one small step for sushistar...

sushistar

So...
I'm an occasional lurker, and I need some advice, and I figured all you wise people were the ones to give it!

We are selling a property and hoping to buy another. Our mortgage will hopefully go down from £213k to around £198k because we are moving to a cheaper part of the country. We will port accross our existing fixed rates and remortgage when they are up, to avoid the repayment charges.

My husband earns around £32k, and I earn about £6k (I have an evening job, and have 2 small children at home full-time). As you can see our mortgage is very big compared to our income - the repayments even on our new reduced mortgage will be about £1000 per month. OUr rates are not particularly high, about average I think.

We'd dearly dearly love to be less tied to this whopping great debt - for instance my husband would love to reduce his hours at work and I'd like to do more work, but we can't because we need his higher income for the mortgage.

We have just been to the pub and discussed whether we should buy a cheaper smaller house in an area near a poor scecondry school. This would have the effect of reducing our mortgage for now. Then later we could move to the house we really want near a good school for our kids. However, the process of moving house will cost at least £13k in fees and stamp duty now, maybe more, and I am reluctant to shell out that amount again in 8-10 yrs time.

I guess the question is... If we stick with the great big £198k mortgage, do you think we have a hope in hell of paying it off before we're 65? I'm definatly a MFW, but is it an impossible dream in our circumstances?

We're both around 30 now, and we have no other debts apart from my student loans - and we're pretty good with money. We have to be with a mortgage which takes about half our gross income.

Advice and opinions welcomed...

SeriouslySeekingtoSave

Damn those Stamp duty fees! I managed to avoid them in my house but I hate the thought of just chucking money at the government for absolutely nothing :mad:

I can't really advise you regarding which would be better as far as shifting would go, but have you explored any options to cut down your costs if you do take either option. For example could you get in a lodger if you decide not to move, or sell the house yourself if you want to move to help cut costs?

Catslovelycats

Goodness. Hard decisions. I know after my ordeal moving house that I vowed not to move again. personally I would move to the best you can afford, rather than buy something you've no intention of sticking with. And I'm not a parent, but beign a teacher I know how important a good education is. If I was a parent I'd want to put my children in the best school I could.
So for me it would be best house I can afford near a good school rather than a house my heart wasn't in near a school my heart wasn't in.
But then, as you say, that'll cost... And they say interest rates will be going up soon, possibly...
Don't envy you the decision!
All the best with what you decide and keep us posted!

originalmiscellany

Ditto catslovelycats. I'm in education too, and would say it's worth getting a smaller house in a good area rather than the opposite.

http://news.bbc.co.uk/1/hi/business/8374053.stm
or
http://www.timesonline.co.uk/tol/news/uk/education/article6927673.ece
fyi

That said, in the cold light of day, your mortgage is big in terms of salary - a multiple of 198k/38k = roughly 5 times your salary when you do move.
It'll be a long term commitment to impact this, but if that's what you want, for your future, children etc, then that's the price to pay.

The boring but practical qn is what deal are you on, and how will you cope if interest rates rocket up to say 8% from their current record low rates?

Carafan

Hello there,

Its a tough choice to make and I've just thought of something else (sorry!).
You don't say how old your kids are but mention 8 - 10 years time - is this when they would be entering secondary education?
If so alot can happen to a school in this time, so an under achieving school now may well be a good school in 10 years time as has happened in our area.

Wishing you luck with your decision

haras_nosirrah

Check with your lender and make sure they will let you move your mortgage. They will treat you as a new customer and you may find they will only let you take 150k to the new house (4 x income)

Before putting your house on the market make sure you can port it.

Secret_Saving_Squirrel

Hello, and best wishes to you. I wouldn't buy a house near a dodgy school no matter how cheap as it could be impossible to sell later. And then you would be really stuck. Location is the most important thing, and also, why pay all the fees twice?

Squirrel x

dimbo61

Its not just about the schools but having said that my OH works at one of the best in cheshire and the fight to get kids into this school every year is really tough!
What does your OH do for a living ? could you move to any part of the country ? have you got close family and do you fancy a "new life in the country"
It seems to me the further south you go the more expensive but there are great places up north if you look and cheaper as well

sushistar

Thanks for all your ideas guys, what a supportive forum!

I think I need to fill in the gaps a bit...

We have sold, subject to contract, our expensive house (where we had a mortgage of £213k). We will have a large deposit to take to our new place.

We're currently living in free accomodation provided by family, in the cheaper part of the country where we are near family. The kids are under 5, so it's 8-10 years before we have to think about 2ndry schools. My husband took a pay cut to come down here.

Our lender is happy to port our exisiting fixed rate products to our new house, and has quoted us that the max they will lend is £198k (I think this is a higher multiple of our income because they take into account non-means tested benefits like child benefit). We will therefore be paying off a minimum of £15k (hopefully more if we can find a cheaper house!) and be paying a small exit fee on this amount (I think it was 3% - so if we pay off £15k it will be £400). Our mortgage is actually split into 2 loans, both I think on fixed rates of around 5.1%, one which will expire at the end of this year and one at the end of next.

When one fixed rate expires, we'll let that part of th loan go onto the SVR until the other part expires, at which point we can obviously remortgage with the best fixd rate deal we can find.

Thanks all for your advice re the location / schools debate... I think on the whole you are all right. It will saddle up to the eyeballs in debt, but moving to the area where we're happy with the schools sems the most sensible move. One factor I didn't mention before is that obviously at some point I will go back to work a bit more (when the kids are older and at primary school) and this will increase our income quite a bit. Thn the morgage won't be suc a millstone!

I so admire all your determination to get rid of your mortgages sooner - it seems soooo far away from us. Decreasing our debt from £213k to £198k or less is a step in the right direction, but it's such a long haul still.

I figure though that the sooner we start focussing on getting it don the better. My husband likes the idea of the lodger!

sushistar

Thanks for the bbc link about school performnce / house prices - interesting stuff! I'm a bit less worried about primary, it;s secondry where i really want to be sure they go to an ok school. Where we moved from was a great vibrant inner city area but the local comprehensive was terrible - it had it's own policeman!

SeriouslySeekingtoSave

If you want to check out the Direct.gov site dealing with lodgers here is a link:

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804

Although I personallly think it's not that clear. Still, basically it's £4,250 a year tax free. I deliberately bought a one bedroom place because I didn't want to be tempted to take in a lodger for the financial reasons After the nightmare I had with flatemates I don't want to live with another person in my space for a long long time!