Upsizing

daddypuff

[FONT=&quot]Hi Guys

First post, so go easy.

We have a two bed flat on an endowment which is roughly on course to pay mortgage which finishes in two years time. Flat is currently worth £250,000ish.

We want to move into a better property without taking on extra debt, so looking for a bit of out the box thinking here. We are open to the possibility of moving from the area and either buying or renting, or staying local and doing the same. I am 53 and wife is 47.

We think house prices are about to pop perhaps within the next few years along with stock markets that will ultimately follow. We have grave concerns for the economy after that so looking for asset protection or off-loading.

Looking at selling up using interest on money to pay towards rent that sort of thing, anyone got some bright ideas?

Not looking to retire so will still have incomes, of around £2000 per month

Thanks in advance for any tips
[/FONT]

harrys_dad

If you believe that the housing market is going to "pop" then clearly renting is the right thing to do. You will struggle to generate enough interest on your capital to pay rent with interest rates as they are, although your salary should cover most of it. My concern would be the effect of inflation on your capital, but if you feel prices will fall that is not a problem.

The bigger problem may be that most people do not agree with you about the direction of house prices, although that may depend where you live. Stepping off a down escalator for a while is a great idea, stepping off an up escalator is a big mistake. It is a gamble which way it is going though.

daddypuff

You're right it's all about risk and reward!

Bear in mind one of the factors that bursts the housing bubble is interest rate rises and these will head higher sooner rather than later once QE2 is done with, thus helping the financing of the said project, do you risk a few thousand more on the upside to losing thousands more on the downside?

Thanks for the response

carefullycautious

If you are paying your mortgage off in 2 years and can afford to buy somewhere outright why would you wish to rent? Is it that you think your property would loose value if the bubble pops.

daddypuff

That is one of the reasons. Secondly, we do not have children; therefore we do not wish to leave large assets, so we are thinking of freeing up the capital in the property to enjoy in later years.

Thanks for the reply

ging84

so you are considering taking your money out of the property market because you think it may collapse, is your motivation that you think it is too risky to have your money tied up in property in property when it could collapse,
Or is it that you see taking your money out now is a worth while gamble which could see you with money in the bank ready to cash in on a cheap property in a few years down the line?

daddypuff

Well, to be truthful, it’s kind of both.

If there is a property crash or even a stagnation of the market, my money might be better employed elsewhere. As I say, I want to spend down the asset over the coming years. I can’t take the asset (house) with me.

In regards to the state of the overall economy, the country is technically bankrupt, so there are many things to consider over the next few years.

As soon as interest rates rise, the country will not be able to service its debts, hence artificially low interest rates and QE2

daddypuff

Anyone else out there in a similar position that did something similar?

ognum

Where are you going to keep this cash when you have sold? Under the bed maybe because no where will be safe at that point.

I think you should be thinking of spreading your asserts in order to gradually realise them as needed but if the stock market and housing collapse so will everything else!

daddypuff

There are numerous ways to survive the down wave. That's not really my concern here; my concern is how to enjoy the value of the asset that we have no intention of taking to the grave with us. Or being forced to sell due to old age care.


Thanks for the reply

ognum

daddypuff wrote: »

There are numerous ways to survive the down wave. That's not really my concern here; my concern is how to enjoy the value of the asset that we have no intention of taking to the grave with us. Or being forced to sell due to old age care.


Thanks for the reply

Do you know much about the care provided to those without funds? Frankly I would rather have money left so I or my family can choose somewhere comfortable with excellent care facilities rather than be stuck without choice in some of the homes available to those without funds!