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How would you approach situation (looking to move in future)
CheeseOnToast
Posts: 357 Forumite
Right - this post is a bit messy so please bear with me.. and the story 
Basically I bought a house in Q2 2005. (Nice point of the boom..)
We paid £75,500 for the house. Unfortunately, due to being in a very very bad financial situation (due to various reasons, mainly poor financial management years before), we re-mortgaged up to £87,300 a year later to pay off existing debt (Property was valued at 90K)
They also lumped the HLC on top of this, putting us at about 88,500.
The mortgage was taken over 40 years (to keep my payments down as low as possible).
Anyway, fast forward to now, we still owe around £87,500 on the house. Going by sales on the street, I estimate the minimum selling price at around 93K - with the market the way it is, obviously this is not a great position to be in.
But to the point, we are aiming to move to a better area, and hoping to do this within three years.
At present we have no savings and high LTV in the property so to rectify this, I have just reduced my mortgage term to 25 years.
This will see my remaining balance at around 82K in three years time.
This month I also start putting between £150-£200 a month into a savings account which will yield between 6-8K in three years time.
My thinking behind this was that if house prices drop around 15% in the next 3 years, I will basically break even on the property. I will then also have about 8K deposit for my new place. I am also planning on getting some reasonably large pay increases over the next couple of years.
But anyway, do you think this seems like the best approach?
My concern is that if the markets dropped e.g. 30% (worst case thinking?) then I would be almost 10K in negative equity - I could nearly match or probably raise the cash to match that, but then be left with no deposit.
So part of me is thinking maybe I should up the mortgage overpayments by another £100 a month and drop the savings to £100 a month?
Or should I just plow as much into the house as I can, as if the prices don't drop that much, my deposit will be recoverable from the equity..
Anyway, sorry if this post is all mish mashy, and thanks for reading it all, if you did!!
Phil
Basically I bought a house in Q2 2005. (Nice point of the boom..)
We paid £75,500 for the house. Unfortunately, due to being in a very very bad financial situation (due to various reasons, mainly poor financial management years before), we re-mortgaged up to £87,300 a year later to pay off existing debt (Property was valued at 90K)
They also lumped the HLC on top of this, putting us at about 88,500.
The mortgage was taken over 40 years (to keep my payments down as low as possible).
Anyway, fast forward to now, we still owe around £87,500 on the house. Going by sales on the street, I estimate the minimum selling price at around 93K - with the market the way it is, obviously this is not a great position to be in.
But to the point, we are aiming to move to a better area, and hoping to do this within three years.
At present we have no savings and high LTV in the property so to rectify this, I have just reduced my mortgage term to 25 years.
This will see my remaining balance at around 82K in three years time.
This month I also start putting between £150-£200 a month into a savings account which will yield between 6-8K in three years time.
My thinking behind this was that if house prices drop around 15% in the next 3 years, I will basically break even on the property. I will then also have about 8K deposit for my new place. I am also planning on getting some reasonably large pay increases over the next couple of years.
But anyway, do you think this seems like the best approach?
My concern is that if the markets dropped e.g. 30% (worst case thinking?) then I would be almost 10K in negative equity - I could nearly match or probably raise the cash to match that, but then be left with no deposit.
So part of me is thinking maybe I should up the mortgage overpayments by another £100 a month and drop the savings to £100 a month?
Or should I just plow as much into the house as I can, as if the prices don't drop that much, my deposit will be recoverable from the equity..
Anyway, sorry if this post is all mish mashy, and thanks for reading it all, if you did!!
Phil
0
Comments
-
BUMP
Anyone got any opinions or viewpoints?
Thanks.0 -
How would you feel about selling now and renting for a few years while you keep saving as much as you can? If the house you are in now isn't a long term home it's what I'd do.
In fact it's what I am doing.0 -
What would be the benefit of that?0
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