Any advice welocme - trying to move house

Lila2708

Hi everyone, I'm new to the forum and in need of some advice (its a bit long winded sorry!)

Here is the situation at the moment :

We purchased a property in 2007 for £95,000. We have decided to move for numerous reasons – the house is too small, it’s in a location we don’t want to be in anymore, there are no decent schools for our girls… the list goes on really.

We recently had it valued – it’s now only worth about £78,000. We have been on a low interest rate mortgage for a while so if we sold the house we should just about break even.

So, we decided to keep the house and move it onto an ‘intent to let’ mortgage, rent the property so bills/mortgage are taken care of and move to my parents while we save a deposit for a new residential property. So far so easy – we are now in my parents and ready to start.

Past couple of weeks we’ve hit some problems. We have about £3k in savings so far (we’ve only been in my parents a couple of weeks and we’ve managed to scrape this together the past few months). We have now found out that the property we already own needs a re-wire, so that’s £2k gone. This knocked us a little but I thought ‘well I suppose we’ll just have to save harder’.

Then the big knock – I had a telephone chat with the mortgage advisor I want to meet up with and he asked me if I was aware of the new stamp duty law – I was not. He calculated that if we buy a new house for £200k which we were looking at it would cost us £6,600 just in stamp duty.

I feel like we are now stuck. With a 10% deposit, stamp duty, re-wires, estate agents fees etc. we are going to need in excess of £30k savings and I have no idea how we are supposed to do it?

We have contemplated selling the property but the area is a little undesirable (for want of a better word!) and the house next door to us has been up for sale for 5 years.

Any advice would be greatly appreciated because right now I am at a loss as to what to do

Thank you

HappyMJ

Sell the property at a loss. ...or pay the extra SDLT. Your choice.

You can sell any property at the right price. If your neighbours property has been on the market for 5 years then it's not priced correctly.

If I were you I would just rent a property that you do want to live in and then sell the property you own then once it's sold and you no longer own a property I would then buy another one.

Lila2708

Thank you for your advice. Financially we wouldn't be able to rent somewhere while also paying the mortgage on our existing property. To be honest the house we have was the biggest mistake we ever made and I would love nothing more to get shut of it but if we put it up for sale it will be the third house for sale on the street (there are only 18 houses) and they are priced at £77,950 and £75,000. If we sold for any less than that we would be seriously out of pocket. See what I mean about is being in Limbo!

HappyMJ

Lila2708 wrote: »

Thank you for your advice. Financially we wouldn't be able to rent somewhere while also paying the mortgage on our existing property. To be honest the house we have was the biggest mistake we ever made and I would love nothing more to get shut of it but if we put it up for sale it will be the third house for sale on the street (there are only 18 houses) and they are priced at £77,950 and £75,000. If we sold for any less than that we would be seriously out of pocket. See what I mean about is being in Limbo!

You said the rent pays the mortgage so you would use your income to pay the rent on the property you want to live in.

You could wait it out but what if property prices never increase. You'll never be able to buy your "forever" home without having to pay £6,000 extra in SDLT.

It doesn't matter if every house on the street is up for sale. Price yours correctly and yours will sell before any other property.

xylophone

Are you able to live with your parents for a couple of years while you save hard?

You sell your property for whatever you can get when you have saved enough for a deposit on a new home and then buy the new home?

Person_one

Can you save much while still living in the current house? How urgent is the school situation?

pmlindyloo

First of all wait until the new stamp duties rules are fully explained in the Budget 16th March. It could be some 'tweaking' has been done.

As it currently stands if you sell the rented property within 18 months of your purchasing a second property then the extra stamp duty will be refunded.

Have a read of this

http://www.thisismoney.co.uk/money/buytolet/article-3394231/Why-concerned-second-home-stamp-duty-reforms.html

If after 16 March nothing changes then continue saving like billyoh and buy your next property when you have the funds.

Is there anyone who would give/loan you the extra money involved on the basis that they would recoup it when your rented house was sold.

In the end, even without the extra stamp tax money you still have a lot to save. What is the actual difference between original stamp duty and the new rules (if they come in?)

If you look at this difference as being your actual 'problem' it won't seem quite so bad.

You need to head over to the budgeting forum for some useful tips on how to cut down your expenditure to the absolute minimum.

The only thing I would say regarding your currently rented property is that tenanted property are often more difficult to sell (and yours seems to have 'difficulty anyway') so you may need to consider buying another and renting out old one almost indefinitely. You could just 'test the waters' by putting it up for sale now - hopefully your tenants would be happy with this.

Sorry, no easy solution - you have some hard decisions ahead.

chelseablue

Where abouts is the house you currently own?

Lila2708

Thank you everyone for your replies. In theory we could stay in my parents for as long as we need but realistically we can’t stay forever. We have 2 very young children and need our space (I appreciate how ungrateful that sounds, my parents are amazing and would do anything for us).


Pmlindyloo thank you for the link and your info. The difference in the stamp duty before and now is £6000 so not small change unfortunately.


Chelseablue – the house is in the Bottle area of Liverpool x

pinkteapot

Even without the £6k, you still need to save up £24k (the £30k you mentioned less the £6k). How long is that going to take?

If we're talking a couple of years, the price of your current property may have risen by just enough that you can sell it and then buy your new home afterwards, so you don't pay the extra stamp duty.

The risk with this approach is if prices fall any further though.

fed_up_and_stressed

xylophone wrote: »

Are you able to live with your parents for a couple of years while you save hard?

You sell your property for whatever you can get when you have saved enough for a deposit on a new home and then buy the new home?

Or sell the property and rent in the preferred area.