Selling, then renting for a few years

foolishqueen

Hello Everyone,

I'd like some advice on my current thoughts, and whether or not it's a sensible or foolish thing to do.

I bought my first house last year on a 5yr fix with NR Together mortgage. In my haste to get onto the ladder and wrap up my existing debt, the unsecured element of the Toegther mortgage is around £29000:mad: My mortgage is over 35 years.

Once my fix expires, the rate on the unsercured bit goes up to SVR+8%. At todays rates that would be 16.69%, making the unsercured payments go from £168 to over £400. I don't believe there is anything I can do to stop this, and with such a long term, the loan would probably be around £27/28k.

My thoughts are this: I bought my house for £98.5k with my current mortgage at £93k, but a recent valaution put it at £115k. Assumuing I could get £110k (big assumption I know) and after deducting redemption and discharge fees, would leave roughly £10k.

I could pay this off the unsecured element, and then rent somewhere cheaper for about 3 years whilst I overpay like crazy (again, assuming I should be able to do this with upcoming pay rises/promotions/girlfriend getting bettr job etc). By my rough reckoning I could have it cleared in 3, maybe 4 years. This woul leave me a clean slate to get back on to the property ladder with.

I think I was foolish to take on this mortgage. Ic an afford it now, and by the time the fix expries I'd probably be able to afford the increaed loan payments, but with still such a big loan hanging over me, the ability to move to better house and all that stuff, is reduced because of the outstanding borrowing.

Whilst I wish I could turn back the clock, I can't. But what I want to do is take the best course of action now and be proactive about things, rather than think I've got a few years left to sort it out.

Any comments/thoughts welcome. Just thought, I'm assuming that I could still overpay the unsecured loan with NR even if I redeemed my mortgage, as I know I can do that at present.

Thanks.

fc123

foolishqueen wrote: »

Hello Everyone,

I'd like some advice on my current thoughts, and whether or not it's a sensible or foolish thing to do.

I bought my first house last year on a 5yr fix with NR Together mortgage. In my haste to get onto the ladder and wrap up my existing debt, the unsecured element of the Toegther mortgage is around £29000:mad: My mortgage is over 35 years.


Any comments/thoughts welcome. Just thought, I'm assuming that I could still overpay the unsecured loan with NR even if I redeemed my mortgage, as I know I can do that at present.

Thanks.

1; Are you content living there?
2; Can you afford it PLUS overpayments? You said yes.
3; if the above are correct...I'd stay and keep life simple.

foolishqueen

fc123 wrote: »

1; Are you content living there?
2; Can you afford it PLUS overpayments? You said yes.
3; if the above are correct...I'd stay and keep life simple.

Thanks for the reply. In answer to your questions:

1. Not really no, so this is a factor for my current thinking. Happy to provide details if if helps people with feedback.

2. I can afford either option, dependant on my partner getting more hours/better paid job. Again an assumption that could take some months to bear fruit.

3. Yep, staying would be the easier option.

However, if I sold, paid off a lunp sum from the unsecured loan, and kept paying it back at the level I do now, it would be gone in about 12 years. If I choose to stay, I won't have the lump sum. I could overpay say to the tune of the equirty I would release by the time my fix is up, but then I'd still be in a position of having half the debt hanging around me, plus at a much higher rate (although I could guess I could sell then if I wanted - but I suppose point 1 is a big factor here).

Another thing I forgot to mention, is that my current house needs a bit of money spending on it - new windows, dormer window needs replacing (100 years old and falling to bits), chimey leans alarmingly. If I had to save up to do this work, I wouldn't be able to overpay, so surely I'd be worse off. But maybe this is countered with any vlaue I would add to my house.

So you can see why I'm not sure which way forward is best!:rolleyes:

Thanks.

Doozergirl

Is your mortgage £93,000 plus £29,000?

You dont have to stick with NR after the term. Why don't you remortgage for as much as you can at the end of the term and then take out a seperate unsecured loan for the rest at 6.9% or whatever is the going rate? Maybe the total repayments will be the same as the SVR plus bits, but the actual loan will be paid off far, far quicker.

The best thing to do at the end of any fixed term is to remortgage!

You need to speak to a mortgage broker before you make any decisions. Let your decision be a properly informed one.

foolishqueen

Yes - looking at my last mortgage statement form September, total outstanding is £129,499 (withonly £77 capital being paid off the unsercured loan ober 3 months!).

I guess, having been in debt for a long time, the thought of being able to pay off a reasonable chunk is tempting and worth th hassle.

Ironically, if I'd never bought I would have been clear of my original debt (about £22k) within the nest 4 years anyway. You live and learn I guess.

Thanks.

foolishqueen

Anyone have any other thoughts? Sorry for the shameless bump!

foolishqueen

***bump***

foolishqueen

Hello everyone,

I know it's probably anti-social to keep replying to your own post, but doesn't anyone have andy more advice? I would really appreciate any thoughts, be they good or bad, so I can make a better informed decision.

Thanks again everyone.

churchrat

hi
I suppose it really comes down to what you would get for it. How are other places selling in your street? what is an average price for a house that needs lots of work? have you looked at the competition?
would you sell if there was no money to put towards the loan?
good luck-- keep in touch

foolishqueen

Yep, that's veruy much the case. Anything less than £110k would not make it worth my while financially. But as I replied to someone earlier, not being happier here, what price do you put on that?

fc123

I feel , from reading between the lines...and it's a Friday, my wine night, so forgive the typing and random thoughts, that you really want to sell up, realise any equity and get shot of the debt?
But deep down, you feel that this may not be the right thing to do long term?

I am rubbish at fixes etc (as am old school; boring repayment on variable rate) which is why I asked if you are content with the "now!?

If you are, but feel it would be better without the debt...the dilema being that the debt cannot be shot without selling....then you are in a bit of a spot.

What bothers you more?

The debt?
or The place you live in?


I know there are HIP costs now (do they apply to you?) but you could

Put on the market...see what happens @ £110k...if nothing, then pay down the debt, live on brown rice and, one day the effort will pay back...trust me. I am an old person (errr when was 44 considered old?)

Hope this helps:D