Anyone here selling and moving to rental?

thebratprince

So we sold our first home and bought our current house in 2022, right before interest rates started to increase rapidly. We borrowed close to our limit on a really low interest rate. Our fixed rate ends next year. I'm on maternity leave and our son is starting nursery right when we'll be looking for a new fix. We can afford 300, maybe 400 more a month if we found more sources of income and cut back on everything. But definitely not our projected monthly increase of £800-£1000. 

We've talked about our options, like extending our term (which is already 35 years) requesting interest only payments, or even downsizing, but due to a few factors affecting our income in the next few years (mat leave, nursery fees, etc) we're leaning towards selling up and moving into a rental. With our house sale behind us, we'll hopefully be able to rejoin the market in a few years. I've made my peace with it and we consider it the best of a bunch of bad choices.

I know it's more complicated than this. But the way I see it, we either:
- stay put in our nice house in a pretty village. get a 2nd job each, quit our hobbies, don't heat the house, delay expanding our family.

- sell. Get a rental at a price we can afford even if it increases. Move further into the city to reduce our travel costs, and carry on living our lives. Rejoin the market in a few years and buy a more modest house we'll be able to afford for years to come. 

We can't be alone in not having prepared for this. Is anyone else considering this? Have you done it? Are we mad? 

MultiFuelBurner

Sadly you probably are buyers that will be hit most from the interest rate hikes only going for a two year fix.

The good thing is you are looking at the possibilities now.

If you don't mind me asking how much equity do you think you have now if you sold now.

If you are thinking of selling now what are the early redemption fees on the mortgage so factor those in as well.

Importantly you will be due a 6 month interest only period which all the lenders are signing up to (the name of the government/bank scheme of escapes me right now?

When is you fix up because if you then add the 6 months interest only scheme on that maybe the interest rates will come down by then.

What is you current fixed rate?

MatyMoo

As someone who struggled through when interest rates were 15-17%, as a single person, I think you are mad 😠 I worked two/three jobs for about 4 years. 

I have friends in rented who are paying as much as my mortgage was & keep having to move as more and more landlords sell up. It’s costing them at least a grand to move each time and they are paying more rent for a smaller property now than they were two years ago. 

If there is a possible way to keep your home, do it!

thebratprince

MultiFuelBurner said:

Sadly you probably are buyers that will be hit most from the interest rate hikes only going for a two year fix.

The good thing is you are looking at the possibilities now.

If you don't mind me asking how much equity do you think you have now if you sold now.

If you are thinking of selling now what are the early redemption fees on the mortgage so factor those in as well.

Importantly you will be due a 6 month interest only period which all the lenders are signing up to (the name of the government/bank scheme of escapes me right now?

When is you fix up because if you then add the 6 months interest only scheme on that maybe the interest rates will come down by then.

What is you current fixed rate?

Thank you. Yes, even though it seemed like a good choice at the time I'm kicking myself! So in answer -

We currently have two products on the go. Our old house was bought via HTB on a longer fix, so TLDR that was the best option for us at the time. The interest rates are 1.8 and 2.8 I believe.

Fix ends in September 2024. Going to start looking at new deals in the Spring.

If we sold before our 2 year fix ends, we'd be looking at walking away with about 50-60k. We have about 5k in savings right now and enough to cover fees. 

I'll admit I don't know that much about interest only payments, but our financial situation won't be any better in the space of 6 months so unless I'm mistaken, that might be just delaying the inevitable! 

Grateful for opinions. 

Herzlos

You're almost certainly going to be paying more for an equivalent rental than you'd pay in mortgage, and you'd also be easier to evict, so I'm not sure that'd help.

You're probably going to be better putting up with it or downsizing.

turnitround

We did it some years ago. Went through a bad time and had a lot of debt. We were advised by Stepchange to sell our house. Terrible advice and I wish we had never gone to them but was in such a state with worry that we believed we were doing the right thing. We found a rental and settled, then after 18 months the landlord sold up and we had to move. Found another rental and had a rogue landlord, visits from bailiffs for him and endless problems so had to move again. Found another place and after 3 years landlord sold and had to move again and by this time we were paying out more than or original mortgage.
If you can face keep having to move and having little security with a very young family then sell up but I would advise you strongly against it. There is nothing worse than not knowing how long you are secure for in a property and each time you move you have no idea what you are going to be facing. Hang on to your own home at all cost if you can.

thebratprince

I totally get it when it comes to being less secure. I grew up in rentals and rented for 6 years with my husband before we bought. But honestly I think that experience is why it doesn't scare me. Maybe it should.

We have considered downsizing as the 2nd best option. Buying and selling simultaneously was unbelievably stressful last time, hence our reluctance to do that. 

MultiFuelBurner

thebratprince said:

MultiFuelBurner said:

Sadly you probably are buyers that will be hit most from the interest rate hikes only going for a two year fix.

The good thing is you are looking at the possibilities now.

If you don't mind me asking how much equity do you think you have now if you sold now.

If you are thinking of selling now what are the early redemption fees on the mortgage so factor those in as well.

Importantly you will be due a 6 month interest only period which all the lenders are signing up to (the name of the government/bank scheme of escapes me right now?

When is you fix up because if you then add the 6 months interest only scheme on that maybe the interest rates will come down by then.

What is you current fixed rate?

Thank you. Yes, even though it seemed like a good choice at the time I'm kicking myself! So in answer -

We currently have two products on the go. Our old house was bought via HTB on a longer fix, so TLDR that was the best option for us at the time. The interest rates are 1.8 and 2.8 I believe.

Fix ends in September 2024. Going to start looking at new deals in the Spring.

If we sold before our 2 year fix ends, we'd be looking at walking away with about 50-60k. We have about 5k in savings right now and enough to cover fees. 

I'll admit I don't know that much about interest only payments, but our financial situation won't be any better in the space of 6 months so unless I'm mistaken, that might be just delaying the inevitable! 

Grateful for opinions. 

So only one fix ending September 2024.

So my proposal was to let you fix ending September 2024 revert to variable and take advantage of the the following scheme that will not affect your credit score

https://www.gov.uk/government/news/chancellor-agrees-new-support-measures-for-mortgage-holders

It effectively gives you til April 2025 to find your next fix and by then we could all be in a better place.

It just gives you a bit more breathing space and to see what's happening with interest rates through 2024.

thebratprince

MultiFuelBurner said:

thebratprince said:

MultiFuelBurner said:

Sadly you probably are buyers that will be hit most from the interest rate hikes only going for a two year fix.

The good thing is you are looking at the possibilities now.

If you don't mind me asking how much equity do you think you have now if you sold now.

If you are thinking of selling now what are the early redemption fees on the mortgage so factor those in as well.

Importantly you will be due a 6 month interest only period which all the lenders are signing up to (the name of the government/bank scheme of escapes me right now?

When is you fix up because if you then add the 6 months interest only scheme on that maybe the interest rates will come down by then.

What is you current fixed rate?

Thank you. Yes, even though it seemed like a good choice at the time I'm kicking myself! So in answer -

We currently have two products on the go. Our old house was bought via HTB on a longer fix, so TLDR that was the best option for us at the time. The interest rates are 1.8 and 2.8 I believe.

Fix ends in September 2024. Going to start looking at new deals in the Spring.

If we sold before our 2 year fix ends, we'd be looking at walking away with about 50-60k. We have about 5k in savings right now and enough to cover fees. 

I'll admit I don't know that much about interest only payments, but our financial situation won't be any better in the space of 6 months so unless I'm mistaken, that might be just delaying the inevitable! 

Grateful for opinions. 

So only one fix ending September 2024.

So my proposal was to let you fix ending September 2024 revert to variable and take advantage of the the following scheme that will not affect your credit score

https://www.gov.uk/government/news/chancellor-agrees-new-support-measures-for-mortgage-holders

It effectively gives you til April 2025 to find your next fix and by then we could all be in a better place.

It just gives you a bit more breathing space and to see what's happening with interest rates through 2024.

Ah so both the fixes end in September, sorry wasn't clear. Would that course of action still work? Are we expecting things to be much better by 2025?

MatyMoo

thebratprince said:

I totally get it when it comes to being less secure. I grew up in rentals and rented for 6 years with my husband before we bought. But honestly I think that experience is why it doesn't scare me. Maybe it should.

We have considered downsizing as the 2nd best option. Buying and selling simultaneously was unbelievably stressful last time, hence our reluctance to do that. 

Don’t underestimate how many landlords have sold up or will consider doing so as interest rates rise. Renting really is becoming less & less secure. 

Emmia

thebratprince said:

I totally get it when it comes to being less secure. I grew up in rentals and rented for 6 years with my husband before we bought. But honestly I think that experience is why it doesn't scare me. Maybe it should.

We have considered downsizing as the 2nd best option. Buying and selling simultaneously was unbelievably stressful last time, hence our reluctance to do that. 

Was that renting, before you had kids?  whilst you grew up in rentals, I'm not sure that needing to potentially move frequently is that great - plus, the rent could become higher than your mortgage, and you'd be paying off someone else's mortgage, rather than your own and/or benefiting from any increase in property values if you went interest only...