Thinking of selling up and renting

ellie27

You are not in negative equity, you are just not getting back as much as you bought for like us. We bought for £179k in 2007 and just sold there for £157k. The way I see it is thats life, things change, markets change.

Do you really dislike the area you are in, or is it more that you just dont like the position you are in, in that the house is worth less than you paid for it? If the latter, then that can easily happen again but it doesnt matter if you plan on being in that house long term.

I wouldnt rent long term future plan.

It seems that you just dont like the idea that you've just not made money on your house, many folk dont, but a house is not for making money on but for having a life in. I dont think renting and moving around would be good if you have children.

Good luck!

moneyfly

Thanks for all the feedback and insight. It helps me question myself.

Interest is around £370. Rentals range from £320 to £650, in areas we'd like. Where we live is ok, but there are some drugs and unsavoury characters dotted around.

My son is in school across town in a lovely area, which is about 30k over our purchase budget. We could rent there for £500ish.

I feel renting would be more certain than where we are right now. ie I'm not trapped renting and can move where I want, pretty much. Overall, with all the interest, repairs, upkeep, roofs, boilers, etc renting and buying over the last ten years would come out at about the same.

Obviously I'm not happy that the house is worth less than we bought it for, but I'm just really happy it's worth more than the mortgage again!

So my thinking is: Get out the area. Rent in a nice area. Save and either buy in a nice area, or buy a small place to rent out as an investment.

Hoploz

The key is to buy in the right place. That seems to be the trouble here.

If you don't like where you are then sell. But I would recommend buying at the same time if at all possible. Could you buy a smaller place which you could squeeze into and somehow expand it eg garage or loft conversion?

My concerns are two things -
1) prices will increase and you will be able to afford even less in the future in your preferred area.
2) you will end up paying more in rent than you would on a mortgage. If you were to take a repayment mortgage for a similar amount as you have now then it would reduce over time and month to month you would be no worse off. Or possibly even move your existing mortgage across to a new property. Have you checked how much you could borrow now with a broker? Perhaps you could buy something that would be big enough after all if you investigate.

I realise my view on this is skewed - I naturally favour buying. I do understand it is the route I have taken and others do things differently. (My brother for example has rented ever since the big crash in 1992 when he ended up in PROPER negative equity with interest rates at 13%!) If you intend renting long term that's fine, but if you are paying out more every month then you won't be able to save so it's a vicious circle in my opinion and you need to ask yourself whether you would realistically ever be able to buy again if you took this option.

moneyfly

Thanks, I will see how much I can borrow now. If we could buy in a nice area I would consider that certainly.

lizards

We did this 2.5 years ago. Sold our house in an area we no longer wanted to live in for the same we'd bought it for 9 years earlier.

Since then:

- The price went up by 30% (bloody typical, no way of knowing that would happen though)
- After 2.5 years our landlords gave notice they wanted to sell a few months back
- The house we're buying was worth £100K less when we first moved here (no deposit to buy then though)

Luckily for us, when we got notice to leave we'd just about scraped together enough to get a 95% mortgage and we're completing on tomorrow. Ironically if we'd stayed in our old house, we'd have saved enough for an 85% deposit including the equity. And we've been living with inspections, worry every time one of the children damages the wallpaper or similar despite our best efforts, not our choice of decor (beige carpets with young children, really?!), nothing hung on the wall, constant fretting over getting a S21 and the first time we did ask for anything to be fixed, the (accidental) landlords decided it was no longer economically viable and that's why they're selling.

That said, despite the tens of thousands it has cost us to move 2.5 years earlier, it was worth every penny. We love our new area and were really unhappy in our old one. The children are all settled in a great school with great local opportunities outside of school, I've made lots of friends (the other area was not very friendly) and life is good here.

We were actually pretty lucky - we didn't have to move lots as pixie5740 has, and the inevitable S21 came just as we were finally in a position to get a mortgage again.

Knowing how it turned out, yes, we'd make the same decision again. If we'd been turfed out after 12 months and needed to move into another rental a few times until we had our deposit, maybe not. Moving with four young children is very different to moving with none!

Anyway, just thought I would share how it has gone for us. We're absolutely delighted to be homeowners again, I hadn't realised how hard renting is especially when you're used to being a homeowner and you have children. It's a very different experience to renting (and I did a lot of that) before we started a family and rented flats, small houses etc.

Good luck with whatever you decide to do!

Bossypants

If you can't get together enough equity for a BTL, there's still the option of applying for consent to let from your current lender. That would let you rent the house out while renting for yourself for a fixed period (usually a year I think), after which you might have a clearer idea of how renting feels in practice?

moneyfly

Thanks Lizards, it's good to know someone else has done it!

I'll have a look into that short term BTL...

sniggings

the grass is always greener...you say rent is £320-£650 which seems a very wide price range? you also say the nice area would cost £500, you really need to pin a price down as £320 is probably wishful thinking.

You also say buying stretched you, and you will be debt free, well seems like wishful thinking again, as £500 for the area near the school is already £130 more a month.

Seems to me you have a good reason for moving, you don't like the area but fooling your self you will be debt free, when you will just be swapping a mortgage for rent is looking at this through rose tinted glasses.

hcb42

chip away harder and review in a year. If you are not in negative equity, get that mortgage paid down, every £500 in rent is a chunk off reducing the mortgage