Downsizing challenges: alternative suggestions?

SimonWatson

Hi All
Despite reading the plethora of information here and speaking to three advisors (who had very different views but very limited suggestions) I'm now resorting to your group experience.

Situation:
I'm 59 and decided to take 'early retirement' after leaving my career for stress-related reasons. Our aim is to relocate & downsize, clear remaining mortgage and release assets to see us through the next 5-6 years before drawing on pensions.
The house has been on the market for 5 months with very little interest despite aggressive reductions in price: unfortunately the local market at the upper end is stagnant and there is little point in dropping and dropping until we find a buyer.

Options:
One option we're looking at is to take out finance on the smaller house as well as Let To Buy on our current home. Make the move and rent out our home for a couple of years to allow the market (hopefully) to recover, then sell and settle all outstanding loans. I'm aware of the stamp duty premium.

The issue:
I have limited cash savings left but significant assets in my company pension and SIPP as well as the house. BUT NO INCOME.

Does anyone know lenders who are able to lend against the security of the above?

I've looked briefly at equity release but found very few who recommend it as a cost-effective option.

Thanks in advance.

getmore4less

Maybe your expectations of what your place is worth are too high.

Renting it out will probably drop the value.

Getting finance to buy a new place with no income?
deposit, extra SDLT and paying the debt.

Refinancing your current place to raise the money to by a new place?
similar problems and reduces the return

If there is no market to buy it what's the market to rent it out?

I suspect you will have a cash flow crisis quite quickly if you try renting it out.

Some numbers may clarify that.


you could try posting a link on
https://forums.moneysavingexpert.com/forumdisplay.php?f=16

to get some feedback on why it is not selling.

SimonWatson

Thanks for the thoughts: we're aware of risk

The current price is now £100k below the initial advertised price which was the average of 3 agents quotes at the time. It's also about £50k lower than extremely similar properties within 1/2 mile (all homes in this sector here are different), but with significantly more land: the other properties have been on the market for up to a year. If there is no current sellers market then there is little point in giving away equity until it finds a buyer....we're not desperate.

The rental market here, on the other hand, is extremely bouyant which is why we're now considering this. A conservative monthly rental income (net of fees) is around £1300.

Same question as originally: is anyone able to recommend lenders who will lend against other assets?

ACG

You wont get lenders lending against assets, not at normal rates (more than equity release).

The lack of income is the difficult bit. I would like to think there would be lenders who will lend against your current property if it is being let out and a low LTV. I can not think of any off the top of my head but I am sure there will be some.

You are not going to find anyone to lend on your new property with no income evidence, that thought needs to be knocked on the head.

You say you are not desperate but to be honest, it could come down to that or staying put. That may be a decision you need to make. Estate agents valuing it at something does not mean a lot. It is effectively an educated guess on their experience but as you have found, it is not necessarily correct. The value is what people are prepared to pay and at the minute that is less than what yours and your neighbours properties are up for.

SimonWatson

Thanks ACG: totally agree about the concept of house prices.In the circumstances we were happy to take a bit of a haircut but complete decapitation isnt an option....as you say: the alternative may be stay put.

Subsequent to my post above I have received an offer as follows:-
- The new house: a bank who will offer a 75% LTV loan at 1.84% for 3yrs secured against proof of my pension & SIPP values. We've also qualified exactly what they need and this is the first time this advisor has seen it in his 20 years.

Coupled with:
- Existing home: a building society who will lend what I need for the above deposit/existing mortgage cleared and additional cash released. Based on the rental amount.

If we proceed with these options I will gladly let you know who the lenders are in case it helps others. Its good to see lenders appearing to make efforts to respond to market demand.....and I'm sure we're not the only family in this situation.

getmore4less

SimonWatson wrote: »

Thanks for the thoughts: we're aware of risk

The current price is now £100k below the initial advertised price which was the average of 3 agents quotes at the time. It's also about £50k lower than extremely similar properties within 1/2 mile (all homes in this sector here are different), but with significantly more land: the other properties have been on the market for up to a year. If there is no current sellers market then there is little point in giving away equity until it finds a buyer....we're not desperate.

The rental market here, on the other hand, is extremely bouyant which is why we're now considering this. A conservative monthly rental income (net of fees) is around £1300.

Same question as originally: is anyone able to recommend lenders who will lend against other assets?

that just tells you that every one is overpriced.

Have a look at what is sold subject to contract on rightmove in your price bracket also at the sold through prices on the land reg

A rent of £1300 suggests around £400k+- value(5% gross yield)

£100k on top of that is the asking?

This new lending do they know you have no income as that is what you said in your first post.

SimonWatson

getmore4less wrote: »

that just tells you that every one is overpriced.

Have a look at what is sold subject to contract on rightmove in your price bracket also at the sold through prices on the land reg

A rent of £1300 suggests around £400k+- value(5% gross yield)

£100k on top of that is the asking?

This new lending do they know you have no income as that is what you said in your first post.

The house is now reduced to £800k: the rental income is potentially higher but I'm a pragmatist and would rather fill it than cry about another £200 a month.

Do they know I have no income? Clearly.

getmore4less

If you think the place is worth £900k then let's say £1500 before fees.

2% gross yield is not good a good return.

Thrugelmir

SimonWatson wrote: »

then there is little point in giving away equity until it finds a buyer...

You are not giving anything away. A property is only worth what someone is prepared to pay for it.