Sell to be Mortgage free?

Sloppy_Saver

I was thinking of selling our house and renting, not because I mind having a mortgage (I'm young, in work and in good health, so have no repayment worries) but because I'm convinced that the property market will have a crash. I have done research on the internet and read an article that the FSA were advising banks and financial institutes that there may be upto a 30% downward adjustment.

Can you imagine the scenario, I sell my house now for say 300k, rent for a three years and put my equity in a 3 years guaranteed government bond (no chance of losing any cash). I have a large-ish house, but in our village there are some really nice stone cottages for rent - and at a lot less than I'm paying for our mortgage, so even more money could go into the government bond.

Once the adjustment occurs, and houses hit the bottom, if prices in my area dropped just 15%, I could buy back a house similar to mine for 45,000 less than I sold it for. With the gains I'd made with cheaper rent (and bills such as council tax) and interest on my bond, I'd end up with the same house and no mortgage!

There is just one flaw, my missus loves the house and flat refuses to move. Oh well, back to the drawing board!

Spendless

Sloppy_Saver wrote:

I was thinking of selling our house and renting, not because I mind having a mortgage (I'm young, in work and in good health, so have no repayment worries) but because I'm convinced that the property market will have a crash. I have done research on the internet and read an article that the FSA were advising banks and financial institutes that there may be upto a 30% downward adjustment.

Can you imagine the scenario, I sell my house now for say 300k, rent for a three years and put my equity in a 3 years guaranteed government bond (no chance of losing any cash). I have a large-ish house, but in our village there are some really nice stone cottages for rent - and at a lot less than I'm paying for our mortgage, so even more money could go into the government bond.

Once the adjustment occurs, and houses hit the bottom, if prices in my area dropped just 15%, I could buy back a house similar to mine for 45,000 less than I sold it for. With the gains I'd made with cheaper rent (and bills such as council tax) and interest on my bond, I'd end up with the same house and no mortgage!

There is just one flaw, my missus loves the house and flat refuses to move. Oh well, back to the drawing board!

And is that the only flaw , take a look at the date I joined this site, people were suggesting the same thing then

Sloppy_Saver

prices cant go up forever, if you look at how many people view this site or the investment sites compared with the Deabt Free Wannabe site you'll see what's in store. People are up to their eyes in debt - it wont take much now for the whole house of cards to come crashing down...

ManAtHome

Just after the millennium I thought things would level off in 2004 as well, so paid off instead of upsizing. Probably worked out around the same, maybe even better as I stuck more into the pension and other investments. If I had upsized, would be currently looking at downsizing to end up in pretty much the same position, so saved me the hassle (is this what they call "rightsizing"?).

Spendless

Sloppy_Saver wrote:

prices cant go up forever,

Probably not but they could stabilise and no one actually knows what will happen. If you'd sold to rent in 2004 where would you be now re buying back your house, gained, lost or stayed same?

MoKa_2

southantrim3 wrote: »

That's a very good idea which I hadn't thought of. I must keep an eye out for up and coming areas in Belfast and see what I can get for the money, good thinking. It would be nice to see how you get on.

Ha - funny how things work out. Turns out everyone else had realised the 'up and coming area' was a good investment and offers for properties were going to what we'd consider 'silly money' for not very special properties.

We re-evaluated and decided to look outside of the city altogether and during our search we came across a property which was as far away from 'downsizing' as it gets! Turns out our priorities were more about getting out of the area we were in and clearing credit card balances. We're now living in the country with a mortgage that is 75% higher than our last one (but without credit card debts is still affordable) and we couldn't be happier.

We have tightened our belts a bit to be able to comfortably continue to afford the mortgage, but waking up to views of mountains and a field full of sheep, as well as feeling good about no credit card debts makes that easier!

musicbox77uk

Hi guys, have been reading this thread - I am having same thoughts about downsizing myself now, as have a 2-month old nipper and my wife wants to stay off work for a few years to look after him until school age.

The biggest factor on the mortgage issue for us is that now she is no longer working, we are paying over 50% of monthly income (1530 quid) on our mortgage. Admittedly, it is a lovely rural village location and we do have some good friends in the village, which also has a school for little one when he grows older.

But, if we moved back to Mansfield where we came from (hence the dilemma!) we could move into a decent comparable sized house in good area for approx. £40-50k cheaper. This would knock a substatial third off our mortgage, and either allow lower payments or quicker pay-off. We could also buy a similar sized place in a slightly less up-market side of town and chop the mortgage in half, meaning that monthly payments are back to 25% of my income, and we would have some breathing space.

We really are stuck on this one - not knowing the benefits of keeping mum at home for little one versus mum going out to top up income, we are having a hard time deciding.

Should we tighten belts even more and hang on for the next 3-4 years, (I already run my car on veg oil and take wood from neighbours gardening to heat the house!) or re-cut our cloth and look forward to paying off a bit earlier, and perhaps coming back to the sticks when we are both earning a little more later in our careers?

Any wisdom gladly recieved!:eek:

musicbox77uk

Thought I would add that if we sell, we stand to gain £60-70k equity, which when buying new house at £150-160K would mean around90-110K mortgage compared to £137K at moment.

Do you think these differentials are worth it?

Goodnight.

dad-of-4

i got chatting to a guy the other day that told me he sold up and bought a big static caravan to live in, he can only live on the site for 10 months of the year but is taking early retirement and will chill out abroad for 2 months each winter, sounded like a good plan, certainly worth a thought if you just need a home as a base to live your life from.

musicbox77uk

Thanks for your reply - at least I feel someone out there read my effort!
Have broken the news to the grandparents today, who were a bit upset that they'd have to drive a bit further to see grandson, but can't help but feel it is daft to pay more money to the bank than necessary! We are off to view properties this week.