Help struggling to afford to move

VNW

Hi

We are in a little predicament and would welcome peoples input

We were late comers to the mortgage market and have been mortgaged for 7 years in a 10 year fixed interest only deal. The mortgage balance is currently 145k and we have paid a small payment on this each month to get this down to this

I have just changed jobs, and as such have a considerable drop in income and we need to move 20 miles away to make the commute much closer as bother my wife and I work in this same town.

We have a buyer for our house at £170k which gives us £25k equity

If we exit our mortgage early we get a £9k penalty

The mortgage company will lend us up to £180k-£200k which we would need to get a house of the same modest standard although the mortgage payments would be not far off double as these would switch to repayment and as we are now just into our 50s we cannot get a longer period than 19 years

Shared ownership or a government scheme would help us tremendously although they will not help us at all as we have a mortgage and are not in "need" which does annoy me having worked all of our lives with no help at all!

It look like our options are
1. Stay put in an area we hate and continue with the daily commute for both of us
2. Sell - swallow the penalty and rent (at approx £900) this will get us out of the area - close to work, a little equity in the bank still although Im uncomfortable at not having our own home
3. Take on the mortgage and really really struggle

Im surprised there appears to be no-one out there to help us at all - we can put down a £25k deposit and have no problem with shared ownership / housing associations etc - just need a little help

Any ideas anyone

ViolaLass

Would renting be cheaper for you?

Thrugelmir

VNW wrote: »

Im surprised there appears to be no-one out there to help us at all -

Why after 10 years have you paid so little off your mortgage?

VNW

Hiya

Yeah it would be cheaper - albeit more than our current mortgage so we would be paying much more for a smaller place, although we are also conscious that at the end of our 10 year term in 3 years, our payments will dramatically shoot up as it will switch to a shorter term and repayment.

Im also a little nervous at a private rent - Id feel fine through an association as such as it would still feel a little more stable and like your home

VNW

We have paid 7 years and have paid quite a bit off - although as stated its interest only although we have paid a little on top

TrickyDicky101

Do you have any savings in addition to the equity in the current property? Moving is an expensive business, so expect to pay fees (inclusive of Stamp Duty) of at least £5k (which also includes EA fees). That cuts a big chunk off of your equity figure.

Also, I presume you are assuming you can port your mortgage rate to your new property? Given what you've said, you sound as if you will be right up against affordability limits so there is no guarantee your existing lender will agree to lend you a new mortgage.

The ERC's on your existing mortgage make moving (if you are unable to port your current product) a very expensive option, whether by ultimately renting or by buying. Perhaps you could consider making maximum overpayments on your current property to reduce the eventual ERC should you move before the product term is up?

VNW

Hi tricky

Yes the mortgage company have confirmed we can borrow by porting which saves the fee.

We do have a little savings and could possibly with the equity and less fees still have £35k to invest

themull1

Why did you buy a house in an area you hate? and when you took the interest only mortgage what did you have in place to pay the mortgage off at the end of ten years? If it was me, i would stay until you won't be penalised on changing the mortgage, and then look at your options, and try and overpay as much as possible.

TrickyDicky101

VNW wrote: »

Yes the mortgage company have confirmed we can borrow by porting which saves the fee.

What they've done is tell you they *might* port the mortgage rate you are currently on but only after full underwriting at the time you apply.

Again, in the absence of further information (such as joint income) it sounds like you will struggle on affordability if you have to take a shorter maturity date due to reasons of your age.

ViolaLass

You don't say where you are or what your salaries are so we're shooting in the dark a bit here but is it an option to buy a cheaper house and/or earn more?

Thrugelmir

VNW wrote: »

We have paid 7 years and have paid quite a bit off - although as stated its interest only although we have paid a little on top

Personally I would take my budget apart and make a determined effort to overpay.