Moving house with no savings

Cheesy_Fingers

Having lived in our house now for 8 years we are looking to move on. Unfortunately, with the downturn in the property market we are left with very little equity in our property but are in a much better financial position (income wise).

We are concerned that with no major savings and approximately £5k equity in our property we will be unable to move.....can anyone advise on what our options (if any) are???

BitterAndTwisted

The only options as I see it would be to make over-payments on your mortgage to build up enough equity to be able to have a 10% deposit on your next property, make savings for that 10% deposit, sit tight or go into rented.

Good_Money

You will need some savings just to pay estate agents, solicitors, stamp duty and removals costs.

These costs alone are going to cost me nearly 15k.

DannyboyMidlands

You are right to be concerned. There are no options other than to save up the new deposit plus enough to cover costs.

Mr_Moo_2

Have a think through what you're looking to achieve - how much might you sell for? at what price level do you want to buy? This will then enablew you to work out how much ready cash you need - to pay for Estate Agent (if you use one), conveyancing costs, removal costs, stamp duty etc etc.

Then - if you're income position is better, work out your plan to save enough money to cover those costs, and pay down your mortgage to get 10% equity - then you should be in a better position to go.

Or, as already mentioned, sell up, rent, increase your savings while renting and then go - again do the maths.

Good luck.

maninthestreet

You bought your property in 2004, even with the property downturn, surely you have more than £5K equity in the property?

DRP

the problem with selling and renting is that rent is expensive. Looking in my own area, flats are 100-150 more expensive pcm, and 300+ pcm more for houses.

I would take advantage of low interest rates and concentrate on saving , saving, saving every month until you have a decent wedge. There's nothing like setting a target to concentrate your mind on a task! :money:

Fire_Fox

DRP wrote: »

the problem with selling and renting is that rent is expensive. Looking in my own area, flats are 100-150 more expensive pcm, and 300+ pcm more for houses.

I would take advantage of low interest rates and concentrate on saving , saving, saving every month until you have a decent wedge. There's nothing like setting a target to concentrate your mind on a task! :money:

More expensive than what, just the mortgage repayments or the mortgage, buildings insurance, service charges, ground rent, estate agents fees, legal fees, stamp duty, loss of equity in the recession, repairs and maintenance .... being a homeowner is not limited to just the mortgage, any more than running a car just costs you in petrol.

DRP

Fire_Fox wrote: »

More expensive than what, just the mortgage repayments or the mortgage, buildings insurance, service charges, ground rent, estate agents fees, legal fees, stamp duty, loss of equity in the recession, repairs and maintenance .... being a homeowner is not limited to just the mortgage, any more than running a car just costs you in petrol.

Correct. All these things need to be taken into consideration.

I have looked into it (in my locale) and given the 300+ extra I would shell out on rent every month the numbers don't really add up - at least not to a significant degree and especially considering the time/disruption of moving to rented accom.

pinkteapot

First job: Look at the sort of house you want to buy. You'll need 10% (or preferably more) of the price as a deposit. This can come from equity in your current home or savings (or a combination). Then work out how much all the fees and costs of moving will be. Add that on. The final figure is your target.

Second job: Work out what your house would sell for, realistically. Work out your equity.

You can then work out how much more you need to save up (the shortfall). If you can save this up relatively quickly (given your improved incomes now) then it makes little difference whether you put the money into a savings account or make mortgage overpayments.

Fire_Fox

DRP wrote: »

Correct. All these things need to be taken into consideration.

I have looked into it (in my locale) and given the 300+ extra I would shell out on rent every month the numbers don't really add up - at least not to a significant degree and especially considering the time/disruption of moving to rented accom.

You are saying rent is expensive as a general statement and you are not the OP. Were you taking all those costs into consideration? Plenty of flats and houses lost that £100-£300 a month in equity alone over the last couple of years. And if you go back to 2008 interest rates were massively higher which translated to hundreds a month for many.