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Sell up and wait until the strom has blown over?
geeba88
Posts: 247 Forumite
Hi All
We've been in the process of looking to move to a larger property (3 kids in a 3 bedroom is proving a bit of a squeeze). In truth though we'd be stretching ourselves to buy a 4 bed in the area we'd like.
I never thought i'd entertain the prospect, but with all the doom and around house prices i'm starting to wonder if it would be wise to sell up now, find a decent rental property and sit tight while the house price "correction" run its course.
Rough calculations would seem to suggest that interest on the sale proceeds would more or less cover rental costs in our area The dream scenario obviously being that a year or two down the line we'll be able to consider the properties that are just of reach at present.
Has anybody else done / thinking of doing this? Any thoughts/comments on the wisdom of such a move appreciated.
ps - In case you are wondering, a "strom" is a really, really bad kind of storm.:o
We've been in the process of looking to move to a larger property (3 kids in a 3 bedroom is proving a bit of a squeeze). In truth though we'd be stretching ourselves to buy a 4 bed in the area we'd like.
I never thought i'd entertain the prospect, but with all the doom and around house prices i'm starting to wonder if it would be wise to sell up now, find a decent rental property and sit tight while the house price "correction" run its course.
Rough calculations would seem to suggest that interest on the sale proceeds would more or less cover rental costs in our area The dream scenario obviously being that a year or two down the line we'll be able to consider the properties that are just of reach at present.
Has anybody else done / thinking of doing this? Any thoughts/comments on the wisdom of such a move appreciated.
ps - In case you are wondering, a "strom" is a really, really bad kind of storm.:o
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We've been thinking about doing something similar or just downsizing to a smaller property. The rent would cost us more than we are paying on the mortgage at present so it isn't really cost effective for us and we don't need a bigger house, it was more a case of potentially buying a similar property with no mortgage that lead me to play around with the figures.
As a result, we are staying put, well for now anyway.0 -
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is your loft suitable for conversion to add an extra room? I hear the rules regarding building regs on these are being relaxed in October-ish. If the area you're in is a good one, why not just expand what you've got?IT Field Service Engineer, 20 years with screwdriver and hammer
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It's a big decision.
Financially it might make sense if the interest covers the rental costs - presumably you will save the mortgage payments as well, plus maintenence, buildings insurance and so on so ought to be a lot better off. If house prices reduce, as seems likely, then you might get a better house for the same or less money.
It's not just a financial decision, though. You need to ensure that the kids can stay at the same school. Bear in mind that you might need to change houses if the LL doesn't renew the lease agreement as well.
Whilst renting releases you from some of the obligations of property ownership, it's not your house and you won't have the freedom that owning your own place gives you.
Just think about it seriously and look at the downsides as well as possible benefits and make your decision rationally.
We sold to rent last year and don't regret it for one moment. We are way better off and house prices are definitely on the way down, but it's not for everyone.0 -
merlinthehappypig wrote: »It's a big decision.
Financially it might make sense if the interest covers the rental costs - presumably you will save the mortgage payments as well, plus maintenence, buildings insurance and so on so ought to be a lot better off. If house prices reduce, as seems likely, then you might get a better house for the same or less money.
It's not just a financial decision, though. You need to ensure that the kids can stay at the same school. Bear in mind that you might need to change houses if the LL doesn't renew the lease agreement as well.
Whilst renting releases you from some of the obligations of property ownership, it's not your house and you won't have the freedom that owning your own place gives you.
Just think about it seriously and look at the downsides as well as possible benefits and make your decision rationally.
We sold to rent last year and don't regret it for one moment. We are way better off and house prices are definitely on the way down, but it's not for everyone.
You're right, it's a massive decision which would require some serious number crunching, plus as you say, the psychological shift from being an owner occupier to a tenant.
I just need that crystal ball that confirms that prices will drop significantly over the next couple of years!0 -
You're right, it's a massive decision which would require some serious number crunching, plus as you say, the psychological shift from being an owner occupier to a tenant.
I just need that crystal ball that confirms that prices will drop significantly over the next couple of years!
The psychological shift is great to begin with. All these potential problems and none of them your responsibility. I'll admit that I am starting to itch for a bit of DIY after 13 months.
Bear in mind when number crunching that you need to be very careful about spending. All that money in the bank can be very tempting.0 -
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I'm thinking of doing this but don't think I've the bottle.0
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We've been thinking about doing something similar or just downsizing to a smaller property. The rent would cost us more than we are paying on the mortgage at present
Curious. Always interested to hear where in the country this is the case in these times of high prices (with which rents have not kept pace at all!) - did you include the interest you would earn on the equity you'd release by selling (if any) in your maths, or just the mortgage vs the rent?Hurrah, now I have more thankings than postings, cheers everyone!0 -
Sounds quite normal to me. Are they extra large kids???
3 kids in a 3 bedroom is proving a bit of a squeeze
When I was growing up we had 3 of us in a 2-bed. Then latterly 3 of us in two further 3-beds (ages: [11, 2, 1] though to [18, 10, 8])we'd be stretching ourselves to buy a 4 bed in the area we'd like.
The best time for this thought was 2006-2007. But it's never too late except you're taking a different large gamble this year. In previous years the gamble was "will it really happen?" now the gamble is "by how much will it happen - and how much will I have to reduce my price by to get out in a timely manner such that any savings I make are putting me in a better position when things improve"i'm starting to wonder if it would be wise to sell up now, find a decent rental property and sit tight while the house price "correction" run its course.
Plus, you're going on the move with kids. With renting you might end up staying put, but you might be moving on a few times - and you have schools and disruption to think about. Moving costs for each move (van, some new stuff, more agent fees each time) add a different dimension.
It's more likely to be 4-5 years (or more). If the sale proceeds more or less cover rental costs then you can be shovelling away some great savings over that time. And, when it comes to mortgage again you will be taking on, hopefully, the same or smaller mortgage.Rough calculations would seem to suggest that interest on the sale proceeds would more or less cover rental costs in our area The dream scenario obviously being that a year or two down the line we'll be able to consider the properties that are just of reach at present.
However, what if in that time your employment/earnings situation changes? Or lending criteria tighten such that you can't get a bigger property after all?
I did it. But I am single. And I didn't do it to try to make money. I did it because I didn't like the house/area I was in and didn't want to be "stuck" in it in a house that wouldn't sell at any price because nobody was looking and there was an over-abundance of properties there.Has anybody else done / thinking of doing this? Any thoughts/comments on the wisdom of such a move appreciated.
ps - In case you are wondering, a "strom" is a really, really bad kind of storm.
If you were my best friend, I'd sit and build up a big spreadsheet for you and walk through lots of scenarios. The spreadsheet would include the following (and more):
Earnings now
Losing some earnings
House prices now
Possible drops
Period of rental
Renting costs (agent fees, removals vans)
Average time in each rental before being asked to move on
Lending criteria changing, down to 3x salary
Interest rate on savings
Cost of rent
How much you can REALLY put aside each month to add to current savings
Good luck on your decision. You must do what's best for your family at the end of the day ... and nobody is you.0
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