Chain fallen apart - what would you do?

julicorn

Hi all, 

Background info:

We've been selling our current flat (1 bed, Hove) and buying our new flat (3 bed, also Hove), and been in a long and complicated chain for a few months now. It's:

1) Our buyer's buyer (offer accepted in January)
2) Our buyer (offer accepted February)
3) Us
4) Our seller
5) Our seller's seller
6) Our seller's seller's seller (an old lady)
7) Probate bungalow seller

So 7 parties, 6 properties, and probate involved. The chain came together in June, probate got granted a few weeks ago. 

We pushed and pushed to get the sale completed by the end of September because of mortgage offers running out, but now the old lady has decided she doesn't want to buy the bungalow after all, so our chain is incomplete again. Everyone is flapping, our seller is panicking because she doesn't think she'll be able to afford a mortgage under the new rates, so instead of applying and locking in a new mortgage asap, she's currently trying to renegotiate her purchase price. Her sellers (number 5 in my summary above) are now also looking for a new home because they're fed up with dealing with the old lady (who also doesn't have a mobile phone, so chasing her has been very very difficult). 

The main dilemma:

We said all along that if the chain were to fall apart, we'd finish up our sale and move into rented for a few months, breaking the chain essentially. It's been a frustrating process so far, and having at least the purchase wrapped up seemed like the better option to us. Our flat is also realistically too small for us, and we want to move somewhere bigger, even if it involves renting for a bit. 
We restated this point when the chain fell apart, and also started a new mortgage application at 3.75% for our purchase - way less good than the 1.75% we had agreed beforehand, but ultimately affordable for us. 

I have to admit though, the rates going completely through the roof right now are giving me cold feet. I'm now just doubting every single choice, and am just all round worried about our immediate future. 

I suppose our scenarios are: 

a) Stay in our flat, not break the chain, but presumably loose our buyer.
Pros: We have only a small mortgage left (under £50k), so costs would be very low for us. 
Cons: We got a good offer from our buyer, and going through the whole process of re-listing, dealing with second and third and fourth viewings, dealing with enquiries and all that are something I'm honestly not sure we could face again atm. 

b) Move out, break the chain, rent for a while
This could either result in us still buying the flat that we're currently in the process of buying, or if our seller ends up freaking out completely over the increasing rates, then I suppose we could look for a new property, but be in a good position (chain-free, £300k in the bank from our sale). 

I'm just so worried right now about those interest rate rises - we've currently applied for a £275k mortgage, were previously approved for around £450k mortgage, and looking at 6-8% interest rates is just absolutely wild at that level! Are we going to be stuck in an expensive rental flat, unable to buy? But also, we're in our 30s and looking to start a family at some point, we can't really stay in our little 1 bed flat for years and years. And if the rates really go that high, then presumably it'd be harder to find a new buyer? And what could be the effect on house prices? 

I know that ultimately we're in a better position than most, and that it's all a bit of a first world problem, but It's just really stressing me out and it feels like every choice we could make is the wrong one. Any thoughts at all would be helpful at this point, I just want to make sure we've thought it all through properly. 

fewcloudy

First Option sounds better to me.

IMO, the 'Con' you have listed is just normal buying and selling and shouldn't be something "you just can't face"...
You'll have learnt something this time; I'm sure next time will be easier.

eddddy

I guess another couple of things to throw into the mix...

- Do you want the stress and upheaval of moving twice?

- Do you want to take a gamble on property prices? Some people are forecasting a 10% to 15% drop in property prices by next year. So if you rent for a year, you might buy for 10% to 15% less (or get 10% or 15% more property for the same money).

But you'd need to consider the cost of a year's rent  (vs a year's mortgage interest payments), and mortgages might be more expensive next year.


(And it's definitely a gamble - it's very hard to predict property price movements.)

julicorn

fewcloudy said:

First Option sounds better to me.

IMO, the 'Con' you have listed is just normal buying and selling and shouldn't be something "you just can't face"...
You'll have learnt something this time; I'm sure next time will be easier.

We don't really know though if we'll get anywhere near the type of offer of what our buyer is paying now, his was the only offer we got back in February when the market was a lot hotter... So it's staying in a flat that's too small for us for who knows how much longer, likely getting less money for it, having to continue dealing with our freeholder who is being a bit complicated at the moment... 

julicorn

eddddy said:

I guess another couple of things to throw into the mix...

- Do you want the stress and upheaval of moving twice?

- Do you want to take a gamble on property prices? Some people are forecasting a 10% to 15% drop in property prices by next year. So if you rent for a year, you might buy for 10% to 15% less (or get 10% or 15% more property for the same money).

But you'd need to consider the cost of a year's rent  (vs a year's mortgage interest payments), and mortgages might be more expensive next year.


(And it's definitely a gamble - it's very hard to predict property price movements.)

Thank you! 
Moving twice we could deal with, if it means being in a bigger place sooner. 
The property price 'gamble' is on my mind as well. Rent for a year would be in the region of £18-22k for what we are looking for around here, so even a 5% fall in prices would more than make up for the rent (although we'd be looking at some really high mortgage rates potentially). 

RM_2013

What a nightmare.  Is your buyer still keen to move? We are in a similar position because the chain isn’t complete at the moment so all feels a bit precarious. 

Ultimately we want to sell our property as have a lot of equity in it which would clear our stupid interest only mortgage and debts that we have accumulated.  However my worry is that if we move into rented to allow our buyers to complete 

a) lack of decent (affordable) rentals
b) moving twice 
c) not being able to find a suitable property on budget (particularly if the mortgage rates continue to climb)

everything feels such a gamble at the moment. You could stay put but then if you decide the property isn’t suitable for starting a family then you have the added complication of factoring maternity leave pay into household outgoings, interest rates going up and if the market does cool you may not get such a good offer from a new buyer that you have now???

such a hard decision - we all need a crystal ball! Hope all works out for you 

julicorn

Thank you @RM_2013, I hope everything works out well for you too! It's so difficult, isn't it? 

From everything we've heard, our buyer is still keen to go ahead, his mortgage offer runs out in December. I actually know very little about his buyer, just that they're still dealing with some enquiries on that transaction atm, so it buys us a little bit of time to think. 

The maternity pay is a good point as well. We generally have a fair bit of wiggle room in our budget right now, but I'm the main breadwinner, so on just my husband's salary + mat pay things will be a lot tighter for a bit. 

SusieT

That is not an easy one to call. I think in that position I would start to look at other properties that may be suitable, then you may decide to pull out and change property, or if your seller drops out due to mortgage expiring and a new rate being unaffordable you will have a better place to get one of those within a short time of your buyer being able to complete, then if your seller has been able to sort themself out you will have a choice of offer on something different, or, stay with the property you have currently offered on. 
If the freeholder is not being easythat would also factor into my decision, I prefer a simpler life

julicorn

SusieT said:

That is not an easy one to call. I think in that position I would start to look at other properties that may be suitable, then you may decide to pull out and change property, or if your seller drops out due to mortgage expiring and a new rate being unaffordable you will have a better place to get one of those within a short time of your buyer being able to complete, then if your seller has been able to sort themself out you will have a choice of offer on something different, or, stay with the property you have currently offered on. 
If the freeholder is not being easythat would also factor into my decision, I prefer a simpler life

That is a really good shout actually. I've been having the odd look on Rightmove over the last few weeks just to see whether there would likely still be options out there for us, but it might be a good time to start viewing properties again. 
The freeholder has historically been easy to deal with, but he's been really weirdly dramatic in dealing with enquiries - he's looking to sell the freehold too, and we'd probably prefer to get everything wrapped up rather than deal with that right now on top of the selling & buying. 

jenni_fer

Sorry to hear this @julicorn.
I think I'd go with option 1 just because while the flat is small, at least you are secure.
Hopefully it won't come to that and the chain will sort itself out quickly.

doingitanyway

I know exactly how you feel.
I held on for a home for 5 months until they found a new home and they re-listed so now I have nothing.
However, more properties are coming on the market and prices/competition have eased. 
Is there a way of combining both options...looking at new properties but not giving up on the current flat just yet...?