Selling to rent, a bad move?

eamyers

Hello 
My husband and I live in a S/O flat with a toddler and have another on the way. According to a recent valuation the flat is now worth 20k less than when we bought it. According to my husbands calculations (we own 75%) to sell at the new figure would leave us with 5k in our pockets... not much for a deposit. 

We have a few options and would appreciate your input: 
1. Sell and then rent somewhere with a similar monthly outgoing (we’ve looked and can afford a property that’s bigger and with a garden). Continue to save for a deposit. 

2. Continue living in the flat (will be a squeeze) and hope that property prices go up so that we will make a decent profit. 

3. Buy another shared ownership property whereby deposits are naturally lower. 

Whilst we earn an OK salary between us, we don’t seem to be able to save the required 40k for a deposit. 

Thanks for reading 

eamyers

We can save 300 renting 20 miles out 

Angela_D_3

How much do you lose by selling?

AdrianC

Your ownership of this place should be a hint that "being on the property ladder" isn't always the guaranteed money-maker that it's often perceived as, right?

So why stress about getting off it?

That then brings you the "rent here, or rent cheaper elsewhere" choice. There's two questions - one is commute to work, the other is your maternal support networks. You know better than we do how they'll work.

MFWannabe

eamyers said:

Hello 
My husband and I live in a S/O flat with a toddler and have another on the way. According to a recent valuation the flat is now worth 20k less than when we bought it. According to my husbands calculations (we own 75%) to sell at the new figure would leave us with 5k in our pockets... not much for a deposit. 

We have a few options and would appreciate your input: 
1. Sell and then rent somewhere with a similar monthly outgoing (we’ve looked and can afford a property that’s bigger and with a garden). Continue to save for a deposit. 

2. Continue living in the flat (will be a squeeze) and hope that property prices go up so that we will make a decent profit. 

3. Buy another shared ownership property whereby deposits are naturally lower. 

Whilst we earn an OK salary between us, we don’t seem to be able to save the required 40k for a deposit. 

Thanks for reading 

1) How much are you going to be able to save while paying rent? 

2) You could also overpay on your mortgage so there becomes more equity in the property. Also how much could you save while continuing to live in the flat? 
3) Depends what’s available? 

You say 40k for a deposit 
What are property prices in your area? 

Scotbot

Where are you? Prices went up last year in most areas, expectation is they will level off or fall this year.  Flats however have suffered and I can't see them going up in price in the near term. I would be tempted to put the flat on the market and see whether you get a reasonable offer, it could take a while to sell. 

eamyers

Thanks for all your comments 

We live in Hertfordshire, Welwyn garden city. Our flat was bought at 297,000 in 2017. 

Our monthly outgoings are around 1600 (including bills), the outgoings if we rented would be about 1300 all in. Saving 300 a month, luckily I can work from home, yes my husbands commute would be greater. 

We would walk away with about 5k if we sell at 280,000 which was the outcome of the last valuation (October 2020) 

Houses near us start at around 350,000 so 35k deposit may cut it but I understand that we may need 15% due to current climate. 

eamyers

Hadn’t thought about overpaying on our mortgage. Thanks 

[Deleted User]

I'd go with option 2, not in the hope that house prices will go up because they might not when you eventually come to sell.  I'd also do as @MFWannabe suggests and over pay the mortgage.  With a baby on the way I wouldn't want to increase my commute, I don't think I'd want another SO property, and I wouldn't want the uncertainty that comes with having an AST when there's a more stable housing solution available.  

AdrianC

eamyers said:

We live in Hertfordshire, Welwyn garden city.

You shouldn't need to go as far as 20 miles, then, to find more reasonable property.

Hatfield? Stevenage? Luton? Hemel?

Angela_D_3

eamyers said:

Hadn’t thought about overpaying on our mortgage. Thanks 

Flogging a dead horse,  throwing good money after bad.  The flat is never going to work gor ypur family,  
So you’d lose £17,000 - it'll take you 56 months to recoup that money.  Nearly 5 years