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Overpayment vs Unsecured loan vs building conservatory for wannabe second steppers
pringles_and_cola
Posts: 2 Newbie
Hi I'm in a bit of a difficult situation and would appreciate any advice from you lovely MSE folks 
Essentially, we bought at the peak of the market with Northern Rock and took out a Together Mortgage. This has now become NRam and we are now on their SVR as due to a small LTV ratio of around 90% - fixed deals we have looked at are higher than the SVR so it doesn't seem to make sense to move to a new mortgage provider, until rates begin to rise. We may be wrong on this point.
We currently owe approximately £93K and the house is valued at £110K. Properties on our street (in a better condition than ours) have been up for sale for at least the last 6 months, so we don't anticipate our home selling quickly or for the full £110k
Anyway, we have a baby on the way (due in 5 months) and our house is extremely small, a small living room and kitchen diner on ground floor and 2 bedrooms and a bathroom on first floor, with no storage space. Therefore, we'd like to move to a bigger property to accommodate our growing family.
Between us we now earn approximately £65K but this may go down to £45K after the baby arrives. We don't have any savings for a deposit so would be relying on any equity in our current property to fund a move.
3 bed room properties around the area we are in are between £200 - 250K.
We have been discussing 3 possible solutions:
1) Build a small conservatory to the back of our property to 'add space' for things like buggies etc and still move in a couple of years when house prices rise (OH thinks they will / we will have more equity - I'm think it will fall). May need to 'release some equity' to fund this as we have no savings.
2) Overpay our current mortgage and try to save for a deposit 50/50 with anything we have left over at the end of the month for the next year or two and 'make do' with what we have even though its not ideal and the baby may have few things in its early life as there is simply no space.
3) Attempt to sell our current house and take out an unsecured loan to fund any short fall in deposit.
Any views on our situation would be appreciated.
Essentially, we bought at the peak of the market with Northern Rock and took out a Together Mortgage. This has now become NRam and we are now on their SVR as due to a small LTV ratio of around 90% - fixed deals we have looked at are higher than the SVR so it doesn't seem to make sense to move to a new mortgage provider, until rates begin to rise. We may be wrong on this point.
We currently owe approximately £93K and the house is valued at £110K. Properties on our street (in a better condition than ours) have been up for sale for at least the last 6 months, so we don't anticipate our home selling quickly or for the full £110k
Anyway, we have a baby on the way (due in 5 months) and our house is extremely small, a small living room and kitchen diner on ground floor and 2 bedrooms and a bathroom on first floor, with no storage space. Therefore, we'd like to move to a bigger property to accommodate our growing family.
Between us we now earn approximately £65K but this may go down to £45K after the baby arrives. We don't have any savings for a deposit so would be relying on any equity in our current property to fund a move.
3 bed room properties around the area we are in are between £200 - 250K.
We have been discussing 3 possible solutions:
1) Build a small conservatory to the back of our property to 'add space' for things like buggies etc and still move in a couple of years when house prices rise (OH thinks they will / we will have more equity - I'm think it will fall). May need to 'release some equity' to fund this as we have no savings.
2) Overpay our current mortgage and try to save for a deposit 50/50 with anything we have left over at the end of the month for the next year or two and 'make do' with what we have even though its not ideal and the baby may have few things in its early life as there is simply no space.
3) Attempt to sell our current house and take out an unsecured loan to fund any short fall in deposit.
Any views on our situation would be appreciated.
0
Comments
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why do a couple with an income of 65k pa and a modest mortgage of 93k have no savings?
how much are you saving per month?
1. no chance of 'releasing' any equity to fund the conservatory; your LTV is too low
2. yes save like mad.
3. borrowing for a deposit is no longer really an option as lenders will take into account your debt swhen looking at affordability of your mortgage0 -
I would err on the side of caution and not expect property prices to rise significantly for a while.
A conservatory is unlikely to add value to the property in terms of the outlay. Maybe consider other cheaper forms of storage.
A baby doesn't take much space initially. So start overpaying the mortgage while you are still able. As you'll struggle to fund and run a £200k plus property on a sole salary.0 -
why do a couple with an income of 65k pa and a modest mortgage of 93k have no savings?
how much are you saving per month?
1. no chance of 'releasing' any equity to fund the conservatory; your LTV is too low
2. yes save like mad.
3. borrowing for a deposit is no longer really an option as lenders will take into account your debt swhen looking at affordability of your mortgage
Many thanks for your advice, it was our FA who suggested releasing the equity - I thought this sounded dodgy......
We have only just got to an income of 65K in the last 3 months. Prior to that I was a student and we were surviving on my OH income of 25K. The pregnancy was unplanned and we had been planning on beginning to save / make significant overpayments and the current house was fine for just the two of us ..... I guess 'life' happens and circumstances can change very quickly.0 -
pringles_and_cola wrote: »Many thanks for your advice, it was our FA who suggested releasing the equity - I thought this sounded dodgy......
We have only just got to an income of 65K in the last 3 months. Prior to that I was a student and we were surviving on my OH income of 25K. The pregnancy was unplanned and we had been planning on beginning to save / make significant overpayments and the current house was fine for just the two of us ..... I guess 'life' happens and circumstances can change very quickly.
congratulations on the baby
now is definitely the time to save like mad and see how things are after the baby is born
best of luck0
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