll just end up burning yourself out just to service your debt.

When did you buy the house? How did you manage when interest rates were ~5.5%?

bristol_pilot

My feeling is that interest rates will not rise substantially for some time. Try and increase income and reduce costs as much as possible. If you move, the cost of the move could outweigh any savings.

missile

It seems to me that your options are limited.
Lender would not give you the mortgage you have at present so you cannot afford to move to a better area.
It seems unlikely that you will be able to rent in a better area for less than you currently pay.

If you feel that you may be unable to repay your current mortgage, in the future, you should find accomodation you can afford.

If you are unwilling to live in cheaper accomodation, either increase your income and/or reduce your spending.

olly300

Henry_P_Chester wrote: »

You can't just keep tanking on more jobs as interest rates increase, you'll just end up burning yourself out just to service your debt.

When did you buy the house? How did you manage when interest rates were ~5.5%?

I know people who took on a second job when interest rates where 14% during the last recession. They eventually got out of negative equity 5-10 years later.

So it is possible.

The OP will manage if:
1. They or wife (if not working) took on a second job in the night - many couples manage this way
2. They cut their budget and budget properly.

Henry_P_Chester

olly300 wrote: »

I know people who took on a second job when interest rates where 14% during the last recession. They eventually got out of negative equity 5-10 years later.

So it is possible.

The OP will manage if:
1. They or wife (if not working) took on a second job in the night - many couples manage this way
2. They cut their budget and budget properly.

The difference is this time interest rates are 0.5% and they are struggling to afford it. So even at normal interest rates of 5% it would have to be a pretty well paid second job! And if we had a repeat of the early 90s then working 24 hours a day wouldn't even be enough!

Inflation is higher than the BOE upper limit. They can't hold off raising rates for much longer and for all we know it could be in January!

ukcarper

rendezvous wrote: »

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:

Do you know what it would cost to rent

hazyjo

Okay, not ideal, but could you extend the term of the mortgage just to get the monthly payments down to give you a bit of breathing space until you decide what to do?

Jx