Hang on or sell?

elbowpipe

We have a holiday house which (yes, we fell for it) has an interest-only mortgage on it (about 60% LTV). Term is up in 5 years. We could switch to Capital/Repayment but this would reduce our income considerably and anyway, quite a few people are talking about another crash looming (we built the holiday house after the last one).

Or we could sell and be mortgage-free (albeit after paying CGT).

It seems to me the main risk factor of hanging on is that a crash could cause house values to plummet. But we could live with that as long as we continued to stay profitable, which brings me to my first question. If there's a crash what is the effect on interest rates? Aren't they like to stay low? Second question - if there isn't a crash how likely is it post-brexit that interest rates will rise?

AnotherJoe

1. Someone somewhere is always "talking" about a house price crash. Sometimes, there is one. Most times, prices fall by 1.2% in one month and someone extrapolates that up to a 75% fall in 5 years or whatever. But that doesn't happen and those who sold up in 1998 and have been in rented ever since waiting for the 75% look like mugs.

2. A crash, presumably due to some external economic circumstance, such as a recession, would almost certainly keep interest rates low. The BoE doesn't want to exacerbate a recession or force house prices down even more by raising rates.

3. Post Brexit, your question is unanswerable. Suppose I said the chance is for 35.7% of a rise? So what. What rise? Of 0.25% in 3 years time? Or 2% next month? And what do you do with a chance? No one knows whats going to happen though you can work out trends but then black swans fly in and mess things up.
So aside a black swan, in general the BoE would probably keep rates low for the foreseeable as an antidote to any tariffs brought in by the EU on imports. eg if the EU decides "we will tax UK 10% on anything we buy from there", UK drops its currency by 10% by dropping rates (such a currency fall will will probably happen on its own anyway were such a tariff to come in)

bruich76

House market crashes are not that much of thing really. Yes, people can be unlucky but generally speaking if the market does crash prices will recover in circa 5 or 6 years max to post crash prices. So if that happens just stay where you are and ride it out. Has happened before and will happen again.


There's no point trying to predict anything or selling trying to buy in cheap as its not guaranteed. The only thing that is guaranteed is the housing shortage and a lack of houses. Which will always drive prices up long term - remember, nothing goes up in a straight line.

Crashy_Time

bruich76 wrote: »

House market crashes are not that much of thing really. Yes, people can be unlucky but generally speaking if the market does crash prices will recover in circa 5 or 6 years max to post crash prices. So if that happens just stay where you are and ride it out. Has happened before and will happen again.


There's no point trying to predict anything or selling trying to buy in cheap as its not guaranteed. The only thing that is guaranteed is the housing shortage and a lack of houses. Which will always drive prices up long term - remember, nothing goes up in a straight line.

The drivers of house prices are now totally disconnected from the drivers of yesteryear, it can turn much quicker now, if the US start pushing rates up it is game over for UK property, and the pound may also have some difficulty. Add in Brexit and I would sell sharpish, and don`t chase away buyers that offer a few grand under asking either.

AnotherJoe

Hold the press !!!! Person who is obsessed with house prices falling advises someone to sell!

On page two, news about the Pope, and bears in wooded areas.

Pixie5740

Do you get any use or make any money out the holiday home?

elbowpipe

Pixie5740 wrote: »

Do you get any use or make any money out the holiday home?

No fortunes to be made, although it's steady. But a rates rise would make it pointless.:(

Mickygg

Lol I read this yesterday and wondered how long it would take crashy to come and say sell sell sell before the world collapses around your feet.
OP in case you hadn't realised no one takes crashy seriously (predicting a crash for years which of course the complete opposite has happened!) so ignore the ridiculous posts.

My 2p worth, no one knows what will happene when we go full brexit, it is pure speculation at this stage.

I would keep or sell based on what you know now. If you want to be mortgage free and risk free then try to sell. If you want to hang on in case prices keep increases and take the risk then keep hold of it.

sparky130a

Crashy_Time wrote: »

The drivers of house prices are now totally disconnected from the drivers of yesteryear, it can turn much quicker now, if the US start pushing rates up it is game over for UK property, and the pound may also have some difficulty. Add in Brexit and I would sell sharpish, and don`t chase away buyers that offer a few grand under asking either.

Dear lord, it's like a broken record.

A bl00dy cheeky girl record at that.

csgohan4

Not another one, If people could predict house prices, no one would buy and wait

AnotherJoe

elbowpipe wrote: »

No fortunes to be made, although it's steady. But a rates rise would make it pointless.:(

If it's that marginal, so really it's just a fair bit of hassle for a small amount of income and it's a punt on house prices rising,why not sell and invest it in something that doesn't need hands on management or have CGT and tax Implications (since you could put the equity into a pension or ISA).

Depending on your tax and employment position you could even get the CGT tax you'll have to pay back by putting the profit into a pension.