Best Approach to negative equity?

SiV1981

ok... been looking at options, and just wanted some of your guys opinions again if its not too much to ask!

not sure if this is the correct board, appologies if its not!

in the first instance of sorting our negative equity would it initially be better to:

A) just overpay the heck out of the mortgage from the word go

Modernize the house to increase the value, then overpay the mortgage
(bare in mind, the house is quite outdated...we're talking fitting double-glazing, plastering over the extensive artex, and maybe fitting a cheep new kitchen and some plain tiles instead of the 70's monstrosities currently gracing our kitchen and bathroom, new carpet and a lick of paint)

this is all work that we have been planning on doing but avoided because of the financial restrains of just having one adult working.... call it voluntary poverty for a few years for our kids, but if i'm going back to full time work.... just wondered which would be best use of our cash??

thanks so much you bunch of geniuses!

xx

19lottie82

Definitely A.

Decorating and upgrading may not improve the value as much as you'd think. Your choice may not be the choice of everyone elses and a potential buyer may look at your property thinking that he will ahve to rip it all otu and start again.

Of course, when it comes to putting your house on the market, there is no harm in making a few cosmetic adjustments to freshen the place up a bit, but I wouldn't look at B, as a cost effective alternative to A.

shiny76

I'd vote A, as well.

B may make your home nicer to live in and probably more attractive/saleable (if it was put up for sale) but it's unlikely to make a vast difference the value of the property.

Clearlier

Are you planning on moving? If you modernise the house and stay in it then you get some benefit from it too. From a purely financial point of view paying down the mortgage makes most sense but you have to live life too!

Skinto_7

Are you planning on selling?

Negative equity is only issue if you are, so if you are happy and plan on staying in your house forever then i wouldnt let the negative equity bother you too much as long as you are comfortable with the repayments

SiV1981

sorry... i should have given more info...

we are planning on selling up and moving ASAP..... but we do have to clear A LOT(!!!) of negative equity first... will be at the very least a year i think... TBH prob more..

we are desperate to move... but doing our best to make it a viable financial option!

jozbo

I would have thought modernising would be a good idea if you can pull in favours and do it on the cheap.
Don't know the size of your house but from what you describe it could be c. 30k worth of work that a buyer would be looking to discount. We are buying a place that sounds similar to yours at a discount of 15% in comparison to an identical, finished property.
Updating services and neutral, non-offensive kitchen would be my priority (and any scares that'll come up in the survey - diy fixes where pos), maybe bathroom if pos. as they say, its these that sell a house...

GDB2222

I hate to say this, but I LIKE Artex. So, I would pay less for the house if you plastered over it. Am I the only one?

SiV1981

GDB2222 wrote: »

I hate to say this, but I LIKE Artex. So, I would pay less for the house if you plastered over it. Am I the only one?

lol!

our artex does look like it was done by a blind gorilla with a teaspoon though... and in certain places in out house it is possible to touch 3 totally different patterns.

we think a previous owner was taking a course, and used to just come home and pick a wall to practice on!

then cover the remaining walls in woodchip....what can i say we were first time buyers and knew our place!...

x

SiV1981

jozbo wrote: »

I would have thought modernising would be a good idea if you can pull in favours and do it on the cheap.
Don't know the size of your house but from what you describe it could be c. 30k worth of work that a buyer would be looking to discount. We are buying a place that sounds similar to yours at a discount of 15% in comparison to an identical, finished property.
Updating services and neutral, non-offensive kitchen would be my priority (and any scares that'll come up in the survey - diy fixes where pos), maybe bathroom if pos. as they say, its these that sell a house...

i'm a technician by trade, and my husband is a handyman and our brother in law is a kitchen fitter...

all work would be done by us... through trade outlets..... we are proper deal hounds when it comes to DIY... we turned our old broken bed into a garden fence when we moved in...

it would be done on the proper cheep, the only thing outside contractors would do is the double glazing!

don't know if that makes a big difference?

DVardysShadow

SiV1981 wrote: »

sorry... i should have given more info...

we are planning on selling up and moving ASAP..... but we do have to clear A LOT(!!!) of negative equity first... will be at the very least a year i think... TBH prob more..

we are desperate to move... but doing our best to make it a viable financial option!

In which case, keep up with maintenance, but don't be tempted into 'improvements'. 'Improvements' done by people who are desperate to move out tend to be ill-conceived and poorly executed - and after a sale could quite probably be ripped out.

Not being 'improved' also means you are not looking for such a high price to recoup your efforts - which will mean that the house is feasible for a much broader range of buyers..

Do remember that if you are going to buy again, you will need more savings to put in some equity on the next property.