Redundancy looming - need to buy/rent a new house - what to do?

PastaFasta

I have never been on here to ask a question before, but I have followed a lot of the principles contained on MSE to pay down and avoid debt, and the crises they cause. But have now been hoist by the petard of not having a mortgage I can port to another house. 

My other half has been notified of redundancies looming and that she's for the chop. That much is official and the lead-in time is somewhere between 4 and 6 months. Nothing is set in stone yet date-wise, but as it appears that outsourcing ate her job, I can't see any chance of her being re-hired unless she moves to the Southern hemisphere. Or, if she is re-hired, it'll be on a contract basis to oversee transition to off-shore. 

She has been there 19 years so it will be an adjustment, but it seems quite likely that she will be able to still get a job in the UK market, (with her skills and a drop in salary). However, the redundancy payment is too good to just jump ship, and the possibility of consultancy means hanging on, too as she won't be able to do it if she has a new job. Although I work, my work is so precarious and already being impacted by AI, that to all intents and purposes, I am not currently in paid employment. This complicates matters, too. 

This is not a crisis, for which we are extremely grateful. But it is a pain in the neck because we are bursting at the seams in our small paid-off house, and had been intending to move either into a larger rental property if one came up, or a buy a bigger house using our equity from the sale of this house, and a mortgage. We can't extend because of planning restrictions. 

Where can I find information on what we need to disclose when renting, and how people in our position manage it, (I mean we could probably pay a 3 year's rent and bills from the redundancy,  savings, and renting out the house we own). But is that a thing? To allow someone to rent without secure future employment at the moment they apply? Do we even bother disclosing it, as we know from our planning that we can cover it, and we have a home to return if needs be? 

And what about mortgages? When we last applied for a mortgage, we were both in full-time employment, and had our pick of products. Who do you go to for a mortgage if you're employed now, but know that you won't be by the time the house completes, but have a year's worth of repayments sitting in the bank and a low Loan to Value? 

This is not something anyone else in our family has dealt with and both sides still have trauma from the Thatcher/Major years with 17.5% interest rates, endowment policies, negative equity and a complete trap that lasted decades. So they can't offer much more than horror stories and advice to stay put, (which is all they could do back then to avoid losing the chance to ever own a home). We are vastly more fortunate than they were when this happened to them, and we are so grateful for that. But we do need to do something. 

Thank you for reading this. I would really appreciate any input on this. My wife works so hard and is such a good provider. I want to really step up and do my bit with the financial planning, as she navigates what looks like being a pretty torturous redundancy process. 

Herzlos

Talk to a mortgage broker and see what kind of mortgage you'll be able to get from your salary alone, it may not be as bad as you think.  Remember if the redunancy happens, a chunk of the payout could go towards the deposit. You've also got the value of the smaller house. 

You'll still be in a better position than a lot of people in terms of upsizing. 

Bigphil1474

Your partner is being made redundant and you are basically unemployed and you want to go from a mortgage free property to a mortgaged property so you can buy a bigger house? Being totally blunt -  listen to your family, I think they are right. 

Also, if you could afford to pay 3 years rent and bills from the redundancy, why not just use that and proceeds from your sale to fund a bigger property within that budget? I remember the interest rates from the 90s at the earliest, so obviously borrowing is a risk. We took out a 5 year fix purely on that basis and we're ahead at the minute, but I think you would be on very dodgy ground if you apply for a mortgage knowing your household income could drop to basically £0, never mind the risk of interest rises. Not a risk I'd take. 

You could look to rent a property, but it's likely that a larger property would cost more than you would gain in rent from your own property, not to mention the faff of being a landlord. However, a landlord might be happy to take you on if you offer enough rent in advance etc. I've never rented so can't say, but I do know good private rented properties are like hens teeth in some parts of the country at the moment so might be worth looking at what's available before deciding. 

One final thing - when we moved last year we did a huge declutter. We actually cleared so much space, we were half tempted to not to move (still glad we did). Is it worth having a clear out and see if you can make your current property more suitable?

EssexHebridean

OK - so if we take it hat it *may* not be possible to move right now, what options are there for your current property?

How many of you are there -v- number of bedrooms, as a starting point. How many reception rooms do you have? Is it possible that some sort of remodelling might make the property work for you as a family for longer? 
If the issue is that while there is rom for everyone to sleep, there isn't space for recreation, how about a poshed-up garden shed which could be used by the kids for their downtime plus things like doing homework? 

You mentioned that planning restrictions are stopping you from extending - does that include going up into the roof as well as out?

PastaFasta

Thank you for your replies. Actually the decluttering is a good point, EssexHebridean and Bigphil1474. I think we might be able to make more space, that way, but as is stands I am not sure we will get enough space from converting the nasty old Victorian shed into something usable, but I am going to go and have a jolly good stare into it and see if I am just being unimaginative. There is probably stuff in there that I thought that we would find space for when we upsized, that could just be given/thrown away and maybe conversion is a possibility. 

Sadly Herzlos, I have no reliable earnings, (which is one the reasons we pushed to get debt free).

The redundancy payment won't cover the amount we would need in order to upsize without a mortgage, Bigphil1474 We are the cheaper end of our size house in this market, (cheap and badly located but enough space for our growing family, or so we thought), and we really need to go up to more bedrooms. But, because we are mortgage free and live pretty frugally, (with more space to tighten belts), it will cover bills for quite a while if we rent, but, thinking about it, we would never be able to fix with the type of mortgage we might be able to get with such uncertain circumstances. 

Thank you all so much for replying so kindly. Looking at it, renting seems a ridiculous waste of money when you have managed to be mortgage and debt free. Sometimes, it gets me down being so cheek by jowl with the family, but I wonder if being less cheek by jowl with our possessions might be a first step, and then maybe things will become clearer. 

oystercatcher

It's definitely worth thinking laterally. I had to downsize due to divorce , then the three small children turned into lumping great teenagers and needed their own space . We had an extension on the back for living space and then were able to divide the old living room to make a downstairs bedroom. I know you said you can't extend but maybe rooms could be divided and rearranged ? Do you have high ceilings where a platform bed/room could work ? Or as mentioned , space in the loft or garden. Remember this is just a phase too, jobs come and go and children grown up and get their own places...we now have all our downstairs space back but it helped them study and get their exams etc before they vanished . Being mortage and debt free is an amazing thing so don't give it up lightly.

RAS

Also really think about what employment you could get. Every £1k you earn below the personal allowance is tax-free, whilst a lot will be deducted from your OH's income. 

Bigphil1474

OP, if you've space in the garden for a Victorian shed, have a look at some of the new garden office/living type buildings on the market. We were looking at them, and they offer some good options for all year round use. Obviously a huge range in price, but maybe give you the extra living space you need , possibly without any PP required.