On or off the property ladder?

JoCam

Hi. I was hoping to tap Money Savers collective wisdom about a financial decision I have. I realise it's quite specific, so sorry if this is not the right kind of thing to be asking.

I am in the process of selling my flat (great timing). I bought it for 104,000 3.5 years ago. I put it on the market last year. Due to the fact that I'm currently living in free accommodation from my job, I didn't push the sale through very hard. There were various sagas (buyer pulling out right at the last moment last September), but to cut a long story short it's now being bought for 110,000.

Without wishing to moan about the loss this has made me after costs etc. etc, I am wondering whether I should stay on the property ladder or come off. My situation is that my mum put in the capital (50,000), and the rest I have in a mortgage. I had just been planning to pay the mortgage off and leave it. But then a family friend said I should think about keeping the mortgage - buying another property, maybe renting it out, just to keep on the ladder, and to suffer less from the current slump. So I wonder if anybody has any advice. My salary is 20,000, and I'm out of the cancellation fee period fee of the mortgage, in case that's relevant.

Thanks!
Jo

jules73_2

In your position, I would have kept the flat and rented it out.

jonesMUFCforever

Have you asked your mother whether in the present climate she wants her money back?
It's not clear whether she gave you the money as a loan or as a gift.

My own opinion is that the current pricing situation in 12 months time will be a lot worse than now. People who's credit history is not good will not be able to get cheap remortgage deals and will have to sell to stay afloat.
Again IMO this will depress house prices more than although it might be better for landlords because a lot more people may be looking to rent.

If it was me I would bank what you have left of your capital, register for those free price sale websites (they tell you actual prices that houses etc have sold at at a given post code) and see where prices are going.

Long term it has been proved again and again that house prices will rise. How long before it happens again in UK is anybody's guess.

JoCam

Thanks for the replies. My mum put the money in as a loan, and as an investment for herself (whoops). She needs the money back now as she is buying something bigger herself, so that's why we're selling now.

jules73_2

In your position, I would sell...lol
I thought the 50K may have been a gift.

beecher

If you have to give the £50,000 back then you won't have a deposit for a new flat (unless you have savings). I think it'd be unwise to buy somewhere just to keep on the property ladder - would you be able to get somewhere for £54,000 which would give you a rental income to cover the mortgage?

JoCam

Thanks beecher. That's what I was originally thinking. I have 5,000 of savings, so not really enough for my own deposit. I was thinking of trying to get a bigger mortgage, perhaps on the strength of it being a renewal rather than a new one? Having paid in about 16,000 into a mortgage over the last 3.5 years and getting about 3,000 back I'm not seeing the advantage of buying rather than renting, but everyone still tells me it's the way to go if possible.