Advice appreciat

edited 29 March 2014 at 9:01AM in Mortgage-free wannabe
7 replies 775 views
glitterjunkieglitterjunkie Forumite
425 Posts
edited 29 March 2014 at 9:01AM in Mortgage-free wannabe
Hi all... I would appreciate people's opinions on the following situation please :)

OH and me live in a 2-bed terrace worth 85k with 51k outstanding on the current mortgage (so approx 34k equity). We have a DS and want another child probably in 2016 so we were originally planning to try and move to a 3-bed house at the end of year. We are OP'ing as much as possible and im hoping that if we move at the end of next year we will have more like 50k equity if all goes to plan :) At the moment you can get a decent 3-bed house round here for 150k, or a really nice one for 170k (even some 4-beds). The most we could borrow is probably around 120k (38k joint income).

However I work in conveyancing and I can see that the market has definitely picked up over the past year, in our area anyway. Our current house is unlikely to increase much in value IMO because there are a lot of very cheap 70k-80k terraces in the area, ours is one of the bigger ones but it's still a 2-bed terrace and I think there's a limit to what people will pay for that. But the sort of house we want to move to I suspect probably will increase In value soon.

What I am wondering is, should we put our own house on the market now with 34k deposit and look to buy a 150k house (making our new mortgage be 116k-ish). If we did that we couldnt afford one of the lovely 170k houses so I would feel I had settled for less than I wanted (I hope that doesn't sound spoiled, im aware we are in a lucky position having a house in the first place!), but TBH we could do with the space now really, Iim starting to feel slightly claustrophobic in our current house as DS has so much stuff lol, plus he is a very active toddler and a back garden for him to run round in would be a godsend (only have a tiny yard at the minute).

OR do we wait 18 months as planned and have an extra 16k equity so our new mortgage on a 150k house will only be 100k (or we could have a 120k mortgage and get one of the lovely 170k houses! ).. BUT taking the risk that house prices will have picked up by then and what might be selling for 150k today might be 166k in another 18 months, meaning our hard earned extra 16k equity will disappear and we would still have a 116k mortgage on a 150k house! (And the lovely houses that are 170k today will still be out of reach)

The 170k houses would be a forever house but I suspect we would end up moving again in another 5 years or so if we bought a 150k house.

I am conscious that living expenses such as council tax water and heating will be a lot higher in the new house too, so we will never find it as easy to OP again as we do currently.

I guess what I am really asking is have we seen the bottom of the house price market? I know nobody really knows what's going to happen to house prices, but I would be very grateful for any thoughts anyone can give me! Our current house is the only one we have ever owned so have very little experience of moving up the ladder! Thank you very much in advance xx

Attempting to pay off our debts! Balances Jan 2018 -
Family member £3,700 - Virgin CC £1,000 - MBNA £1,700 - Barclaycard £2,500 (was £2,700) - Halifax CC £1,280
13

Replies

  • Sorry about the title, was meant to say 'advice needed please', not sure how to edit it! X

    Attempting to pay off our debts! Balances Jan 2018 -
    Family member £3,700 - Virgin CC £1,000 - MBNA £1,700 - Barclaycard £2,500 (was £2,700) - Halifax CC £1,280
    13
  • ArkersArkers Forumite
    1.5K Posts
    Tenth Anniversary 1,000 Posts Name Dropper
    Forumite
    Hi GJ; put your house on the market and see what happens if/when you sell you can then have a look. You never know what's round the corner, in that one of those gems may just become available within your budget. Whilst your house is not on the market then your options are narrower. One consideration you have not mentioned is interest rates, again no crystal ball, but in a year or two they may start creeping up which will have an impact on your purchasing power.


    In short "suck it and see!"
  • in_need_of_directionin_need_of_direction Forumite
    6.9K Posts
    Ninth Anniversary 1,000 Posts Name Dropper
    Forumite
    I'd say that I house is too big a purchase to settle for less than you want. I did with my first house and resented every day I spent there. You may be a lot more tolerant than I
    Mortgage at 01.01.14 £119,481.83:eek: today £5429.46. Emergency fund £5.5/5.5k & £200/200 cash.:jWeight 24/02/19 14st 7lb now 12st 3lbdetermined to stop defining myself by my mistakes. Progress not perfection.:T86%through my 1% mortgage challenge. 1% = £387aiming for 100% by end of mar 23.
  • LydiaJLydiaJ Forumite
    8.1K Posts
    Part of the Furniture Combo Breaker Mortgage-free Glee!
    Hmm. Difficult.

    I'm a big fan of trying to get to a forever house with as few moves as possible. Moving is so expensive, and troublesome as well, especially with a toddler. But there's no point waiting 18 months to get an extra £16k equity if the house you want will have gone up by more than that in the meantime.

    Nobody knows what house prices are going to do in the next 18 months, but they probably won't do the same thing everywhere - things do seem to be very patchy over different parts of the country. If you work in conveyancing you must have better knowledge of local prices than just about anyone, so your guess is better than most.

    I think Arkers has made a good suggestion. If you put your house on the market you can see if it sells, and how much for. Selling doesn't happen overnight, so you could always have a mega-effort at OPing in the meantime - cut back on everything you possibly can, ebay spare possessions, that sort of thing, just for a while. If you know it's only a temporary measure you'll be able to do without a lot more things than you'd want to cut out for the long term.

    Good luck with the decision anyway. :)
    Do you know anyone who's bereaved? Point them to https://www.AtaLoss.org which does for bereavement support what MSE does for financial services, providing links to support organisations relevant to the circumstances of the loss & the local area. (Link permitted by forum team)
    Tyre performance in the wet deteriorates rapidly below about 3mm tread - change yours when they get dangerous, not just when they are nearly illegal (1.6mm).
    Oh, and wear your seatbelt. My kids are only alive because they were wearing theirs when somebody else was driving in wet weather with worn tyres.
    :)
  • LydiaJLydiaJ Forumite
    8.1K Posts
    Part of the Furniture Combo Breaker Mortgage-free Glee!
    Sorry about the title, was meant to say 'advice needed please', not sure how to edit it! X

    Go to the first post of the thread. Click on Edit. Then click on Go Advanced. The title of the thread will appear in an editable box. :)
    Do you know anyone who's bereaved? Point them to https://www.AtaLoss.org which does for bereavement support what MSE does for financial services, providing links to support organisations relevant to the circumstances of the loss & the local area. (Link permitted by forum team)
    Tyre performance in the wet deteriorates rapidly below about 3mm tread - change yours when they get dangerous, not just when they are nearly illegal (1.6mm).
    Oh, and wear your seatbelt. My kids are only alive because they were wearing theirs when somebody else was driving in wet weather with worn tyres.
    :)
  • Do you know what guys you have all hit the nail on the head and I think I know what to do... Thank you all very much! :)

    I have decided realistically it will probably take us a couple of months to do a bit of redecorating and decluttering just to freshen the place up anyway. But if we decide to put on the market in May that will give me the motivation to do it! Then it could well take months to sell anyway, and even when it does sell there will be another couple of months for the conveyancing. So during that time we can be chucking as much as possible at the mortgage, ebaying, earning extra etc. Then at least if it's on the market it's up to fate as to whether it sells quickly or not :) it might still end up being 18 months till we move or it might be quicker. it all seems so simple when I think of it like that! Thank you all very much :) xx

    Attempting to pay off our debts! Balances Jan 2018 -
    Family member £3,700 - Virgin CC £1,000 - MBNA £1,700 - Barclaycard £2,500 (was £2,700) - Halifax CC £1,280
    13
  • I agree with the others, put it on the market and see what happens. If you do sell now you will be able to fix a mortgage rate that is affordable where in 18 months it may not be as good. Lgp
    Mortgage value was £135,000 now £43,218
    TCB total £1200
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