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Pay off Mortgage & rent or keep it???
smudge33
Posts: 34 Forumite
Sorry, I think I posted this on the house buying page by mistake!
Anyway:
Hi! please excuse this looooong post, I'll try to be brief:
DH and I bought 4/5 bed victorian terrace in nr Edinburgh coastal town in autumn 2008 after Dd was born. Long story short, work meant it didn't suit (20 min train from Edinburgh but DH has awful hours). We returned to our unrented out flat in Edinburgh & have been happy here til we looked at schools & nursery. Coastal property has been rented out for a year, now our tenants are leaving to buy their own place round the corner! Mid-April, it will be empty.
We have a 305k interest only mortgage with v low rate (0.5% above BoE base rate tracker) on property valued at 355K in late 2008 (25k below original asking price). Surveyor valued it at 355. Last year, next door sold for 350k, although it had 'garden room' and much smaller garden. Not sure what Home Report value will be but prob. 340-345k? Area not really affected by dip too much, just slowed down. (East Lothian)
DH is 50, self-employed architect (oh joy), I am a painter but at home with DD so we are not likely to get that type of deal again - if we were to try and borrow that just now, I think we'd be paying at least /double/ which we could, almost, manage, without me getting a job.
So: we want to sell, accept that we will 'lose' on it but don't want to try and rent it out again because we need to move from our current part of town to closer to DD's nursery, where property is (wait for it) twice as expensive. We're keeping our current flat (60% LTV) for a few more years in case it all goes tits up and renting has really picked up here, so it'll wipe its face no problem.
Should we
1. keep the mortgage deal we've got, keep our fingers crossed we get enough from the sale for a 15% deposit and tighten our belts when rates go up (to rent somewhere would cost at least £300 per month more than our current mortgage!)
2. pay off the mortgage, pay higher rent and hope we'll be able to borrow again to buy in the future (safer in the short term?)
3. keep the mortgage, borrow a bit against equity in current flat (raising the LTV to no more than 75%) and get a bigger deposit for new house, where we'll have to stay for at least length of DDs schooling
(by which time DH will be 70 and not interested in moving LOL!!)
SOO sorry this is a ramble. I've not been able to sleep waiting to hear from our tenants who I like and have been great but want to settle themselves and their 4 (count em) kids... I should add that the Edinburgh market is extortionate compared to the rest of Scotland and hasn't suffered terribly in comparison with a lot of areas in the UK. It isn't a total bubble but it is different.
Cheers!
Anyway:
Hi! please excuse this looooong post, I'll try to be brief:
DH and I bought 4/5 bed victorian terrace in nr Edinburgh coastal town in autumn 2008 after Dd was born. Long story short, work meant it didn't suit (20 min train from Edinburgh but DH has awful hours). We returned to our unrented out flat in Edinburgh & have been happy here til we looked at schools & nursery. Coastal property has been rented out for a year, now our tenants are leaving to buy their own place round the corner! Mid-April, it will be empty.
We have a 305k interest only mortgage with v low rate (0.5% above BoE base rate tracker) on property valued at 355K in late 2008 (25k below original asking price). Surveyor valued it at 355. Last year, next door sold for 350k, although it had 'garden room' and much smaller garden. Not sure what Home Report value will be but prob. 340-345k? Area not really affected by dip too much, just slowed down. (East Lothian)
DH is 50, self-employed architect (oh joy), I am a painter but at home with DD so we are not likely to get that type of deal again - if we were to try and borrow that just now, I think we'd be paying at least /double/ which we could, almost, manage, without me getting a job.
So: we want to sell, accept that we will 'lose' on it but don't want to try and rent it out again because we need to move from our current part of town to closer to DD's nursery, where property is (wait for it) twice as expensive. We're keeping our current flat (60% LTV) for a few more years in case it all goes tits up and renting has really picked up here, so it'll wipe its face no problem.
Should we
1. keep the mortgage deal we've got, keep our fingers crossed we get enough from the sale for a 15% deposit and tighten our belts when rates go up (to rent somewhere would cost at least £300 per month more than our current mortgage!)
2. pay off the mortgage, pay higher rent and hope we'll be able to borrow again to buy in the future (safer in the short term?)
3. keep the mortgage, borrow a bit against equity in current flat (raising the LTV to no more than 75%) and get a bigger deposit for new house, where we'll have to stay for at least length of DDs schooling
(by which time DH will be 70 and not interested in moving LOL!!)
SOO sorry this is a ramble. I've not been able to sleep waiting to hear from our tenants who I like and have been great but want to settle themselves and their 4 (count em) kids... I should add that the Edinburgh market is extortionate compared to the rest of Scotland and hasn't suffered terribly in comparison with a lot of areas in the UK. It isn't a total bubble but it is different.
Cheers!
0
Comments
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Firstly have you got a repayment vehicle in place for your interest only mortgage, as lenders are not very keen on IO mortgages at the moment.
If not do you think you would be able to afford a repayment mortgage at the current levels?0 -
Well said Short Changed.
To clarify details:
House 1 - Terrace Coastal 305k interest only valued at 350k
House 2 - Town Flat - Is there a mortgage on this? What's it worth?
Is this right or have I made a total wally of myself?!Feb 2012 - onwards MF achieved
September 2016 - Back into clearing a mortgage - Was due to be paid off in 32 years in March 2047 -
April 2018 down to 28.00 months vs 30.04 months at normal payment.
Predicted mortgage clearing 03/2047 - now looking at 02/2045
Aims: 1) To pay off mortgage within 20 years - 20370 -
I'm honestly not sure. I've tried to work out how much it would cost but the numbers start jumbling about in front of me :-( We don't have a repayment vehicle in place because when we bought we assumed we'd be able to switch to repayment in a few years when I started work again. Which we still hope to! I know, we are not risky types but we had very persuasive advice (all strictly legal and we ARE grown ups, I know) and had no idea the whole poo was about to hit the fan...0
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originalmiscellany wrote: »Well said Short Changed.
To clarify details:
House 1 - Terrace Coastal 305k interest only valued at 350k
House 2 - Town Flat - Is there a mortgage on this? What's it worth?
Is this right or have I made a total wally of myself?!
No! Not a wally!! :-)
House 1: terrace coastal 305K interest only, value 350k
House 2: town flat 115k interest only, value 190k
(house 3: town flat 80k interest only, value 110k, but not going to sell that for a looooong time)...
I feel like such a prat, having so much debt :-(0 -
No! Not a wally!! :-)
House 1: terrace coastal 305K interest only, value 350k
House 2: town flat 115k interest only, value 190k
(house 3: town flat 80k interest only, value 110k, but not going to sell that for a looooong time)...
I feel like such a prat, having so much debt :-(
What are your valuations based on? Are they your valuations, an estate agents or surveyors because they can be suprisingly quite different.0 -
No! Not a wally!! :-)
House 1: terrace coastal 305K interest only, value 350k
House 2: town flat 115k interest only, value 190k
(house 3: town flat 80k interest only, value 110k, but not going to sell that for a looooong time)...
I feel like such a prat, having so much debt :-(
Thank you very much.
So then that's a total mortgage debt of: 500k
That's unsustainable, esp. baring in mind Mr Smudge is 50 and doesn't want to work till he's 70.
Have you been in a position to overpay any of these 3 houses, or have any savings? And roughly, what's your combined annual income?
I'm trying to work out what the best thing is (in my mind) but it's confusing me with 3 houses!Feb 2012 - onwards MF achieved
September 2016 - Back into clearing a mortgage - Was due to be paid off in 32 years in March 2047 -
April 2018 down to 28.00 months vs 30.04 months at normal payment.
Predicted mortgage clearing 03/2047 - now looking at 02/2045
Aims: 1) To pay off mortgage within 20 years - 20370 -
Thank you!
1. Valuations based on mortgage surveys for flats 2 and 3 (although flat 2 was recently looked at by estate agent with view to selling)
2. We've tried to overpay recently on the 305k house but we've only got 5k savings left after buying it and using our savings to pay stamp duty etc.
3. we're screwed, aren't we!0 -
PS this is double posted here and also:
https://forums.moneysavingexpert.com/discussion/3107224
just to keep an eye on what's been said.Feb 2012 - onwards MF achieved
September 2016 - Back into clearing a mortgage - Was due to be paid off in 32 years in March 2047 -
April 2018 down to 28.00 months vs 30.04 months at normal payment.
Predicted mortgage clearing 03/2047 - now looking at 02/2045
Aims: 1) To pay off mortgage within 20 years - 20370 -
Screwed is a strong word, facing "some fun challenges" maybe more appropriate
Feb 2012 - onwards MF achieved
September 2016 - Back into clearing a mortgage - Was due to be paid off in 32 years in March 2047 -
April 2018 down to 28.00 months vs 30.04 months at normal payment.
Predicted mortgage clearing 03/2047 - now looking at 02/2045
Aims: 1) To pay off mortgage within 20 years - 20370 -
LOL 'fun challenges' is one way of putting it!! :-D
Our combined income is about 65k, 60 of that being Mr Smudge. I'm a self employed painter (of paintings, not houses alas) so my income is rarely taken into account when applying for things. I am happy to get a job in tesco or waitrose though, once Dd is a nursery (come the autumn) so we have more regular cash. Oh how I long for a 'real' job.0
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