Am I doing the right thing?!

tryinghard2011

Hi everyone,

I've been 'lurking' on this site for some time not but have plucked up the courage to ask a question about my own mortgage free dreams!

I am trying to overpay as much as possible to enable me to sell. If I sell at the minute I would lose money on the house. I bought it for £87k and at the minute these properties are going for about £65k-£70k at best. Therefore, I thought if I overpaid like mad for three years I could offord to loose some money and make the move I'm desparate to make.

I currently have a 70K mortgage (2.5% rate) that I am (attempting) to overpay every month by £560, bringing it in at £1100 per month. I've done this for three months so far and its just about been ok. However, I am not saving anything anymore (I've saved £4,500) and am not updating the house (which would need new kitchen).

I suppose I'm worried I've not got more savings or that I should be improving the house.

Any advice, comments would be greatly appreciated.

Thanks in advance

RosieTiger

Seems a very awkward position to be in which probably explains why no responses so far. I think this is your own decision to make. Personally, I would save the money to get a deposit to move, but that depends on the rate you can get for savings compared to what your paying on the mortgage. On the kitchen, question for me is will it make any or much difference to the house value? If not don't do it.

amancalledmartin

That is a pretty tricky situation. You've got a great mortgage interest rate, but I suppose theoretically you could get a 3% savings rate certainly via some ISAs which would mean you'd earn more through saving than paying off the mortgage. But then you are also in negative equity which is a situation I'm sure you'd like to be out of. Ideally in savings you should have the equivalent of 3 months expenditure so that if anything went wrong you have got a good cushion, and it sounds like (excluding mortgage overpayments) you pretty much have that.

You don't say why you're so desperate to move? House prices do seem to be heading in the right direction now (i.e. back up); can you not hang fire for a bit into you're back in the black with your current property?

tryinghard2011

Thanks for the replies

I suppose being in negative equity is one of the things that really bothers me and has prompted me to try to pay as much off now whils the rates are so low.

I feel pretty desperate to move as this house isn't in the best of areas and doesn't really reflect what I want anymore.

However, I suppose this thread has made me think that its not so bad and I have to just hang on. Other times I worry I should be saving as then I could use this for a deposit but how would I get around being in negative equity?

I suppose thats what I struggle with. At one stage I wanted to save for a deposit but realise I couldnt move due to equity issues.

Apologies for the rambling