Downsizing

Gingerbeard

Hi All,

Apologies if this is the wrong forum, our circumstances are this.

We have a mortage of £150,000, we owe approx £122,000, my wife has just become self emplyed and although we are ok month to month on our finances I would also dearly like to free more disposable cash to use for growing our business slowly, one day I would also like to work full time in the business, as a first step we are considering downsizing our home, we currently have 4 beedroom new build terrace townhouse which was £186.500 new in 2007 but is worth approx £150,000 now.

We don't have children so don't need the four bedrooms apart from Christmas when we have family to stay but we can get over that, so we are considering a move to a different area, closer to the business for a 2 or 3 bedroon house for about £50,000 to £70,000, we also have about £10,000 of CC debt to clear as well.

Am I correct in thinking that our only option would be to sell first and then look to buy? We won't be able to save for a deposit so we would need any possible equity, in this situation what options are there? Would our existing mortage provider (Halifax) be able to help?

Thanks in advance for any advise.

ACG

You dont say what your combined income is, however as your wife will probably not have 3 years acconts it would really be soley be on your income.

Thats the deciding factor really.

oldtractor

I think its better to stay where you are.

Gingerbeard

Hi ACG - thanks for the reply, yeah thats the problem there although I can list some income from the business as drawings but only about 3k so to be honest I'd apply on my salary alone which is 36k

Hi oldtractor - thanks for the reply, why would you say that?

ACG

Your income alone would give you a mortgage for £120-130k maybe more.
If your looking for a property for say £100k you could pay off your CC and still have a 15% deposit give or take.

But no you can search, put your place up for sale and then find somewhere. Hopefully it will all just click where you get an offer and find somewhere approximately the same time.

locust_2

Gingerbeard wrote: »

We have a mortage of £150,000, we owe approx £122,000,

Just to check - is it the case that the mortgage was originally for £150K and you now owe £122K (with the house worth £150K)? If so you'll have £28K minus selling costs left over for a deposit on a new place.

You mention looking at houses in the £50K- £70K (correct me if I'm wrong) and you're earning £36K. It sounds like you're pretty close to being able to pay off the £10K debt, plus have almost 20% deposit left over for a house around the £60K mark. Would selling, moving and stamp duty on a new purchase be around £6-8K? If it's around that number then it would fit within the £28K equity you currently have.

I'd have thought a salary of £36K should allow the mortgage you need. Might be worth checking with Halifax whether they'd even allow you to port your current deal (if it's any good) to a new place worth a hypothetical 60K with a 10-20% deposit.

Sounds like sticking your house on the market and seeing what offers you start getting is the way to go.....you can get offers near £150K or a bit lower and go ahead with your plan by the sounds of it. I guess it depends what % of deposit you want on the new place and whether paying off the cc debt is number 1 priority (I'm assuming it is....) even though that would reduce your deposit a bit.

getmore4less

Selling and buying will just eat money.

I would look carefully at cost reward.

are you really going to save that much to invest in the business?


What about Lodgers.

Gingerbeard

Hi Locust,

Yeah, the details are correct, I was just trying to get my head around the timing of it all, I think that firstly I need to check with the Halifax what is possible with them, in any event I need to sell in order to have a deposit if it's with Halifax or a new provider.

Thanks for the comments though, very much appreciated.

Gingerbeard

Hi getmore4less,

Yeah, I understand, problem we have is that we are paying our current mortage for a property that we barely use 50% of, my rough calculations mean that I could realise about an extra £500/month of cash which can directly into savings, with re-investment of profit from the business this means we can purchase additional equipment (it's a catering business) such an extra delivery van etc to expand our delivery range and coverage, a lodger would make sense but it's not for us to share our home.

Thanks for the comments though, very much appreciated.