Newbie - baffled by her neighbours' financial situation!

RoaringTwenties

Hello,

This is my first post on this forum, I only found it this morning but havereally enjoyed reading through various threads. I don't need advice per se,just wanted to 'chat' as it were about a situation that's come to a head for meand my OH over the last 24 hours that has got me thinking about how people makesuch different decision about their finances...

OH and I have a 3 bed detached in a lovely area. We’ve been here 7 years andit’s always been great for us but we now have a 5 yr old and another on the wayand it’s started to feel tight. OH is incredibly resistant to moving but I managed to persuade her (we’reboth women btw!) that it might be sensible if we could find somewhere we lovedas much as our place. A couple of weeks ago our neighbours told us they wereseparating and asked if we’d like to buy their 4 bed detached. It seemedperfect as it has all the space I’d like and OH would only be moving about 10feet! The other bonus is that one of said neighbours said she’d like to buy ourhouse as she loves the area too, so we could do a swap, private sale with allthe benefits. I know that ours is worth around £180k and that hers is worth£240-250k as that’s what they’ve been routinely selling for in the last coupleof years. I looked at our finances and it would havemeant increasing our mortgage by around £68k and putting it back up to 25 yrs(got it down to 16 at present). We agreed this would be sensible as in the longterm when I get back to paid work (full time mum at the mo) we couldoverpay/reduce the term etc, and it would be the perfect house and a cheap andeasy move. Anyway, the neighbour came round last night and said that she can’tafford to buy ours unless we either sell it to her for £150k or buy hers for£280k! We don’t have the money to do either but in any case it would be madnessto effectively give away £30k of our hard-earned money. I was astonished as wehave one good professional salary coming in (£44k) and they have had doublethat amount with two of them working in similar jobs, no kids, but I gather they musthave re-mortgaged as the figures she was talking about mean they must have lessequity in that they had when they bought it two years ago despite the valueremaining pretty constant. But she told us they have no savings, have hadexciting trips abroad, new cars etc. We’ve not had any real lifestyle – noholidays, same car etc – but managed to pay off a third of the value of ourhouse. It just astonished me that apparently sensible people who hold down responsiblejobs could make those kinds of choices (naive I know!) She even said that whenthe soon to be ex-husband rents a flat (he’s renting from a friend at £400pcm)they’ll have to go interest-only. They should have a surplus of atleast £1000pcm from their salaries even after that rent – where is it allgoing?! I must admit I do take in a lot of parcels from high-end online retailers for her...it's all none of my business I know, and I don't wish to be seen to be taking some kind of moral high-ground, but I’m fascinated...She ended up askingour advice on her financial position, telling us we are “amazing” for beingable to manage all this stuff...

Not a very original or interesting story I know, I’m sure you’ve all beendiscussing this and more on the forum over the years! But thanks to those ofyou who haven’t fallen asleep or logged off for listening to my witterings...I shall try to be more original next time!

GDB2222

Don't take any notice of jjl. He's like a bear with a sore head in the morning, but he mellows during the day, and sometimes even posts something worth reading! It's entirely up to your neighbour whether she discusses her finances with you, and it's none of jjl's business to tell her not to.

I agree with you. I try to keep the household expenditure within reasonable bounds, but other people just don't seem to see that. They want all the bling now, without saving at all, and then they are surprised that their finances are in a mess.

ebee1

Dont be put off by peoples harsh comments on here - welcome to the forum. I nearly deleted my account because of peoples pointless comments to begin with.

You know what, I'm ALWAYS baffled/interested in neighbours' finances! She sounds like she lives waaay beyond her means. With regards to a house swap.. unless she is leading you up the garden path about her funds it perhaps sounds like something you can't really consider, which is a shame as it sounds really ideal!

Joyful

One thing your neighbour should also be aware of is if her expectations are too high.It may be unusual for houses to sell in your area for the same price as 2 years ago. Most areas have dropped. Why not research recent sales to try to come to an agreement.

abankerbutnotafatcat

Yep, some people are like that. It's all about balance isn't it because you can't take it with you and there's no point being the richest corpse in the cemetry but equally you need to plan to be able to live a comfortable life.

Reading your story, I do wonder whether, given their marriage break-up, there was an element of compensating with their spending for things that were lacking at home.

Bottom line though, you're correct, her idea is ridiculous. Go the 'normal' market transaction route to see if it works for you i.e. if you can find a property you can afford that is as lovely as your current one and you never know, they're going to have to see their property to someone...

corrag

Hello and welcome

I hope it all works out for you and your expanding family My friend and her partner sound the same as your neighbours. They are constantly pleading poverty yet always jetting off on holiday, changing cars, and decorating. Of course its all on credit. They have a habit of slightly looking down their noses at people who don't keep up with them, yet they are digging a huge hole of debt for themselves. We went round for dinner recently where they served up this gawd awful miniture concoction of food but it was from Fortnum and Masons don't you know so we were suppose to like it.

We got some chips on the way home as we were still hungry.

BitterAndTwisted

What is fascinating to me is how a couple with one young child and another on the way can feel things are a bit "tight" in a three bedroomed detached house. That's the thing which truly baffles me about your little story.

COLOURBOUNCE

They clearly can't afford their lifestyle any longer and want someone else to dig them out of their over spent hole. Give it a while and pick the place up as a repo, doesn't sound like you will have too long to wait.

The_Earl_of_Streatham

You'll have to ignore that gracious welcome you were offered in the first response, in my experience as a long-time lurker and somewhat rare poster most people hereabouts are capable of much better. People can be harsh, but they've usually got a point to make and they're very often right; that response looks like unpleasantness for it's own sake.

But, your story... I think you'll find your neighbours are like very many people, their expenditure has been determined to some extent by what they can borrow and pile onto the mortgage. Once upon a time we were all worried by industrial action in support of preposterous wage demands, these have over the years been supplanted by easy credit. It's a good thing we put a stop to all that pay demand madness, so damaging to the economy was it that we had to endure full employment, affordable housing and secure pensions. We must give thanks that those days are behind us;).

All this credit means that what we are calling house prices in many cases include the cost of the sellers holidays and new cars over the years. The reasons why your neighbours want a particular price shouldn't enter into your considerations, the real questions are can you afford it and do you want it at that price. I suspect you knew this anyway.

My turn to be harsh now. If you can crack a post into a few paragraphs it's a lot easier to read... welcome to the boards!

corrag

BitterAndTwisted wrote: »

What is fascinating to me is how a couple with one young child and another on the way can feel things are a bit "tight" in a three bedroomed detached house. That's the thing which truly baffles me about your little story.

Just because its a 3 bed detached house doesn't mean its big. It could be 1 double bedroom and 2 very small rooms. Hardly baffling. Whats wrong with wanting more space anyway?

lowlitmemory

I think they are just trying it on and want more money off you personally! They probably CAN afford to sell for less, they just want to see if you'd bite. Walk away and see if they come running after you.