Anyone here selling and moving to rental?

Martico

I agree that 6 months interest only is dangerous, as it kicks the can down the road and you end up with higher payments (as the mortgage terms is now shorter, but the capital to pay back won't have changed)

In your position, I'd work out how much of a difference extending the term would make to your monthly outgoings. If you think a liveable life still won't be possible, then downsizing or finding a less attractive property might be the best option. I'd caution against renting given price pressures and insecurity 

MultiFuelBurner

thebratprince said:

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?

There are no rules that suggest you cannot take the interest only option on two products(mortgages)

Personally I expect something in the 3-4% range by then for fixes in the 5 year range. That's finger in the air and from various projections read since the Bank of England increased rates to 5.25%

As others have said, and from past high interest rates, stay on the ladder if you can and imo with the fixed rate end date and the 6 months interest only option it will give you time to secure a deal that is hopefully easier to afford.

jimbog

As rental is less secure consider the stress of trying to find a new (affordable) rental near your nursery/school

GDB2222

If you do sell, when are you planning to do that?

thebratprince

Martico said:

I agree that 6 months interest only is dangerous, as it kicks the can down the road and you end up with higher payments (as the mortgage terms is now shorter, but the capital to pay back won't have changed)

In your position, I'd work out how much of a difference extending the term would make to your monthly outgoings. If you think a liveable life still won't be possible, then downsizing or finding a less attractive property might be the best option. I'd caution against renting given price pressures and insecurity 

Yeah, I'm not sure I like the idea of paying more later and just delaying things. Renting seemed like the best choice but if I could make downgrading and buying somehwere else *not* a logistical nightmare full of stress, I'd want to do that.

Extending the term by any length would take my husband past retirement age so it's not ideal, we'd have to extend it quite a lot to make it affordable. 

TheCheerleader

We accepted an offer of £335k on our house in late March, we are near to completion now. We are going to rent for the next two years and use the interest to fund this, as we are mortgage free. 

caprikid1

TheCheerleader said:

We accepted an offer of £335k on our house in late March, we are near to completion now. We are going to rent for the next two years and use the interest to fund this, as we are mortgage free. 

Out of interest, what was the logic to leave the market in this way ? Was it a move ?.

Firm believer of go short or long in property but always be in the market.

TheCheerleader

 

TheCheerleader said:

We accepted an offer of £335k on our house in late March, we are near to completion now. We are going to rent for the next two years and use the interest to fund this, as we are mortgage free. 

Out of interest, what was the logic to leave the market in this way ? Was it a move ?.

Firm believer of go short or long in property but always be in the market.

We only owned the house for 12 months, so I suppose we went short. It was only ever a stop gap as we bought it to renovate in a sought after area. We anticipated the market falling and didn’t want to be stuck here, as it’s too big for us. We expect we will look to buy again in 2025, hopefully market will have stabilised by then.

johnhenstock

no, not even thinking about it. for what, to be at the mercy of a landlord in a market where dozens of families bid for one property? to have to pay a non-FTB stamp duty in a few years, when the market picks up again and prices will go through the roof?

not being disrespectful, but your issue is not one of equity or interest rates. your problem is that you're losing one full income and replacing it with a few hundreds of pounds a month AND that you're about to start paying nursery, which can easily be £1000+, more if you're in London.

even at relatively low interest rates, you would've been able to afford the mortgage, had your wife continued to work and you held back on having a baby. I've got 3, so I'm not judging or pointing fingers, but it's not the interest rates that messed it up for you, but family circumstances, which would've happened anyway.

I can't see any case in which people can afford to pay rent on a similar property but can't continue to service a mortgage.

Flugelhorn

Suspect with fewer landlords hanging on to their properties and letting them out and more people wanting to rent them, it could very difficult to find somewhere suitable for your family that is affordable - have been helping someone  find a place to rent  recently and the demand is huge with lots of people booked in for 5 minute viewings and many of them completing the application forms there and then