Advice - negative equity

glasgowdan

Are you a first time buyer?

Do you believe that your house price is going to half or something? Because it's really not!

And you have just completely embarrassed yourselves in front of your neighbour....that must be hard to accept!

No, you can't sue anyone or exert influence on someone else's sale price. You COULD sell and buy in a new area, pay another £20,000 in costs and fees and take your chances, then sell that place again if a neighbour advertises their house at slightly less than what you paid.

You might have had time to digest the responses above by now and realise the mistake you've made in your thinking.

Also I don't know why I see HPC dreamers all over this post when they have no house of their own, no experience and nothing to offer in terms of advice.

hazyjo

Look, just sit it out. Why on earth are you worrying about it. As said, if there is a crash or drop, everything else will drop too. I have always used drops to my advantage and bought bigger and cheaper in a few years' time - moving to a house that more than likely would have been unaffordable under 'normal' circumstances.

Interest rates are likely to go up. I presume you got a good deal. Prob a better one than you would in a couple of years' time.

Please don't ever consider the stock market as a way of investing, you'll give yourself a heart attack!

Crashy_Time

hazyjo wrote: »

Look, just sit it out. Why on earth are you worrying about it. As said, if there is a crash or drop, everything else will drop too. I have always used drops to my advantage and bought bigger and cheaper in a few years' time - moving to a house that more than likely would have been unaffordable under 'normal' circumstances.

Interest rates are likely to go up. I presume you got a good deal. Prob a better one than you would in a couple of years' time.

Please don't ever consider the stock market as a way of investing, you'll give yourself a heart attack!

Not great advice IMO, but they don`t have the option, realistically, of selling out and buying in again at this stage, I agree with that.

chelseablue

We live in Berkshire and also bought our house in February 2016.

Are you sure prices are falling in your area? We bought ours for £400,000 and it has recently been valued (by a surveyor not EA) at £435,000

TBagpuss

OP, as others have said, no, you can't sue anyone. No one was giving you advice about what house prices might or might not do in the future.

Nor can you change what your neighbours chose to market their house for. Neither you, nor we, can know why they are selling at that price. Maybe they have huge debts and need a quick sale. Maybe they are splitting up. Maybe their property has issues which mean it is worth significantly less than yours.

Selling now and putting the money away is up to you - you'd incur costs - legal and estate agents costs, maybe an early redemption penalty.

You woyukldalso have costs again when you bought another property.

Of course, if there were to be a massive crash in house prices you might then be able to buy a property at a cheaper price (assuming, of course, that you were at that time able to get a mortgage) but equally, if you *don't sell, and prices fall, you might get lss whne you sell your house but you'd pay less for a new one, too.

If you are concerned that you've overstretched yourself on the mortgage and that interest rate rises may mean that you will struggle to met your mortgage payments, so you might end up being forced to sell, then I would suggest that you start to address that issue instead.

Consider switching your mortgage to a longer fixed rate to buy time ,look at your budget and outgoings and start to overpay your mortgage and/or put money side to pay a lump sum off the mortgage once your current fix ends and you can make over payments without incurring a penalty.

Look at your income and spending to see where you could make savings or increase your income.

Meanwhile, enjoy living there. Unless you need to move or can't afford the mortgage it's not a problem, and the picture may look very different in another year or 5.

westernpromise

sarahc81 wrote: »

Thank you for your responses (other than the one that was rude). The reason why we are considering selling now is because if they have continued to fall and not recovered then should we need to sell at a later time we may not be able to do so. We would be unable to afford to buy another property without selling.

This was intended as a long term purchase and not an investment. We are living in the property having lived with my husband's mother for several years. But that doesn't mean we're happy with the price coming down. And if the outlook is such that they may continue to fall then recovering what we paid, moving back with his mother, and buying again when things stabilise is something we've been considering. If it's better to sit and wait then that's of course what we would prefer. That's why I was asking for advice as we're unsure what is the best option at the moment.

First of all, at the mortgage rate you're likely on, you will pay off 15% off the mortgage in the first five years. The days when the mortgage balance barely came down until the last couple of years are long gone.

Secondly, you appear to be attempting to short the market speculatively. What makes you think you are likely to be successful?

Third, all you will do by selling is crystallise as cash a hypothetical deflationary loss. If you're not in the market when it starts to go up again, you will lose out further. Crashy did that 21 years ago and still hasn't managed to buy back in.

You say in you're in Luton or thereabouts? I'm guessing you paid about £300k. To sell up would cost you probably £6,000, then you have to move out and rent for some period of time while you save up another deposit. You then have to hope you can buy back in after you've saved up a deposit but before prices start going up again, and you then get to pay stamp duty of £5,000 or so all over again. Oh, and more mortgage, survey, legal, and moving fees.

It's going to cost you at least £20,000 to £30,000 to do all that, not including the deposit. So you would need a price fall of 10% just to end up no worse off than now. If prices started to move up while you were still renting, they could run away from you very fast.

Crashy_Time

westernpromise wrote: »

First of all, at the mortgage rate you're likely on, you will pay off 15% off the mortgage in the first five years. The days when the mortgage balance barely came down until the last couple of years are long gone.

Secondly, you appear to be attempting to short the market speculatively. What makes you think you are likely to be successful?

Third, all you will do by selling is crystallise as cash a hypothetical deflationary loss. If you're not in the market when it starts to go up again, you will lose out further. Crashy did that 21 years ago and still hasn't managed to buy back in.

You say in you're in Luton or thereabouts? I'm guessing you paid about £300k. To sell up would cost you probably £6,000, then you have to move out and rent for some period of time while you save up another deposit. You then have to hope you can buy back in after you've saved up a deposit but before prices start going up again, and you then get to pay stamp duty of £5,000 or so all over again. Oh, and more mortgage, survey, legal, and moving fees.

It's going to cost you at least £20,000 to £30,000 to do all that, not including the deposit. So you would need a price fall of 10% just to end up no worse off than now. If prices started to move up while you were still renting, they could run away from you very fast.

It is advice like that that probably got the OP into negative equity in the first place? :rotfl:

cjmillsnun

Crashy_Time wrote: »

It is advice like that that probably got the OP into negative equity in the first place? :rotfl:

Says the man who sold up and has been renting for how long? and lost how much compared to if they sold recently?

parking_question_chap

You want to sell your house because its currently worth less than what you paid for it?

Just what?

chappers

As others have said don't worry, it only becomes a problem if you really are forced to sell.
London and the home counties are feeling a bit of a squeeze at the moment, a squeeze that may spread further. But these are the areas that will also recover the quickest.
As you live in your house and pay off your mortgage the equity comes back to you and inflation over time reduces the actual cost to pay the mortgage down