Negative Equity Query

pleasedelete

On that income try and convert it to a buy to let

Lifes_Grand_Plan

PickleTricks wrote: »

Financially we're not too bad, we bring in around 62K pa

:eek::eek: Is that £62k take home or gross?

Surely with that much income you could overpay the mortgage, get some equity and then sell?

PickleTricks

With the exception of "in my wildest dreams", that's gross! That's starting to sound like the best option... however is it better to overpay or save?

DannyboyMidlands

PickleTricks wrote: »

With the exception of "in my wildest dreams", that's gross! That's starting to sound like the best option... however is it better to overpay or save?

Depends what rates you can get and whether there is a limit on overpayments. The first thing I'd do though is stick your current savings into NS&I certificates paying RPI + 0.5% tax free.

Thrugelmir

JQ. wrote: »

and if property values drop?

Easier to move up the ladder when property values fall. As the property you aspire to purchase will fall more in value than yours. Markets are relative.

By paying off your mortgage you always have a home, that one day will be paid for.

In a rising market you need to borrow more and more to bridge the gap.

With repayment mortgages every month more capital is repaid and less interest. So over time the amount you owe will reduce.

If you are serious about moving. Then cut out all unnecessary expenditure and pay off the mortgage instead. Amazing what can be achieved if the desire and will is there.

DVardysShadow

pleasedelete wrote: »

Can you convert it to buy to let and then use the 8-9k as a deposit for a new house (possibly with more you have saved).

This isn't as easy as it was but you might find it's an option if the rent will cover the mortgage.

That would potentially add the problem of overleverage to a simple problem of negative equity. ie OP would now be doubly exposed to drops in the housing market. Only a good idea if you have a strong hunch that the market is going up and you are able to stand the losses.

JQ.

Thrugelmir wrote: »

Easier to move up the ladder when property values fall. As the property you aspire to purchase will fall more in value than yours. Markets are relative.

By paying off your mortgage you always have a home, that one day will be paid for.

In a rising market you need to borrow more and more to bridge the gap.

With repayment mortgages every month more capital is repaid and less interest. So over time the amount you owe will reduce.

If you are serious about moving. Then cut out all unnecessary expenditure and pay off the mortgage instead. Amazing what can be achieved if the desire and will is there.

So if the OP's house drops a further £10k in value and they overpay their mortgage by £5k during that period you consider they will be in a better position than if they sold now and bought after values had dropped further. Really?

All I was pointing out was that you gave a simplistic response to what is a complicated decision, on the basis that whilst the OP is in Negative Equity they have the ability to pay it off, they have the ability to move in with a parent and reduce their living costs substantially thereby enabling them to save a larger deposit. Should values drop further they will be in a far better position having sold their current property and saved hard whilst living with a parent. Obviously if values don't fall further then they would be better staying put and overpaying. The OP also needs to decide if they can cope with living with a parent for an extended period.

Anyone got a crystal ball and can tell us where values are going?