Should we sell and move back to parents?

uberkiwi

Hi Guys,

Long time reader, first time poster.

I have a dilemma, and while it could be considered 'private' im desperate for some advice.

Basically, my wife & I bought our house right at the boom of April 2008, 40 years, 5yr fixed at 5.99%. So you can imagine how ridiculous my payments have been. Ive barely touched the capital.

My wifes ever so generous parents have paid off almost 20% of our Mortgage and we are at a stage now were we break even if we sell.

We drop onto the standard rate with our bank in April (2.5%) and our monthly payment drops massively.

However, by my calculations around our finances it would still take some 3-4 years to pull together a deposit (or acrue equity) using any spare money we have.

We have a situation were its a very very small 2 up 2 down house, and 1 child (17 months) and we have discussed having another soon. Unfortunately we have next to no space in this house and are absolutely desperate to move, definately before my little boy starts pre-school.

My parents have kindly offered us to live at their place rent free for as long as we need, where ive calculated that we could potentially save 15% of a deposit for a new house (over 12 months)

Is there anything I should be aware of if we did this mortgage wise? Would be wise to come off the property ladder and 'start again' as FTB?

Or should we just be patient and wait out the price raise again? (if there is ever such a thing...?)

Really appreciate any advice guys, thanks for reading.

retro.kid

This is exactly what my fiance and me are doing.

We bought our flat Dec 03. With a view of living there 4/5 years before going for a house to start a family.

Fast forward 9 years - we are still in the flat and due to cost of living rocketing coupled with salary freezes since 2007 the possibility of saving for a deposit ain't a reality. Plus house prices went crazy at the time we were looking for a house!

So selling up flat - and moving back in with the in-laws and direct all the monies i would normally pay out on bills into a savings account to build up for a deposit.

It's like taking a step back, but having looked at the options, i have come to the conclusion it is necessary to take this step back to move forward.

Scunnered and frustrated that both of us are hard working tax paying individuals and we are having to do this, where-as countless examples of those who do not work enjoy a nice house and associated benefits.

hazyjo

Hi

You'll have 9 months (or so) when your OH is pregnant, maybe months/year/s to get there in the first place, baby will be in with you probably to start with anyway for a fair while... I don't really get the mad rush. Kids can share a room later for a number of years even if different sexes.

Might have worked out cheaper to pay the fine and swap your mortgage product for a lower % one. Bit late now if it ends soon though.

If your property value had risen, so would anything you wanted to buy - you'd possibly still be in the same situation without enough of a deposit.

If you're bursting at the seams, take a good honest look around and put what you don't need in storage. I've currently moved in with my BF in his one bed flat, taken the bare essentials, and left a 4 bed/4 storey house behind ('til it's sold). I've amazed myself at what I can live without! I'm usually such a hoarder and have furniture/utensils/'stuff' for just about everything.

I'd be saving like mad in your shoes, and putting off having another baby for a while.

I suppose it partly depends on how big your parents' house is - but I'd not do it for a million (not as a family, might have considered it short term on my own or possibly with a partner). I especially wouldn't want to live with my partner's parents - I'd hate to be using their kitchen, cooking, taking 'advice' on how to deal with my child... it would be very hard, and I can't see your parents (not that I know them!) never ever getting involved in anything and leaving you all to it.

My sis, her OH and my nephew lived with my mum and dad for around the first year of my nephew's life. I was there for a few months inbetween selling/buying too. OMG it was horrendous! My mum took over just about everything (that's the way she is), and there were many arguments (they all bicker quite a lot anyway).

Jx

uberkiwi

Thanks Retro, certainly gives me peace of mind knowing people are going through the same struggles. Frustrating is definately a word I would use. We are fairly well paid people who do work very hard, yet because of the situation cant seem to get out of it easily.

Thanks Jo, appreciate the advice. All the things you have mentioned are at the forefront of our minds too. My mum is very similar, though because she works nights, my dad works shifts and we work during the day I dont think it would be that much of a problem (although I get were you're coming from with the advice on raising children!)

I should add that further to our terrible mortgage, we are with Mortgage Express, who are a subsidury to Bradford & Bingley, who of course got nationalised to wont offer us anything new, they want rid of us if anything - which is a bonus as they waiver the ERC.

Annisele

How big is your parents' house? It'd have to be pretty big not to feel cramped with four adults and a baby in it.

In your shoes, I'd do two things before I made a decision:

1) Seriously declutter your current house. If you're going to sell it you'll have to do that anyway - so you might as well see if it feels bigger once you've got rid of absolutely everything you don't need.

2) Go stay with your parents for a couple of weeks. Not as a holiday, keep going to work and doing all your normal things - then see how you all feel at the end of it.

partialycloudy

We will be doing the same ( although my parents don't know it yet lol) We bought in 2007 with 100% mortgage and although we have paid off enough to get out with deposit (in theory)....we need to get our lease done before we can sell, which will wipe any equity out completely.
So we will look to move home for 12 months or so! Actually looking forward to having mum cooked meals again!

Fire_Fox

Space saving furniture: loft beds, sofa bed with storage under, wall beds, gateleg tables, folding or stacking chairs, floor to ceiling/ wall to wall shelving and cupboards ... How small is the second bedroom? When did you last have a serious declutter? Do you know where every last tenner of your income goes and have you cut every cost to the bone? http://www.stoozing.com/msoc/soacalc.php

6% is not ridiculously high, it's actually the current interest rates that are ridiculously low. IMO you overstretched yourselves to buy a house that would not last you more than a couple of years. Property is a gamble short term, it is only an investment if you look to stay ten years plus.

JimmyTheWig

uberkiwi wrote: »

Would be wise to come off the property ladder and 'start again' as FTB?

I'm not going to comment on the "how will you cope living with your parents" side of things. Only you can know whether that will work or not.

In terms of the money, it's a question of what house prices do in the meantime.
Generally house prices all go up/down together.
So if you own a place and prices go up you'll sell yours for more and buy the next one for more.
And if you own a place and prices go down then you'll sell yours for less and buy the next one for less.
So it makes little difference (other than the question of equity, as you will be fully aware!).

If you sell and then buy later, if prices come down in the meantime then you will be up on the deal. But if prices go up in the meantime you will be down on the deal.
If prices rocket upwards then you may find yourselves "stuck" in a position where you can't afford to buy anywhere. The more yuo stay with your parents and save money, the more prices are going up and the amount you have saved isn't enough.

So it's a question for you of what you think house prices are going to do over the next couple of years.
Personally I see them being pretty stable so no real harm in doing what you are doing. But you just need to consider it.

Freecall

uberkiwi wrote: »

40 years, 5yr fixed at 5.99%.

Do you mean a mortgage with a 40 year term?

zzzLazyDaisy

uberkiwi wrote: »

My wifes ever so generous parents have paid off almost 20% of our Mortgage and we are at a stage now were we break even if we sell..

Do you mean that if you sell now, you will break even after you have repaid your wife's parents?

OR

Do you mean that your wife's parents paid off 20% of your mortgage, which means you can now sell up and effectively throw away the money that they gave you?

Basically, what I am saying is, when they gave you the money to pay off the mortgage, was the intention that this would ease your financial situation so that you could stay in your own home and turn this around?

To be honest, you have managed this far, with help from your wife's parents. Your mortgage is about to drop significantly, and if you keep the same monthly payments, you will be overpaying on the mortgage and will quickly start eating into the capital, and thus build up a deposit.

If you head over to the MFW and DFW boards you'll get advice about paying down the mortgage to build up a deposit, and also tips on budgeting and cutting back on daily living expenses to support this.

One other thing that you might want to consider - when my cousin was in a similar situation to you (tiny two bed house, two children, and negative equity) they got a joiner to build raised beds in the children's room which freed up floor space, and put a conservatory on the side of the house, which served as a play room/dining room. This gave them several more years in the house while they paid down the negative equity and built up a deposit. It is a longer term plan, but saves living with in-laws with one child, and potentially another on the way at some point (personally I can't think of anything worse, but that's just me!)

xylophone

I think I'd stick it out in the little house for another year or two and overpay the mortgage.