Sell our house to clear loan, rent then buy again..?

valleyboy444

HI,

This may sound stupid and just want some ideas/pointers.

Our house is a small 2 bed semi, we have a 16 month old daughter.

We bought it 6 years ago for £106k, it is now worth around £123k

We have a secured loan on the house with first plus about £20k but we also have a loan with santander this will be paid of in jan 2015 (13,300)

the santander loan is the one that is killing us each month, were paying it off but if we could free it up it would help us loads.

anyway my wife has this master plan, hence me checking it out on here.

she thinks that if we sell our current house and get a good price we could wipe out the santander loan.

we would then rent somewhere and save for a deposit for a bigger house.

can anyone see a major flaw with this.

we have looked at rental properties and you can get a much bigger house than we have, with garage for about £60 less a month we pay for our current mortgage.

i am fearful of this idea because

1 - We'd be off the property ladder

2 - would we really be able to save a deposit in current climate, the houses were looking at buying are £140k so obviously £14k deposit.

cheers for any help!

fannyanna

valleyboy444 wrote: »

HI,

This may sound stupid and just want some ideas/pointers.

Our house is a small 2 bed semi, we have a 16 month old daughter.

We bought it 6 years ago for £106k, it is now worth around £123k How have you arrived at this figure? Basically are you sure you could sell (and not just market) it for this amount?

We have a secured loan on the house with first plus about £20k but we also have a loan with santander this will be paid of in jan 2015 (13,300)

the santander loan is the one that is killing us each month, were paying it off but if we could free it up it would help us loads.

anyway my wife has this master plan, hence me checking it out on here.

she thinks that if we sell our current house and get a good price we could wipe out the santander loan. Will it also clear the secured loan?

we would then rent somewhere and save for a deposit for a bigger house. How much do you think you'll realistically be able to save per month? How long would it take you to save the deposit that you'd need to purchase again as well as the other costs associated with buying (solicitor fees, stamp duty, valuation/survey, removal etc).

can anyone see a major flaw with this.

we have looked at rental properties and you can get a much bigger house than we have, with garage for about £60 less a month we pay for our current mortgage.

i am fearful of this idea because

1 - We'd be off the property ladder

2 - would we really be able to save a deposit in current climate, the houses were looking at buying are £140k so obviously £14k deposit. Have you looked at the 90% LTV mortgages to see whether they'd be affordable on a monthly basis?

cheers for any help!

A few things to think about above in red

BitterAndTwisted

You need to read the terms and conditions of that Santander loan: there could be early redemption charges which may cost you a fortune.

Even if you could get that £126k for your property it won't clear the secured loan unless you've got a decent amount of equity.

There is no "property ladder": for many home-owners it has suddenly turned into a snake.

atush

You are selling an assest for a secured loan, which is never a good thing to do.

There are other ways and means. go to the Debt free board and see bout reducing your outgoings and brining in more money. Every penny extra should be pain onto the Santander loan.

Kathy535

If I'm reading this right you have loans of £33,300, £20k is secured on the house so if you sold the house you'd have to pay off this loan (presumably) and you want to pay off the £13.3k loan too. Do you have £33.3k in equity? If not then the other posters are spot on with there questions and comments. Also, how much longer can you continue to pay both loans, houses aren't selling as quickly these days so you might have to struggle on for a year or more before your house is sold.

DVardysShadow

valleyboy444 wrote: »

can anyone see a major flaw with this.

How much is outstanding on your mortgage? And on the secured loan? And on the Santander loan?

Assuming the outstanding on your mortgage is £95000, on the secured loan £20000 and on Santander £13000, you owe £128000, and if you do get £126000 for your house, you will still not clear Santander. Allowing £1500 for costs of selling and £1500 as the cost of credit check and a deposit for renting you will be £5000 short.

missile

Have you factored the cost of buying and selling and moving home?
You need to tighten your belts and clear those loans.

valleyboy444

thank you for the replies, i must have been half asleep when i post, apologies.

we want to get shot of the secured firstplus loan first, not santander.

we had a good chat today and we agreed it would be suicide to sell then rent.

we just need to buckle down and pay them off.

cheers all!