Your opinions please...! **SEE OUR REPLIES & DECISION ON POSTS 39 & 41 **

Cheddar_2

Hi all,

Hope you can all offer some words of advice for our situation... I can't sleep because my mind's so active all night pondering what to do! I just need some opinions to help push my decision in the right direction! :rolleyes:

My wife and I have a duplex apartment which was bought for £190,000 four years ago. We have since had a daughter and due to lack of space (and no garden) we would like to move to a house in an area with good schools.

Since we bought this place, apartments have been springing up everywhere and although now on the market for £162,500, the estate agent reckons we'll only get £150,000 for it (it has been on the market for 18 months, with only one viewing). Our mortgage is for £140k

We have been advised to take the apartment off the market, rent it out, and take out a 2nd mortgage on a house. In doing so, we would be about £100 per month short of the apartment mortgage and management fee, so we would have to make that up ourselves. We could then hold out for a few years until such a time as the market picks up and we can sell, hopefully recuperating some of the money we paid originally.

We have found a house we really like, priced at £200,000. The owner openly said that she'd be willing to accept £190,000 as an absolute minimum, which was great, but we still feel we can get this down some more.

My main concern is the falling property market, and the fear that we may buy at say, £187,000 and then the prices fall further, leaving us in exactly the same predicament we are now, but on TWO properties.

My wife has her heart set on this house we've seen, and so I feel her decision is being made through rose-tinted glasses :cool:

What do you think we should we do?!!! :mad:

**WIFE'S COMMENTS ON POST #8**

**REPLIES TO YOUR COMMENTS ON POST #39**

**THE VERDICT ON POST #41**

seven-day-weekend

I personally would stay where I was until there is some more equity in your apartment.

Or, let it go for whatever you can get for it and then stay in the next house until you have some equity in that.

I certainly wouldn't want to risk two properties being in negative equity.

I don't know whether that is the best advice, but that is what I would do.

Mrs_Thrify

Good morning, reading your notes, I would not move untill you sell house one. Buying house two in advance could put you on the road to big time dept. I would contend with taking the child on walks or to the duck pond/swings until such time things improve. It is depressing, I am also there. No one wants to buy, hang on in a bit longer.;)

Biggie

this will not be possible unless the yield on rental is really good.

You will probably only be able to remortage at about 70%-80% giving you very little to pay back on your main mortgage. i,e You will still have to make the shortfall on your current mortgage for your to get a mortgage for your new home.

I would at least consider selling so that you can pay your mortgage i.e 140k then assuming you have a good deposit put a side purchase your new property.

If you don't have a good deposit for your proposed new home I would advise against it.

Don't get into a life style that you not ready to afford. You will be very stressed and unhappy.

merlinthehappypig

I'd go with the opinions so far.

Becoming a first-time landlord and having to worry about two properties potentially reducing in value is only going to add to your stress.

I can't see the rental yield coming close to covering your costs either. The apartment mortgage and management fee will not be your only costs. You will have internal maintenance, letting agents fees, two lots of home insurance. There is bound to be more, but some of the landlords on the board will tell you better than I can.

You almost certainly won't be able to let it on your current residential mortgage, so will need to take out a commercial BTL mortgage. With the way things have tightened with lending recently I suspect that, on the information that you have given so far, you won't have enough of a deposit to qualify anyway. The interest rate may be higher as well. Bear in mind that you will also have to pay CGT at whatever rate the Government have decided by then when you come to sell.

Sorry to be negative, but it does look a total non-starter.

sishort

I'd have to say that I agree with the majority. Getting into possible negative equity on 2 properties is a big risk to take.

I'm in the same situation, but have to move because of work. We can't seem to generate any interest in our flat, but are now considering renting it out and then renting something in London where my girlfriend and I now work.

Not sure what anyone thinks about Let-to-Let situations?

Jorgan_2

Another one agreeing with the majority, why put yourself under all the stress off having two mortgages & the possibility of both properties going intonegative equity.

If you can afford to take on a second property why not look into making overpayments on your existing mortgage? If your lender doesn't allow you to make overpayments, pay the monthly overpayment into a savings account so you can pay a chunk off the mortgage.

Cheddar_2

My wife's comments:

My thoughts are that even if the house prices drop over the next few years, they will at some point start to rise again as they have in the past. If we rent our apartment, which we should be able to do, we should be able to cover the mortgage with the rental payments. We would have to pay the management charge of £877 (yearly) but I would rather do this for the next 3/5 years or for however long it takes for the price of the apartment to rise again, rather than losing £30000 if we sell at £160000. Selling just seems to be a waste of money and house prices will not drop forever!

With the house that we have seen, it is in a really nice area with good schools on the edge of greenbelt. I am sure that if house prices drop, they will drop less in this type of area than in less desirable areas. Again, if they do, we can just stay put and be happy in our house until they rise again. The 5 year fixed rate deal we have been offered will secure peace of mind and I’m sure that the house market will be showing signs of recovery (or even already recovered) by 2013!

Thanks to our savings over 2007, we have a deposit of £10000 for the new house. We were also able to pay £8500 off the mortgage on our apartment last year. I hope that over the coming years we will be able to pay chunks off our mortgage to help reduce our debt. If things become a bit tight then we will just have to cut down on our spending!

My husband is quite rightly worried with everything that’s being said on the news and the internet. He is definitely a ‘head’ person who likes to gather lots of information to the point that he confuses and overwhelms himself, hence the sleepless nights!

However, life is short and if you spent all your time worrying about everything, you would never do anything! This could be a bad decision or it could be a great decision. I’m not naive, I will be prepared to wait to see what happens with the BoE rates and mortgage deals over the coming weeks but I really don’t think looking at the long term that it’s a bad idea. Our Stocks and Shares ISA has probably took a battering but my husband hasn’t even mentioned it! People accept falls in stocks and shares and that investment in this field should be for the long term but isn’t that true of the houses we buy too?

Doozergirl

The £30,000 or £40,000 of equity you have lost, has gone. If you want house prices to rise, it doesn't matter what property it is that you own, you don't have to wait with the equity that you do have in exactly the same property - it won't be the same £30,000 that comes back to you, serial numbers checked. Do you see what I mean?

If you buy another house for £190,000 you can wait for that to increase by £30,000 instead.

It wasn't falling house prices that cause your apartment to bomb, it was the fact that many of these developments were vastly overpriced by the developer in the first place, especially around the time that you bought. House prices on the whole have barely even started falling. If they do go - you're in trouble big time.

What you are doing is gambling with money you don't have on an already losing horse. Keep one roof over your heads, one mortgage and hope that one day you'll see your money back

Trollfever

(it has been on the market for 18 months, with only one viewing).

Congratulations!

You must hold the record for this Forum for the longest time with fewest viewings.

Cut your losses and get out.

Rick62

The fact that you think your small flat should be worth as much as a really nice 3 bed house in a good area well placed for schools should tell you something. Unfortunately it looks like you overpaid for the flat. You also need to ask what the EA is playing at, 1 viewing?

When the market turns down its not usually for 3-5 years, thats how long it falls for then its the same again before it starts rising, so you should only keep the flat if you are prepared to subsidise it for maybe 10 years.

Otherwise sell it for what you can and then buy the house.