We're stuck! Selling then renting

thaimeister

Hi all,

Feeling very frustrated at the moment and not really sure how to move forward:-

I currently have my house on the market which I purchased 10 years ago when I was single, so its just me on the mortgage. I'm now married with one child so we are looking to move to a larger house in a nicer area. The property has been on for 3 months with no interest. Its currently on at £10k less than what I paid for it 10 years ago due to the fall in house prices and amount of rental properties currently available in our area (this is one of the main reasons we want to get away)

When we put the house up for sale, we worked out that our savings would just about cover a 10% deposit on the next house, fees, as well as a further £5k loss on my property as that was the most I could afford to lose on it & still be able to afford a deposit on a better house.

We are now so unhappy living here and desperate to get out of the area.

I'm now considering reducing the asking price to much less then I was prepared to accept originally, just to get a sale. However, this would mean we wouldn't have the deposit for the type of property we want.

I'm now thinking an option could be to sell at a loss and then go into renting for maybe 6 months to a year to save up our original deposit. This would also mean we would be in a better position to buy as we wouldn't then have a property to sell.

Just wondering if anyone else has been in a similar situation and how did you find it. Or if anyone else has alternative suggestions we're open to anything really at the moment

Thank you

hazyjo

Surely you'd have paid up to a third or so off the mortgage by now? Hasn't that given you some leeway?


Are you sure renting is cheaper than your mortgage? In my experience it's often more expensive.


Good luck!


Jx

PField

Seems like there is a lot of rental demand in your area, so an option might be to rent it out rather than sell it.

thaimeister

No. I bought the house in 2007 for £80k. It was a 100% mortgage with a higher lending fee so the mortgage was £82k. I was then on interest only for the first few years I owned the house so I've actually only been on repayment for the past 5 or 6 years. I currently owe around £72k on the mortgage & it's for sale at just under £70k. I was hoping to sell for around £67-68k and allowed for that loss in our savings. But looks like it wont sell for that

I understand we'd be paying more on rent than I am currently on the mortgage for a while (about £200 per month more). But we would still be able to save enough each month to recover our loss within 6-12 months if we went into a rented property.

In all honesty its more about getting away from where we are than buying the next property

PField - there actually seems to be more properties than tenants and a few sitting empty. I wouldn't be able to get another mortgage if I kept my current house to rent. I just want rid of it

steampowered

In your case, the opportunity cost of moving into rented property for 12 months is as follows:

1) The £200 a month extra you'd pay in rent.
2) The reduction in the balance of your mortgage over the 12 months (payments made less interest accrued).
3) You would not benefit from any increase in house prices during the 12 months.

Only you can decide whether that is worth it for what you see as an increased quality of life.

If you were in a comfortable financial position, I would suggest you move. It is worth paying for quality of life. However, as it sounds like you are struggling financially, I wonder if it is worth sticking it out for a few more months.

thaimeister

Thanks

We're not struggling financially. My salary covers our living costs & to build up our deposit we were saving on average 75% of my wife's monthly salary (she also works full-time) before putting the house on the market. Hence why its not much of an issue paying an increase if we rented for a while. However, if we sold & bought another property straight away it would totally wipe out our savings.

Realistically I think my property could sell for between £60-65k. Lets say say it sold for £62, an extra £5k loss over my original estimate. We couldn't currently afford to take that hit on our saving & still buy another place immediately. But if we rented & saved with the same intensity we were, then we would probably be able to claw that £5k back within 6-8 months then go on to get a new joint mortgage.

I just feel like if we took the house off the market now and then tried again in a year or two, the way the area is deteriorating would make it even harder to sell than it is now

Cakeguts

You might consider this statement as odd but actually you are lucky. You are living in a house where if you saved really hard you could probably be mortgage free in a relatively short time. How much would you pay in rent? It will probably be more than you pay in mortgage so put that difference into your savings to start with and then save as much as possible. When you have done that and you own the house outright then you can decide what you want to do. Paying off the mortgage as fast as possible means that you save the money that is currently being wasted as interest on the loan.

NaughtiusMaximus

Cakeguts wrote: »

You are living in a house where if you saved really hard you could probably be mortgage free in a relatively short time. How much would you pay in rent? It will probably be more than you pay in mortgage so put that difference into your savings to start with and then save as much as possible. When you have done that and you own the house outright then you can decide what you want to do. Paying off the mortgage as fast as possible means that you save the money that is currently being wasted as interest on the loan.

That may well be the case but the OP is clearly unhappy living in the current property/area, having been in a similar situation myself I know that getting out ASAP over rides what may be the best thing to do from a purely financial point of view.

Kidder81

I'm not sure you have too many options. If you're desperate to leave the area, you'll have to take a hit on the price by the sound of things.

Not the end of the world if you have to go into a rented property. Like you say, puts you in a good position when you come to buy again.

phoebe1989seb

If you hate it there that much, OP I think taking a hit on the price and going into rented might be the best option.

A few house sales ago we had to take a hit of £60k, but were prepared to do so as we desperately wanted to get out of an area that made us miserable. It hurt to do it, but the relief once we'd moved on was amazing!

GL and hope it all works out for you

dlmcr

Sold a place at a 5 figure loss because I hated it and hated the area. In hindsight it was a mistake to buy it. Moved back into rented. I'm lucky and was able to make the loss back by saving up for around 15months. Now 3 years of saving later we have had an offer accepted on a much nicer house in a much nicer area.