Should we get off the housing ladder?

dander

It seems to me that if you bought a house, close to the peak in the market on a 100% interest only mortgage, then you're not really on a property "ladder" anyway. There will need to be quite big changes for you to ever be able to move up the ladder from there. As you've discovered 100% percent mortgages are no longer available and it's likely to be a long time before they come back (if at all) and any increases you make in the value of your property will be pretty much the same as costs of other properties - so when you add in fees, moving and buying another place will likely just cost you money without any chance to increase the relative value of the property.

What you've got is a house and a huge debt, that in five years of an interest only mortgage, you haven't got any closer to paying off - but you're five years closer to having to find a lump sum of 200k to pay it off!

In my opinion if you want a way to get extra space to live in quickly then you don't have many options other than selling up and renting - or if your house is genuinely not in negative equity and your mortgage portable, moving to a much cheaper area. If you're determined to "stay on the ladder" - then you need to rethink your finances so you can actually get yourself in a position to move up the ladder - and also work out what the benefit of being "on the ladder" actually brings you, bearing in mind it currently means you are squashing five people into two bedrooms (three of whom are getting bigger all the time!) just so you can pay interest on a loan you can't currently repay.

gingertips

I would really urge caution to becoming a landlord and renting out your current property - particularly when the rent will not cover the repayments.

right now with the risks of property prices it might be a very wise choice to sell now & squirrel the money away until you can afford a property the right size.

Interest rates are ineviatebly going to rise a couple of percent - as much as the BoE tries not to, it is the only thing that is going to curb inflation.

My question to you is what would a couple of percent interest rate rise mean to the mortgage payments on your property?!

Or...on a more positive note assuming you sell your property, what would a couple of percent interest rate rise mean to the savings that you now have from the sale of your property?! Perhaps more money towards your dream house (& fingers crossed for significant price reductions over next couple of years too!)