Asked this before, but is there any mileage in selling up and renting, banking equity...

IAMIAM

and getting say 5% interest per annum on around 100k until you find the next property if unsure of location/area, or wise to stay on property ladder always.....

MFWannabe

I would personally say if you’re moving to a completely new area that you really don’t know and you want to see what it’s like before committing to buying then there is definitely merit in renting first. 

But you would have to factor in rental prices, how much more are they? 

How easy / difficult will it be to get a new mortgage when ready? 

Dependant on area will house prices have risen in the months you rent? 

Would it be possible to keep current property and renting that out while renting in new area? 

grumiofoundation

Unlikely you will get any different answers to before. 
https://forums.moneysavingexpert.com/discussion/6395501/has-anyone-decided-to-sell-up-and-put-all-equity-into-cash-and-buy-again-in-a-year-or-two/p1

Impossible to 'solve' a mathematical equation since you don't know what house prices will do.

As above the key question is how could this impact on you getting a new mortgage, how much could prices rie, how much can you save, will your salary increase etc

tiger135

i think its a good question. i am currently off the property ladder and my money is earning 2.75 in instant access. thats 300 a month. if i fixed at 5% it would be almost 600 a month. not bad  although on the other hand i need somewhere to live.

mi-key

Earning interest on the equity only really works if you aren't using it up having to pay more than you are making to rent somewhere.  

IAMIAM

tiger135 said:

i think its a good question. i am currently off the property ladder and my money is earning 2.75 in instant access. thats 300 a month. if i fixed at 5% it would be almost 600 a month. not bad  although on the other hand i need somewhere to live.

How long have you been in that situation? 

tiger135

the interest rate has been 2.75 for about 4 months now 

IAMIAM

MFWannabe said:

I would personally say if you’re moving to a completely new area that you really don’t know and you want to see what it’s like before committing to buying then there is definitely merit in renting first. 

But you would have to factor in rental prices, how much more are they? 

How easy / difficult will it be to get a new mortgage when ready? 

Dependant on area will house prices have risen in the months you rent? 

Would it be possible to keep current property and renting that out while renting in new area? 

This is exactly the case. I do not know where I want to be at this moment. I have made circa 100k in 6 years where I have been but don't want to commit again just yet. I am even wondering whether there is merit in having the 100k sat earning 5% for a few years, pottering around areas on 6/12 month rentals and then deciding what I want in 3/4 years. On top of maximising my pension contributions where possible. 

YoungBlueEyes

I think it's one of those things that works, on paper. Bank your money, rake in some good interest while you're renting/stopping at a very understanding friend's, wait for the market to stop doing the macarena, buy a better house than you poss could do now cos you've a bigger deposit and the mortgage rates/house prices are more ...sensible...? 

But then it falls under the 'timing the market' thing, which is a mug's game. 

jimbog

tiger135 said:

i think its a good question. i am currently off the property ladder and my money is earning 2.75 in instant access. thats 300 a month. if i fixed at 5% it would be almost 600 a month. not bad  although on the other hand i need somewhere to live.

5% fixed rate is impressive, but if the money is locked away for a number of years then you can't get hold of it when you do find somewhere to buy

lookstraightahead

For me it works every time. But not because of only making money on the interest.
My experience is that being without a chain more than makes up the rent on negotiating prices. I find it better to rent whilst looking for what I want (especially if moving areas) and gives me flexibility in timescales (not having to find a property before moving out of my owned one etc and the ability to walk away rather than seeking somewhere quickly). It's so nice to be able to look freely. I have often bought while still having a few weeks in the rental which means no removal company as could move ourselves (some find all that more stressful, I find it less stressful).
I've found that most people want to move quickly and I've always edged towards buying properties where the seller is happy to move into rental and break the chain - so it makes it all quick and efficient.
Having equity in the bank also helps of course, so if you can add all these things together it can be very cost effective.

Of course it's a bit of an out of the box way of thinking and doesn't suit everyone  But it suited me, even with family / children and pets.