Should we get off the housing ladder?

00ec25

MrsOB wrote: »

The £950 per month rent would be before any agency fees etc :-( and if tennants missed a month it would be very bad news.

then you should NOT even think about renting out your property if your financial situation is that precarious - a wise LL budgets for their property to be void (tenantless) for 2 months in every 12

womble12345

MrsOB wrote: »

The old rate we were on just expired and renewed at 5.49 fixed for 3 years - monthly payments of approx. £960.

Have you just signed up for a new fixed deal? I bet there is a massive early repayment charge if you sell up and rent. I reckon that will be about £3000 but you should check in your paperwork!

cjmumto2

Can you not add on a conservatory or loft to give you the extra space? I would be reluctant to get off the ladder as house prices may fall but inflation is going up which means prices will over time anyway. Although if you are only paying interest only this wont benefit you when you want to sell and upgrade later. Have you looked around to see what you can rent? Renting from family/friends is always a dodgy situation and you should get a contract to protect yourselves just in case.

This is certainly the reason why I stopped at 2 kids as I cant afford to move

botchjob

I can't see the point in selling to rent. I can't see the point in renting to rent. I can't quite understand why you've just committed yourself to a 3 year fix if you're not sure what you're going to be doing for those 3 years. You're now on the upslope of a fixed term mortgage (and not a v. competitive one either...) that will cost you money to change or get out of.

Sounds like your best option is to squash in where you are for a bit while you work out exactly what you're next move should be. Then plan properly for it...

shortchanged_2

Couple of questions.

Do you have a repayment vehicle in place for your interest only mortgage?

How do you know for sure your house is worth more now than what you paid for it?

Mallotum_X

MrsOB wrote: »

OK ..... so 'hypothetically' we can get a long term rental ........ is getting off the property ladder a bad idea?

Crystal ball time here:

If property were to crash in value then you would be able to pick up a better house for the same money in the future.

If property were to jump in value then you may find it impossible to get back on "the ladder".

There are people that will argue either way, so it really depends on what will happen, and whether you want to gamble.

Many people seem to have a view of a stagnant market for a few years, i.e. prices not really doing very much.

If that is the case then as you are on an interest only mortgage you have lost nothing by renting (assuming rent and interest is a similar level).

However the obvious flaw in this is why interest only, perhaps you should be considering what options you have for a repayment mortgage.

Ultimately its a gamble and there are so many influences that can impact on house prices, some of which are impossible to predict.

pjcox2005

Have you had a look to see how much a slightly bigger place would cost in rent in comparison to your current interest payments?

MrsOB_2

A bigger place would cost around £1,100 per month - which we could afford IF we didn't have to pay the extra 1% our mortgage company would charge us to rent our property out. But taking into account PPs comments I'm not sure that is even an option for us.

Simiar properties in our area are selling for around £225k (Mouseprice.com) so that is what I am estimating our property would be worth.

We do not have repayment vehicle in place for the interest only mortgage. We had to renew our mortgage with current lender as old fixed term had come to an end - as LTV was still high that was the best offer we had and no other mortgage companies would lend to us.

I know that we have not planned anything properly, I know that we SHOULD have thought about what we were going to do, how we could have more space etc, etc. but we were just being told by everyone that we had to get on the ladder so we did ..... just in a really rubbish way that made sense at the time but looking back it was/is daft. I know that reading it it seems stupid but we just took the only option available to us as I'm sure many other people have done.

Grrrrrrrr.

Thanks for all the input though .......

hcb42

personally i would stay put, find a way to make the space work better, and start paying off the loan properly, not interest only

joerugby

Sitting tight and extending, or simply altering one of the bedrooms to create two small rooms, is probably the best bet for the moment. This would be better than the insecurity of renting in my view.

You really need to start repaying your mortgage.