Do we down/upsize?

eegreen200188

In June last year myself and my o/h brought an appartment for £145k. We both worked for a bank at the time and didnt have a deposit, so if we wanted to borrow 100% we could only reach up to £116k, with a 5% deposit we could go up to £187k. So we found a new build site which gave us 5% deposit paid and free legals.

In our area the average price of a 3 bed house is £120k, we have a 2 bed 2 bath apartment which is now valued at £150k. And our mortgage is £137,300. Which we are paying £660 per month.

We have seen a house on the market for £119,950, which is absolutly beautiful and we are wondering whether to put ours on the market.

We have worked out that the estate agent fees will be around £3000 and sols £1000, then the valuation fee to move will be £215 and the HLC £3090 both of which we would add to the mortgage. If ours sold at £145k we would have £7700 equity, £3700 after the estate agent and sols fees are taken out, then our new mortgage will be £123,255, meaning the mortgage payments will be £595 per month.

We could then use the £3700 to pay off our debts...... which are listed in my signature. Then we have an addional £65 per month to put away also.

Would you say that this was a realistic cost of what we are looking to do or are there any hidden costs, such as transfering the sky, electricity, etc.

Should we put ours on the market now???

Any advise would be welcomed as we want to shift as much debt as we can in the next 2 1/2 years.

Em
xxxx

wydsiwyrg

Hi Em,

It looks to me like you've done your sums wrong:

145 - 137.3 = 7.7k

you've now got no mortgage and 7.7k in cash out of which you've got to pay 4k for fees

7.7k - 4k = 3.7k

Why/how would you then take out a 123k mortgage against a 119k house?

Wouldn't you need to use that 3.7k as a (very small) down payment on the house; although that doesn't reach the 5% target, and therefore would fall into the sub-prime bracket; with associated high interest rates.

Are you aiming to go Interest Only, or Repayment?

Are you I/O or Repayment at the moment?

Why do you want to downsize, is it to save money to pay off your debts, or is the house totally above your means?

Hope this helps.

silvercar

Things to check:

1. What have flats like your actually sold for. Check nethouseprices or similar. Houses may have been advertised at 150k but have they achieved this?

2. Is there an early redemption charge on your current mortgage?

3. What sort of mortgage deal can you get. What really worries me is that you are looking for a mortgage value higher than the purchase price. There are very few lenders that will do this in the current climate.

4. On paper a £150k property with a mortgage of 137k looks better than a 120k house with a mortgage of 123k. All your equity has been swallowed in the move. I know your payments will be lower but you have given up a lot of equity to deliver that.

5. Modern flats have much lower heating bills and maintenance than older houses. Your other costs will increase.

6. You would be putting your home on the market (and paying for a HIP) in the hope that you get near asking price, anything below £140k and it really wouldn't be worth while moving.

eegreen200188

Well were on a 5.79% 95-100% mortgage anyway... staff rate. Which means that we can go up to 100% and the HLC is automatically added, and we can choose to add the £215 valuation fee to the loan then too... i know that we will be in negative equity but once the unsecured debts are cleared then we will be paying an addidional £370 off the mortgage or loan each month... i just wanna shift the credit cards overdraft and my mum... which is £6787.95.

In 2 1/2 years time we would be looking at moving to a house then... its whether we hang on... try and pay off £21k in the next 2 1/2 years and then have the ability to get a bigger house as we would have £150 which we are paying off the credit cards, £220 which is what i save to pay off debt anyway... and £225 from the loan... and the £200 per month we have to spend on ourselves.. so we will have an additional £795 as spare money... which means that we could up the mortgage.

Its just a thought at the moment.

Another idea i have is to sell my 52 plate toyota which is going for around £5500 on autotrader and buy a little 04 plate ka which i have seen for £1995, that was i am getting a more relable car as far as the age, lowering my insurance and getting £3500 back to pay off my debts....

Thoughts are running through my head.. im desperate to pay off my debts.

wydsiwyrg

Why not get a £700 VW Golf - nice old plate, but reliable as hell, and not worry about having a new car!

eegreen200188

Am i being silly with this and should i wait until the mortgage is up for renewal in 2 1/2 years time, and do everything i can to get rid of the £21k. I know that if i can pay off my credit cards then I will have an additional £150 per month that we can put towards paying off the loan.

eegreen200188

Only problem with that is that i drive 20miles a day to get to work.... if i do change car i wanna get something newer.. even if that means i downgrade in model of car (but upgrade in the age). My insurance will drop £250 per year anyway by doing that!

wydsiwyrg

Em - seriously, having a cheaper car you will be able to chuck £5000 of what you sell your car for at debt.

We do more miles than most people I know (my wife drives 55 miles per day to University, plus I commute to London often); last year we clocked up 37000 miles. In our £465 pound Fiesta, we've had to pay out £200 quid in the whole year for maintainence, peanuts for the amount of use we've got out of it!

You don't need to have a new car to do what you're doing; and it will give you a whole lot of money to chuck at your debt. (£1500 extra)

eegreen200188

I set up a fixed rate monthly saver in December with West Brom at 7.85% and so far I have managed to put in £540. I should be recieving £625 bonus from work (which will be taxed) im putting £20, which is another £220 before December, away a month from my £100 spending money that I am left with after all the bills come out. And we have a LOAD of stuff to sell... bedroom furniture (£250) sofa (£100) Marvel figures (£200) Sax and flute (£380) Guitars (£100) Spanish Discs (£50). Then I have got an additional £100 coming from my premium bonds and £98 pounds from expenses from the company. Which is a total of £2663... whoop! AND as from Feb i will be getting a pay rise of £200 net per month which until December is £2200. So I expect my grand total to be £4863....

So I have decided that I will try to raise £5000 this year, but if i get any extra then great. I have a total of £7085.97 on credit cards, overdraft and mum, but with my credit card payments of £150 per month that should add another £1650... totting it all up to £6513, meaning im only £572.97 off paying off my priority debts.

The as from Jan 2009 we only have 1 year and 6 months until our fixed rate comes to an end.....so at the end of that period we should have £11,300 redemption figure on our personal loan and the remainder of ther priority debts.... so over 18 months starting next year I want to aim to save up £15,000. (£5000 every 6 months)


this is what i aimed to do for the 20k by december challange..... But our gym membership runs out too in Aug.. so that will be an extra 2 years of £60 per month - £1140, and if i can exchange my car thats an extra £3500, then i will have £8280 from my £150 to credit cards - i should have them payed off my April next year, and my mum and overdrafts... and also my £220 per month savings... so that equals a grand total of £1140+£3500+£8280+£7087.67 = £20007.67... which will mean that i will be nearly there when we come to remortgage....

Is this a better idea????

anniestar

Slightly off topic(sorry) I agree re car. We have a 16 year old car:eek: DH commutes 30 miles each
way Mon-Fri no problem. Insurance (fully comp) is less than £300 per year.
By the way good luck re the flat/house.