downsizing advice please.....

Hi, my wife and i are planning on selling our beautiful house and downsizing in order to pay off our debts and a large chunk of our mortgage.

We just wondered if anyone else has done this and if so how has it worked for you? do you miss your old place? Resent the move?

We reckon that by having a smaller mortgage and paying it off quicker and also saving to we would then be able to buy our dream house in 7-8 years time without having to work every hour that god sends to afford to live there. Has anyone downsized for a few years and then move back up to the level they were at?

Any comments/stories gratefully received!
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  • Our other question regards mortgages.....

    we get that if you overpay then you will be charged less interest and pay it off quicker but we were wondering which of the following options would be best......

    1. Take out a mortgage over 25 years paying £300 per month and then over pay by £900pcm (we can afford to pay £1200 in total)

    2. Take out a mortgage over 25 years paying £300 per month and then pay £900pcm into a high interest savings account and pay chunks of the mortgage as desired.

    3. Take out a mortgage over 4 years paying £1200pcm....... interest seems quite high on this one - more than the loan amount in fact!

    Any thoughts anyone?
  • David_B_2
    David_B_2 Posts: 718 Forumite
    Hi, my wife and i are planning on selling our beautiful house and downsizing in order to pay off our debts and a large chunk of our mortgage.

    We just wondered if anyone else has done this and if so how has it worked for you? do you miss your old place? Resent the move?

    We reckon that by having a smaller mortgage and paying it off quicker and also saving to we would then be able to buy our dream house in 7-8 years time without having to work every hour that god sends to afford to live there. Has anyone downsized for a few years and then move back up to the level they were at?

    Any comments/stories gratefully received!

    That’s a bold step but I know of people that have done it for very similar reasons to you. They needed to clear increasing debts and then rented instead of buying again.

    I can only guess that it must be sad having to give up a property if you don't really want to but for this type of situation it is fully justified I believe.

    I guess the secret is not to look back and think of what you did have but more on why you are doing it and what this could lead to in 7/8 years as you mentioned.

    I also belive that all parties need to be fully committed to this with no resentment.

    I wish you well.
    Regards,
    Dave

    If only I had a pound for every time I used the thanks button :D
  • Thanks David B.

    I think we have a lot of decisions ahead of us. We know moving is the right thing for us just don't know what the next step is - downsize, BTL, renovation, self build????

    All very confusing!
  • safesound
    safesound Posts: 1,164 Forumite
    My parents did this about two years ago. Unfortunately my stepfather lost his job shortly afterwards so any savings they did make by having a smaller property were swallowed by only having one income. They are now in pretty much the same position as they were with their big house (ie, debts, mortgage etc) but without anywhere near the equity so they've seen no benefit whatsoever. My mother is now really sorry she made the move as she really misses the big house/garden.

    I just thought I'd post a different POV.
    :A:A:A:A:A:A
  • azjh77
    azjh77 Posts: 925 Forumite
    We'd like to do this, we would be debt free and £700 per month better off. Added bonus is , I HATE my house!!!!

    How much better off will you be by moving?



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  • silvercar
    silvercar Posts: 46,833
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    You talk of selling your beautiful house now and buying your dream house in 7-8 years time. Are these one and the same? If there is any chance that you could happily stay on your current home for the next 15 years I would say that the costs (financial, stress, emotional & stress) of moving twice would far outweigh the benfits of having a lower mortgage for 7-8 years.

    If things are tight now then consider remortgaging, maybe even go interest free for a short time, but stay where at least your hapy to be.
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  • 1. Take out a mortgage over 25 years paying £300 per month and then over pay by £900pcm (we can afford to pay £1200 in total)you could do this in theory but check that your new mortgage would allow such big overpayments - many are capped at 10% yearly

    2. Take out a mortgage over 25 years paying £300 per month and then pay £900pcm into a high interest savings account and pay chunks of the mortgage as desired.yes, if your savings are paying a higher rate than the mortgage interest rate. Remember to deduct tax from your savings

    3. Take out a mortgage over 4 years paying £1200pcm....... interest seems quite high on this one - more than the loan amount in fact!I had a quick look at your posts over on DFW - perhaps you could go for a compromise somewhere between 4 and 25 years, with overpayments when you can afford them, rather than committing yourselves to a large mortgage payment every month whilst you are still trying to work out your budget.

    Any thoughts anyone?[/QUOTE]
    Don't forget to add in all your moving costs when deciding what to do, as someone has already said it might be wise to let the dust settle after your LBM. It's hard to tell you which will be the cheapest options without facts and figures, ie interest rates and products involved (and I'm no expert! someone else might come along soon and put me straight on what I've already said!). There are some calculators you can use at the top of the board, so put some figures in and play around :) Consider also when giving up your "beautiful home" would you be tempted to overspend making your new property into a "beautiful home" thus negating any benefits of the move.

    Good luck in whatever you choose, in the end, only you can decide what is best

    Jen :)
  • Hi everyone - thanks for the posts. I've been away for the weekend so sorry for the late reply!

    Safesound - thanks for the different POV. I'm sorry to hear your mum feels that way. I guess for us we have age on our side (I'm 24) and if things went horribly wrong then we could pick ourselves up. We need to think carefully though.

    Azjh77 - we'd be similar to you. £800 pcm better off and no debts - i must admit it'd be nice to feel like i have a life for a change!

    Silvercar - our house now is not our dream home. We have made the house beautiful but the area is not really 'us', if you know what i mean! Moving house is not really a prob for us as we have both moved around a lot - altough i take your point about factoring in the costs. We can't remortgage anymore with our current salaries.

    yorkshire Jen - thanks for your thoughts. Maybe a combination of 1 and 2 would work for us. I think you're write about 3 - we'd probably end up taking on too much and get back in debt!

    thanks everyone :)
  • Rebob
    Rebob Posts: 1,010
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    You could take the mortgage over 15 years and then reduce the term (not overpaying) by requesting this. I have done this a couple of times. You can also make allowed capital repayments (often 10%).
    The best bargains are priceless!!!!!!!!!! :T :T :T
  • matty2767
    matty2767 Posts: 442
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    another thought for the melting pot. your existing larger house will have a higher 'ceiling' for the price to increase to than your downsized house.

    for example a two bed where i live has hovered around the 100k mark for around 2.5 yrs now (which is what we moved out of) yet the 4 bed we moved into has gone up 60k. and they are less than a mile apart so it isnt the area as such.
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