Move now or keep saving??

Hareed

I'm looking for some much needed advice as we are going around in circles! I own a small 2 bed semi and my boyfriend moved in after a year of buying. We've been here 5 years and are out growing the house fast.

We'd like to move but have so many "what if's". Firstly I have credit card debt, just shy of £10000 ( all interest free). Our wages have significantly increased since I bought this property and are now £56,000 jointly and will increase to £60000 in 6 months. The mortgage was taken out with what's now NRAM and is £76000 left with unsecured loan of £15000. The house value is about £98000 now realistically at best. We have no significant deposit other than about £1500 in the bank and the small equity in our home.

We're desperate to move after a string of unpleasant neighbours renting next door (both sides). We're also wanting to start a family and so will need to move quite quickly if had a child at this house.

We're quite keen to move to a good location and a new housing estate is built where we'd love to live hence starting the whole "we want to move" routine again. The cheapest property on this site is £170000.

My question is are we being unrealistic about moving now? Our family are saying we could do it especially with several new home schemes that are about. They also keep saying when any children come it'll be harder to save and get a mortgage. A big issue we also have is that we haven't told our family we need IVF and so this would also be a drain on finances.

Our monthly take home is £3400. Mortgage £474 (4.79% SVR). Total paid to credit cards/loan min £300.

NB. I have said I have credit card debt but this shared on 4 credit cards in my name, my partners and a friend to keep moving around for 0% deals.

Any advice would be gratefully received.

r1chscott

Hi there,

So currently you have £22,000 in equity in the house (at best), you would be able to use that as part of the deposit for a new house, if you could add £3,500 to the £22,000 then you would have a 15% deposit on a £170,000 house, this would lead to interest rates of around 5% and a monthly mortgage payment of around £800. (Not forgetting stamp duty/arrangement fees/solicitors fees etc.)

Before you move forward with this I would suggest that you find out where your money goes. Having debts of £25,000 when you're taking home £3,400 a month suggests that you are living beyond your means, and that is not a good time to be looking at getting a bigger mortgage.

If it were me, I would stay where I was, put up with the horrible neighbours and clear my debts before I moved. With your salaries you should be able to bring the debts under control within a pretty short period of time. Then you could throw some extra money at a deposit and buy a family home to stay in long term.

Also, if you are thinking about having children, you will be financially worse off once you do and any debt you have will be harder to clear. Enjoy the time of financial freedom and get yourself set for the future.

Hope that helps,

Rich.

Panda78

I would stay where you are. You're one step ahead of many people in that you already own your own home and even when you do have a child, you can still all live in a small 2 bed for many years to come. In fact, many people have no choice but to stay in that situation permanently.

I agree with your parents that starting a family will mean that you have less chance to save, but they don't know about the IVF, which is going to be a huge expense, depending on how many times you need it.

For me, the best "have it all" situation, would be to own my own home and be able to start a family. In your case, i think staying where you are will achieve this. Wish you all the best.

marathonic

How long is left on the interest-free credit cards? The most cost effective route for you would be to overpay the unsecured loan and then the mortgage by as much as physically possible until the credit cards' interest-free period is up.

At that point, you can revisit your options.

If house prices fall further in the meantime, the £170,000 house should have fallen by more than your current house leaving you in a better position - by overpaying your mortgage, you should still have a good amount of equity in your current house.

If house prices rise, you'll obviously need a bigger mortgage to upsize but your deposit would be closer to 20% allowing you to secure better interest rates.

If it were me, I'd seriously look at my expenses because, as has been said before, a couple with £3400 take-home pay and no dependants shouldn't have racked up £25,000 debt.

I'd scrimp and save and try to eliminate the £15,000 unsecured debt ASAP. Your salary will be increasing in 6 months so I'd try to eliminate the debt in 9 - you'd then have £15,000 less debt than you do now as well as 3 months payslips at the higher rate of pay.

Although this is what I would see as achievable, you may find it tough enough: but I don't see any reason why it couldn't be cleared in at most 12 months.

R_P_W

You say your house value will now be 98k at best (so could be lot lower). If you bought your house 5 years ago for mortage value - why do you think its value has increased when majority of areas in uk in that time would have decreased?

Personally if it was me I would focus on paying off that £10k of cc debt. Even though it is on 0% now, at some point you will start paying interest and with no guarantee that you can switch to another 0%. Which ever way you look at it, its still a debt that needs to be paid back - surely you want to pay it back BEFORE your monthly mortgage paymenyt nearly doubles?

Suggest you do a SOA because your numbers dont seem to add up - your mortgage is a relatively low amount compared to your salary, so even if you said you spend 1200 a month on mortage and bills and another 1000 on food, pertrol, entertainment etc you should still be able to pay off 1200 a month from your cards?

Hareed

Thanks for all your advice. In answer to some of the questions; the £15,000 unsecured loan was the 'deposit' for my current property as didn't have a deposit when buying. The reason the price I bought the house is lower than what's its worth now (despite the current market) is because I had a really good deal as the house was a repossession, paid £95000.

The £10000 debt was incurred 4 years ago when I bought the property by myself and my wage was only £18000. My previous partner was supposed to move in at the time and contribute but left me 3 months after I bought the property therefore I struggled a lot at the start. I can safely say I haven't spent on a card or for 3 and a half years but obviously still have the debt.

I'll definitely be considering to pay the unsecured debt first as this is the only one incurring interest for now. If I'm not able to switch existing cards in future I guess the priority will change to pay off highest interest first. We've calculated that we can pay minimum £850 monthly off debt and so will 'put up and shut up' regarding the neighbours as one day we will move!

Thanks again

Thanks again all. Will be scouring the forums for tips to add to the £850 monthly pay off of debt!