Mortage Situation

sterling30

mi-key said:

Hi, I am in a very similar position to you and the same age. I think downsizing may be the best option ( this is what I am considering ), I can get a decent size house around the same size as I have now, but not such a 'select' location for about 2/3rds the price I can sell mine for, so could either reduce mortgage to about 50% what it is now, or have a very nice lump sum to pay off the credit cards, reinvest some into the business, and also have a nice buffer for the next few years depending on what happens. 

I am lucky to have a long term fixed rate at 2% that I can hopefully port over to a new property

If you did this at least it would take the pressure off, and if the business picks up over the next few years you can always look at moving again. The danger is getting off the property ladder, then having a reduced income and not being able to buy again in the future and being stuck renting.

It is hard being self employed though as we get hit twice, once by the cost of living increases, and then again by income dropping because of it ! 

I think it is worth making a decision sooner rather than later though while you still have some savings and wiggle room to be able to choose, rather than being forced at the last minute 

Thanks for sharing your story. I reckon there must be a lot of us. Also I think there will be so many people going to come unstuck soon as their large mortages run out and interest rates are higher. Maybe lots are going to downize / change areas. More possible I suppose for people who WFH. So, what is the UK equivalent of Bordeaux? Certainly it isn't Bolton.

silvercar

sterling30 said:

mi-key said:

Hi, I am in a very similar position to you and the same age. I think downsizing may be the best option ( this is what I am considering ), I can get a decent size house around the same size as I have now, but not such a 'select' location for about 2/3rds the price I can sell mine for, so could either reduce mortgage to about 50% what it is now, or have a very nice lump sum to pay off the credit cards, reinvest some into the business, and also have a nice buffer for the next few years depending on what happens. 

I am lucky to have a long term fixed rate at 2% that I can hopefully port over to a new property

If you did this at least it would take the pressure off, and if the business picks up over the next few years you can always look at moving again. The danger is getting off the property ladder, then having a reduced income and not being able to buy again in the future and being stuck renting.

It is hard being self employed though as we get hit twice, once by the cost of living increases, and then again by income dropping because of it ! 

I think it is worth making a decision sooner rather than later though while you still have some savings and wiggle room to be able to choose, rather than being forced at the last minute 

Thanks for sharing your story. I reckon there must be a lot of us. Also I think there will be so many people going to come unstuck soon as their large mortages run out and interest rates are higher. Maybe lots are going to downize / change areas. More possible I suppose for people who WFH. So, what is the UK equivalent of Bordeaux? Certainly it isn't Bolton.

East Sussex, I’m not joking - a family member many years ago sold an inherited flat in prime position in Hove and we have jokingly monitored the price over the years, it hasn’t done as well as we expected. Towns further along the cost have done even worse. If I was downsizing out of London that where I would look.

dander

I might have missed it, but wouldn't remortgaging on a much longer term be an option? At 48 you should be able to get at least a 20 year mortgage, if not longer, which should help with cashflow even if it costs more in the long run. And of course if your business recovered in the future you could shorten the term through overpayments.

housebuyer143

dander said:

I might have missed it, but wouldn't remortgaging on a much longer term be an option? At 48 you should be able to get at least a 20 year mortgage, if not longer, which should help with cashflow even if it costs more in the long run. And of course if your business recovered in the future you could shorten the term through overpayments.

He's on interest only so the term is irrelevant to payment amounts. If there is no repayment strategy for the house he will have to downsize at the end of the mortgage term to pay off the mortgage anyway. Seems like doing it earlier is probably the right call.

silvercar

housebuyer143 said:

dander said:

I might have missed it, but wouldn't remortgaging on a much longer term be an option? At 48 you should be able to get at least a 20 year mortgage, if not longer, which should help with cashflow even if it costs more in the long run. And of course if your business recovered in the future you could shorten the term through overpayments.

He's on interest only so the term is irrelevant to payment amounts. If there is no repayment strategy for the house he will have to downsize at the end of the mortgage term to pay off the mortgage anyway. Seems like doing it earlier is probably the right call.

Wouldn’t make sense to me. Why not stay in the home you prefer for longer? Then downsize when you need to. You may find that either with another job or an improvement in your own business, that you can afford to remain in this home. Downsizing now just crystallises the losses.

Bigphil1474

OP, for info, I live in Leeds and we're looking to buy our next house. We have a budget of around £300k, and that can buy us a good 3 bed semi, and the occasional detached house comes up in that bracket. We're looking around the outskirts of the city - suburbs/rural, and in good areas. You could get a nice rural pad in Yorkshire for £300k.

sterling30

silvercar said:

sterling30 said:

mi-key said:

Hi, I am in a very similar position to you and the same age. I think downsizing may be the best option ( this is what I am considering ), I can get a decent size house around the same size as I have now, but not such a 'select' location for about 2/3rds the price I can sell mine for, so could either reduce mortgage to about 50% what it is now, or have a very nice lump sum to pay off the credit cards, reinvest some into the business, and also have a nice buffer for the next few years depending on what happens. 

I am lucky to have a long term fixed rate at 2% that I can hopefully port over to a new property

If you did this at least it would take the pressure off, and if the business picks up over the next few years you can always look at moving again. The danger is getting off the property ladder, then having a reduced income and not being able to buy again in the future and being stuck renting.

It is hard being self employed though as we get hit twice, once by the cost of living increases, and then again by income dropping because of it ! 

I think it is worth making a decision sooner rather than later though while you still have some savings and wiggle room to be able to choose, rather than being forced at the last minute 

Thanks for sharing your story. I reckon there must be a lot of us. Also I think there will be so many people going to come unstuck soon as their large mortages run out and interest rates are higher. Maybe lots are going to downize / change areas. More possible I suppose for people who WFH. So, what is the UK equivalent of Bordeaux? Certainly it isn't Bolton.

East Sussex, I’m not joking - a family member many years ago sold an inherited flat in prime position in Hove and we have jokingly monitored the price over the years, it hasn’t done as well as we expected. Towns further along the cost have done even worse. If I was downsizing out of London that where I would look.

That sounds contraditory but it's probably me just misunderstanding it. Why would you recommend to look in East Sussex if Hove hasn't done well and towns further along even worse? What do you mean by "hasn't done well"?

sterling30

dander said:

I might have missed it, but wouldn't remortgaging on a much longer term be an option? At 48 you should be able to get at least a 20 year mortgage, if not longer, which should help with cashflow even if it costs more in the long run. And of course if your business recovered in the future you could shorten the term through overpayments.

I suppose that's an option I will add to the table and make sure is included in my discussion with an advisor. Thanks.

sterling30

silvercar said:

housebuyer143 said:

dander said:

I might have missed it, but wouldn't remortgaging on a much longer term be an option? At 48 you should be able to get at least a 20 year mortgage, if not longer, which should help with cashflow even if it costs more in the long run. And of course if your business recovered in the future you could shorten the term through overpayments.

He's on interest only so the term is irrelevant to payment amounts. If there is no repayment strategy for the house he will have to downsize at the end of the mortgage term to pay off the mortgage anyway. Seems like doing it earlier is probably the right call.

Wouldn’t make sense to me. Why not stay in the home you prefer for longer? Then downsize when you need to. You may find that either with another job or an improvement in your own business, that you can afford to remain in this home. Downsizing now just crystallises the losses.

I'm inclined to agree with that.

silvercar

sterling30 said:

silvercar said:

sterling30 said:

mi-key said:

Hi, I am in a very similar position to you and the same age. I think downsizing may be the best option ( this is what I am considering ), I can get a decent size house around the same size as I have now, but not such a 'select' location for about 2/3rds the price I can sell mine for, so could either reduce mortgage to about 50% what it is now, or have a very nice lump sum to pay off the credit cards, reinvest some into the business, and also have a nice buffer for the next few years depending on what happens. 

I am lucky to have a long term fixed rate at 2% that I can hopefully port over to a new property

If you did this at least it would take the pressure off, and if the business picks up over the next few years you can always look at moving again. The danger is getting off the property ladder, then having a reduced income and not being able to buy again in the future and being stuck renting.

It is hard being self employed though as we get hit twice, once by the cost of living increases, and then again by income dropping because of it ! 

I think it is worth making a decision sooner rather than later though while you still have some savings and wiggle room to be able to choose, rather than being forced at the last minute 

Thanks for sharing your story. I reckon there must be a lot of us. Also I think there will be so many people going to come unstuck soon as their large mortages run out and interest rates are higher. Maybe lots are going to downize / change areas. More possible I suppose for people who WFH. So, what is the UK equivalent of Bordeaux? Certainly it isn't Bolton.

East Sussex, I’m not joking - a family member many years ago sold an inherited flat in prime position in Hove and we have jokingly monitored the price over the years, it hasn’t done as well as we expected. Towns further along the cost have done even worse. If I was downsizing out of London that where I would look.

That sounds contraditory but it's probably me just misunderstanding it. Why would you recommend to look in East Sussex if Hove hasn't done well and towns further along even worse? What do you mean by "hasn't done well"?

As it hasn’t done as well ( price increases compared to other areas in the south east) it would be relatively more affordable. Still decent areas.