Stick or Twist

anon_fisherman

Hi. Me and OH want to move house. We currently live in a commuter town which is nearby our home city. We moved here as FTB 5 years ago as this was the best we could afford at the time. We want to move back to our home town for various reasons but being close to work and family are the two most important.

Thing is the city we want to return too, the house prices have been rising faster than where we live now. To get a half decent house that we could call home forever would mean taking out£240000 plus our £45000 deposit. At the current low rates I'd be paying back around 130k in interest alone.

Now my thoughts are am I better off staying where I am for a few more years and gaining more equity or in the this scenario assuming prices continue to rise steadily over the next 5 years am I going to be worse off because the gap between house prices will be higher and will this counter any equity I will have gained. I hope this makes sense and I look forward to your reply.

Thanks

Thrugelmir

Overpay your existing mortgage to accelerate the speed with which you build equity.

AnotherJoe

Too many unknowns to call.
Might it be that house prices in mysterious City (?Cambrudge?) might be reaching a natural high and so will cascade out to further to commutable places such as where yiu now live so that the gap will lessen ?

Dird

Stick and wait for the current bubble to deflate a bit. The £45k deposit is separate cash or the equity in current house?

anon_fisherman

45is mostly equity but includes some of our 12k in savings. It's not Cambridge further north than that. We went to see the house but funnily enough the home owner wants to downsize so they are better off in retirement. If I buy this house then we will be saddled with debt and as lovely as it is I don't want so much debt.

Waldorf_Statler

Some would say it's a great time to be leveraged, while interest rates are low. They're practically giving money away. The cost of buying a home is like a drawbridge being raised. Better to grab on and hold tight than to be left on the wrong side of the moat.

If house prices stabilise (and latest evidence suggests they have "paused") then you're financially better off building up equity in your current home. But if house prices rise (and more quickly there than here for you) then you'd be better off moving.

But your motivation to move sounds like it is not a financial one; it's to be nearer family and work. So why not make it about that and leave the financial bit to one side? The financial bit is pure speculation. Make it about where you want to call home.

Thrugelmir

Waldorf_Statler wrote: »

Some would say it's a great time to be leveraged, while interest rates are low. They're practically giving money away. The cost of buying a home is like a drawbridge being raised. Better to grab on and hold tight than to be left on the wrong side of the moat.

With a 25 year window though. That "leverage" leaves people exposed for a very long time. Debt is debt. As the old adage says cash is king.