Would you sell up & rent?

DilbertJones

Bit of background first.

Bought house in Aug 05 for £105k mortgage was £75k & 25% was equity loan.

House is now worth ~£120-£125k (at a guess) & mortgage balance is currently £63k. Based on £120k I have equity of £27k I am in a high fixed rate until Oct 31st @ 5.6%

Now we want & need to move, we have two kids 7 boy & 4 Girl, and this house being a 2 bed terrace with small garden is getting very cramped. A 3 bed house where I would like to live is likely to be listed around the £150k mark. At a rough guess I would need to borrow £130k leaving some equity for fees etc.

I have just started on this process so it is early days & crazy ideas at the moment, but would anyone consider walking away with the equity in their pocket and renting? if so would you do it short term or long term?

Better_Days

A lot will depend on what house prices are doing in your area and, crystal ball time, what they are likely to do. You could pop over to the house prices and economy board - but if you are anything like me you will end up confused Don't forget that the government is continuing to meddle in the housing market and the effect of the latest scheme which starts next January IIRC, remains to be seen. I suspect it will push prices up as the increased number of potential buyers will not be cancelled out by the increase in house building. So if you drop out of the market to rent then if prices rise then you could find it difficult to buy again.

Your children are still quite young. Could you hang on for a few more years where you are and pay down your mortgage a bit more? Or could you extend into the attic or put on a conservatory for a bit more space? Could this be funded by a better mortgage deal when your fixed rate ends?

Also what are rents like in your area? Would you be able to afford to rent a bigger property? If you had teenagers it might be a bit different, but at 7 and 4 your children are not going to be so worried about space.

Flashmanchop

What agreeement is in place regards the equity % of the shared part of your property, come selling time? presume it is shared.

what would be wrong with Renting out your current property, and renting a 3 bed elsewhere?

No doubt someone will be along to say you will be breaking xyz rules.

ognum

This is a big question with a lot to think about.

If you are asking would I do it the answer is never!

For you how will you feel if your kids have to change schools because you can't get another rental in the area you want.

What do you plan to do when you retire and still have to pay rent?

Will you ever get another mortgage if you want one?

how will it be when you child wants stickers on their bedroom wall and a room painted pink and your landlord says no its got to be magnolia?

How will you feel if your landlord doesn't step up and do repairs that you need?

You are currently in a fortunate position, you have equity in your home if I where you I would be looking to sell and buy again but that's MY choice.

DilbertJones

Better_Days wrote: »

Your children are still quite young. Could you hang on for a few more years where you are and pay down your mortgage a bit more? Or could you extend into the attic or put on a conservatory for a bit more space? Could this be funded by a better mortgage deal when your fixed rate ends?
I have a boy & a girl so twice the amount of toys & clothes in a single bedroom! If nothing else its driving me & the wife insane!
Also there is no scope for a conservatory in reality, attic conversion is possible but I am not sure I could live with the build process!

Also what are rents like in your area? Would you be able to afford to rent a bigger property? If you had teenagers it might be a bit different, but at 7 and 4 your children are not going to be so worried about space.

I could afford to rent a larger property yes, would be similar in cost to a mortgage for similar property

Flashmanchop wrote: »

What agreeement is in place regards the equity % of the shared part of your property, come selling time? presume it is shared.
25% is paid back out of the total sale value of the property, even if it is less than what they paid out originally (unlikely)
what would be wrong with Renting out your current property, and renting a 3 bed elsewhere?
The house would require a lot of work to do this IMO but is possible if I re-mortgaged and obtained a lump sum
No doubt someone will be along to say you will be breaking xyz rules.

ognum wrote: »

If you are asking would I do it the answer is never!
Basically yes, I am getting opinions
You are currently in a fortunate position, you have equity in your home if I where you I would be looking to sell and buy again but that's MY choice.

I am pretty sure we would buy, unless we had the crystal ball & knew the prices would crash that is!!

Lord_Baltimore

If you walk away I doubt you'll ever recover the equity which you will spend on day to day living.

Owning a home is hard but it is an option we're all lucky to have. I wouldn't fancy being at the whim of some LL who will take all the money that should be your investment.

The early years with a young family are hard but you'll get there.

DilbertJones

Just got off the phone with my existing mortgage company, and although admittedly nothing set in stone & no guarantees etc, but according to their affordability questions I should be able to borrow £130k which means the potential houses we are interested in are in reach

ognum

robodan wrote: »

Just got off the phone with my existing mortgage company, and although admittedly nothing set in stone & no guarantees etc, but according to their affordability questions I should be able to borrow £130k which means the potential houses we are interested in are in reach

Well at least you feel you have choices now!

DilbertJones

ognum wrote: »

Well at least you feel you have choices now!

Yes, feel a lot happier now.

Now the hard part and actually getting my house ready for a sale!!

dj.boz

I think you will always be better off paying your own mortgage than someone elses.

Circumstances will dictate what you can do. We too are / have been in the same situation. New child (this year) and yet we only had a two bed terraced house. Luckily we too were able to afford a larger property / mortgage. It will be tight for a few years (it was when I first brought my original house), but over time will (or should!) work out better.

dimbo61

It is now June and by the time you put your house on the market and sell it with all the legals and searches/surveys it will take until October to complete.
Make sure you do not sell until the fix has finsihed.
Check what your mortgage reverts to at the end of the fix