Second time buyer: advice needed

dylansmum

Hi

I am pretty confused about a number of things (sorry) and need any advice/knowledge! I bought my 2 bed house in 2000 and thus have 10 years 7 months left on my mortgage. My house has been valued for sale at 114950, though I totally get that does not mean I would sell it for that price. I owe 31K on my mortgage (halifax flexible mortgage - used to do up house as it was a shell when I bought it). However, at a crossroad whether to upsize or stay put, pay off mortgage - can be done within 3 years - then amass savings and then move within 5-6 years. But these are the issues:

1. The price difference between a 2 bed and a 3/4 bed is pretty big: i.e. 80K price jump. However, properties I have seen at this price are either a bit ropy, or much smaller rooms downstairs - bigger bedded houses here tend to be tall and thin. If I do sell, then I am worried about getting an offer on my house (shortage of 2 beds here and they go quickly) and not finding a decent house.

2. Bigger houses tend to be on the market 6-12 months, but sellers refuse to budge on price - how do you overcome this (given I am realistic and know you must have wiggle room for buyers). ?

3. Do you think plan B: paying off mortgage and moving in 5 years (of course, with no clue as to what house prices will look like then) is safer than paying out to sell my house then finding other vendors won't budge on price: note, I have looked a few this last week to get a feel and every time, estate agents say guide price = bidding up (which does not happen given how long houses on market!)

4. I would also lose my flexible mortgage - so that is an issue.

Thanks in advance

dekoder

Paying off the mortgage first or selling now doesn't change anything in terms of being in a chain. You still will have to tie up the sale of your property with purchase of a new one (unless you're planning to pay off the mortgage and save enough for new house deposit without selling the old one first)

dylansmum

Thanks - good point: I guess we'd save interest though. I have a good 80K capital in the house, and know I need to sell that to add to a new house..just about timing. So yes, I'd be then saving once mortgage-free to add to that sum. Sorry for my utter confusion about best thing to do.

dekoder

Definitely worth paying off the mortgage early to save on interest payments. Though check if there are any accounts paying more interest than your mortgage is: (factor 20 or 40% tax)
http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

Decision about up-sizing now or waiting you should make based on your view of the local market, which way is it going, though many times its just guesswork. Also depends how much you need the extra space.

rosie383

I think it depends on what you need. We put every penny of savings into paying off our mortgage on a 2 bed then saved enough to upgrade to 3 bed. But we need the extra room because our family is bigger than when we bought before. We were comfortable and happy in our home and content to wait for a few years until we could do it the way we wanted. It's what works for you, and don't apologise for asking the question and feeling muddled in your thoughts. Sometimes once you write it down and get a few different perspectives then you will see your own way more clearly.

Hoploz

I always think its best to move up the ladder as soon as you can afford to do so, as prices go up over time normally. So if the difference is 80k now, you might find it is 100k two years down the line. Where will you find the extra 20k? A percentage uplift in your lower value house does not equate to the same percentage uplift in a higher value house.

Hoploz

Having said that, I would recommend overpaying on a mortgage if you can and shorten the term to pay it all off as quickly as possible, or indeed to reduce it before you move on.

dylansmum

Thanks to you all - this is so helpful for sorting out pros and cons! I just wish those with houses on the market for 1-2 years would negotiate prices!