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munners

Advice Please.

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My first post.

Fantastic site and a wealth of knowledge. ;)

My wife are 34 and we are currently under offer on our house. We live in a small village in Surrey where the average price of a 4bed house in a quiet road is 1m....STILL!!! Prices have dropped a little but not drastically like other parts of the UK.

Recently local estate agents have noticed a small boom with new instructions commonly selling within the first week. They blame this on lack of stock to the market which is keeping prices high. There have been many instances of numerous bids at the asking price and over! Maybe this is a case of the 'DEAD CAT BOUNCE' that I have been reading about on here.

We struggled to sell our house last year and didnt receive one offer. This year the first person through the door made and offer and we accepted. He is in an investor and aims to rent it out. We have had 4 viewings since in the space of a week and have had no interest since.

To cut to the chase, we will walk away from our house with £600k. I know that is a considerable amount of money and we are truely grateful for this. We bought the house in 2005, developed it which nearly cost me my marraige and now we can hopefully cash in if it goes through.

We intend to do another development. However....to buy a property that needs developing in our area we would have to take out £400k mortgage adding to our £600k collateral. We have been lucky to have secured a fixed rate with the Abbey for 3.55% over 2years interest only. This runs out on the 31/7/20011. Repayments would be very low considering the borrowing but here enters our problem.

I am self employed and my wife works as a Director for a local business. My business has been struggling recently and my only worry is that once the interest rate of 3.55% expires in 7/11, the rates on offer may be so great that we will be unable to keep up repayments. Who knows what the rate will be then? From what I have read on here figures of 5%+ have been mentioned.

In an ideal World I would take my money, rent and wait but as our area has seen hardly any decrease in price I am concerned that we will miss the boat. After all we will be getting no interest on our money in the bank although this would cover our rent on a two bed flat if we rented.

This is really getting on top of me now and I dont know weither to stay in our current house with our existing £400k mortgage or sell and walk away with a nice profit and hope for the market to fall. But will it??

Please advise.

Thanks Nick

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Most people here will advise you (including myself) not to buy anything at the moment.

I am afraid this is a decision you are going to have to conclude for yourself by doing a significant amount of reading regarding the economy and its effect on the housing market etc. Be careful relying on any small group of people giving you advice, no one knows what is going to happen for sure.

FWIW, if I could sell (I rent) and invest a huge amount of equity from that sale in anything other than housing stock I would do that.

You mention that you are concerned regarding your business... can you afford to live in your current house if your business does go under? I think there is still alot of pain to be seen in the economy, if only because of the enormous debt the country is in. When the inevitable belt tightening happens, what will that do to your business, and the housing market?

Interest rates will rise eventually, and wages aren't increasing - though unemployment is? Your area may well be unaffected at the moment, since there is clearly a lot of money where you are (maybe old money as well, so no problems for them in the short term regardless of the state of the economy...) but will it last?

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Welcome

If you can walk away from the sale with £600k, why not just buy a smaller house with the £600k ??????

Debt free living is priceless, especially in these uncertain times. Now is the time to pay down debt, not take more on.

If your personal circumstances improve over the next 5 years or the economy improves ( which aint going to happen ), then you can rebuy then with all the money you saved from not paying a mortagage + interest.

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Agree. Buy two houses. :P

Thanks for the comments.

I live in a village full of 'old money' people who have no need to sell which is why the market hasnt really been affected. They have no need to sell which is why the stock is low and the prices remain high.

I do worry about having a large mortgage and I hate it. It scares the life out of me.

The only reason I wont downsize is because im only young and I want to better myself. I feel its too early to stop but I am now in a position where I may be forced to.

It seems that the next move I make in the market will only take me sideways. Stamp duty is a killer and its just too expensive to continue doing one house up and then another just for a profit which is eaten away at by the Govt. Clever barstewards.

My gut feeling is that there is more to slice off the price of a property. It cannot continue to go on like this as unemployment rises. The snake in the grass is the current low borrowing rates. People are getting sucked into it. If we are currently at 0.5% above base and the average lender is now lending at around 4% on fixes rates who knows what lenders rates are going to be in 2 years time when the base rate rises? The base rate has to rise sooner or later. Its not going to stay like this forever. I feel that it will be at this time that people will need to sell and the market will be flooded and the price of property brought down. Supply and demand.

Thanks guys.

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I do worry about having a large mortgage and I hate it. It scares the life out of me.

The only reason I wont downsize is because im only young and I want to better myself. I feel its too early to stop but I am now in a position where I may be forced to.

You are on a dangerous path I'm afraid. If you can't be happy with 600k and a chance to live debt free you need to evaluate what it is you actually value.

When you say "better yourself" what do you mean? Acquisition of money doesn't equal betterment.

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Hi Munners,

Firstly, have you got Propertybee installed?

Also, it might be worth examining a few assumptions. Just because the village is full of old money types, do you really want to take on a £400,000.00 mortgage just to keep up with them? That is some serious wonga.

The fact is that we have had a blip that many on this site were expecting. Even if you were just to rent out for six months, there is now a good chance that prices will go down in that time. Even if they don't, unless your dream home is on the market right now, then you aren't going to miss out all that much.

I assume from your post that you don't have ankle-biters, so you can be a bit more adventurous. In your situation, you are gambling a possible £20,000 loss (if prices continue to rise) against a potential £200,000 gain if prices do plummet again.

Assuming that Mrs. Munners is on board, I would be tempted to go for the STR option. I don't think it's as clear as it was in 2007 but if you manage to halve your mortgage and still have the same house, then it will have been worth it.

Only my opinion, DYOR etc.

Edited by NotMyHouse

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You must choose to play either the long game or the short game.

You sound like a get rich quick merchant.

It's your money - you choose.

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I wouldnt say that i was a get rich quick merchant but I have gambled alot when it came to houses and I dont want to throw it all away and make the wrong decision which is why I have asked for advice on here.

I have two kids and a wife and they come first. We would be happy living in a studio flat as long as we are all together.

I have no savings at all so everything we own is in our house. Thats why our next move is important.

Unfortuntely property developing is a business and I only did it to achieve a nice house for the family that we would own out right. It would be a shame to make the wrong move and let all of our hard work go down the pan.

Saying that, alot of people slog their nuts off and are in neg equity so as I said in the first post I made I am grateful to be where we are.

I have spent all day on this site reading away. Its so interesting and I am deffo a bear at the mo. lol

Really great site and a wealth of knowledge and opinion.

I have made my mind up to sell and then rent.

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Hi Munners,

Firstly, have you got Propertybee installed?

Also, it might be worth examining a few assumptions. Just because the village is full of old money types, do you really want to take on a £400,000.00 mortgage just to keep up with them? That is some serious wonga.

The fact is that we have had a blip that many on this site were expecting. Even if you were just to rent out for six months, there is now a good chance that prices will go down in that time. Even if they don't, unless your dream home is on the market right now, then you aren't going to miss out all that much.

I assume from your post that you don't have ankle-biters, so you can be a bit more adventurous. In your situation, you are gambling a possible £20,000 loss (if prices continue to rise) against a potential £200,000 gain if prices do plummet again.

Assuming that Mrs. Munners is on board, I would be tempted to go for the STR option. I don't think it's as clear as it was in 2007 but if you manage to halve your mortgage and still have the same house, then it will have been worth it.

Only my opinion, DYOR etc.

What is STR and DYOR? Sorry!!!

Also what is Propertybee?

Thanks

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What is STR and DYOR? Sorry!!!

Also what is Propertybee?

Thanks

STR = Sell to rent

DYOR = do your own research

google propertybee, its a plugin to show rightmove database changes

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You are on a dangerous path I'm afraid. If you can't be happy with 600k and a chance to live debt free you need to evaluate what it is you actually value.

When you say "better yourself" what do you mean? Acquisition of money doesn't equal betterment.

Agreed. Just how much money does the OP want?. He needs to take long hard look at himself, and his values. Read Affluenza and the like. He's done one 'development' which he says nearly cost him his marriage, and now wants to do another!

You can only wear one suit and eat one meal at a time, mate.

Not wearing a Rolex doesn't mean you are a failure.

Step out from the Beeny Property Ladder middle-class greed brigade, and start thinking about developing your understanding, rather than another house.

Edited by juvenal

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Agreed. Just how much money does the OP want?. He needs to take long hard look at himself, and his values. Read Affluenza and the like.

You can only wear one suit and eat one meal at a time, mate. Not wearing a Rolex doesn't mean you are a failure.

I once ate fish and chips and chicken dansak simultaneously for a bet.

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You may find that this is my 4th project mate.

Im not in this to be a multi millionaire so its not greed and I would never wear a Rolex.

I want to live in the area that I live. The area that my kids go to school in and the area that I was born. I could call it a day and hang up my boots but why?

Very judgmental considering you dont know me.

We are all on here because of one thing. Money. Money buys homes and unfortunately a home is your biggest investment in life so why shouldnt I seek advice and protect my investment?

Same old same old. You always get a knob on forums.

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Sell house. Take £600k. Invest at 3% interest --- gives £1500pcm. Use to rent house. Enjoy debt-free life.

As opposed to own house outright, never be accountable to a landlord again, and relax? Afterall, if the inflationistas on the forum have it, you're money will only become worthless but your sacred spot on earth won't

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We are all on here because of one thing. Money. Money buys homes and unfortunately a home is your biggest investment in life so why shouldnt I seek advice and protect my investment?

Same old same old. You always get a knob on forums.

Read what you've just said. We are not all on here because of money. Many are simply seeking a secure roofover their head; others are seeking a saner outlook than the consumerist, dog-eat-dog, I-want-it-all-now society that has developed over the last two decades.

I own outright a four bed detached Victorian house a mile from the sea. I want it to drop 40% plus from peak, because I care about the next generations. I don't want them to be crippled with massive debt simply to get somewhere to live. I don't want to profit hugely at the expense of those to come. I want to see a return to 3.5 x average annual earnings for a modest family house.

Your 'development' and 'investment' attitude has contributed to putting house prices to the insane levels they are currently at. There is more to life than self interest, albeit presented as 'I only want the best for my family'.

Look at the bigger picture, and see where we are heading in this country. You have the attitude of many of your age group, and if you don't like unpalatable observations about examining underlying values, and our obligations to our children, perhaps a site called housepricecrash isn't for you.

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A slightly confusing post. Do you want to reduce the debt or not? I cannot see why if a standard house is 1m, a development project should be 600 + 400.

To hedge a little, as your job looks insecure, do another development like the one you have just done, not a bigger one. Buy something for, say 600, spend 200 on it and hope to sell it for a million. Keep the mortgage but reduce it to 300 (so you have a cushion). Stick the rest of the money in a BS at 4%.

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You are on a dangerous path I'm afraid. If you can't be happy with 600k and a chance to live debt free you need to evaluate what it is you actually value.

When you say "better yourself" what do you mean? Acquisition of money doesn't equal betterment.

Totally agree with your post. The OP symbolises a lot of what is wrong with this country.

Agreed. Just how much money does the OP want?. He needs to take long hard look at himself, and his values. Read Affluenza and the like. He's done one 'development' which he says nearly cost him his marriage, and now wants to do another!

You can only wear one suit and eat one meal at a time, mate.

Not wearing a Rolex doesn't mean you are a failure.

Step out from the Beeny Property Ladder middle-class greed brigade, and start thinking about developing your understanding, rather than another house.

Ditto

You may find that this is my 4th project mate.

Im not in this to be a multi millionaire so its not greed and I would never wear a Rolex.

I want to live in the area that I live. The area that my kids go to school in and the area that I was born. I could call it a day and hang up my boots but why?

Very judgmental considering you dont know me.

We are all on here because of one thing. Money. Money buys homes and unfortunately a home is your biggest investment in life so why shouldnt I seek advice and protect my investment?

Same old same old. You always get a knob on forums.

:o

You're are really endearing yourself to forum members aren't you. You have to take the rough with the smooth. There are ways of meeting your long term objective without mortgaging yourself upto the hilt.

Read what you've just said. We are not all on here because of money. Many are simply seeking a secure roofover their head; others are seeking a saner outlook than the consumerist, dog-eat-dog, I-want-it-all-now society that has developed over the last two decades.

I own outright a four bed detached Victorian house a mile from the sea. I want it to drop 40% plus from peak, because I care about the next generations. I don't want them to be crippled with massive debt simply to get somewhere to live. I don't want to profit hugely at the expense of those to come. I want to see a return to 3.5 x average annual earnings for a modest family house.

Your 'development' and 'investment' attitude has contributed to putting house prices to the insane levels they are currently at. There is more to life than self interest, albeit presented as 'I only want the best for my family'.

Look at the bigger picture, and see where we are heading in this country. You have the attitude of many of your age group, and if you don't like unpalatable observations about examining underlying values, and our obligations to our children, perhaps a site called housepricecrash isn't for you.

Spot on.

Edited by Buffer Bear

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Munners if you sell your house you will almost certainly have to rent as the stock is not available. Those in Neg Eq will have to realise teh debt if they were to sell up so its easier to service the neg eq month by month and try to hang on in there hoping for no drops in income through job losses but this will be a harder second leg down.

My friends won the lottery and are in this very predicament in Norwich. The type of property they want just isnt around so its a waiting game for some old person to snuff it or get put into a home and the house sold off to pay for the nursing home (servicing the grey pound is the new growth industry).

You've got nothing to lose by banging your wonga in teh bank for 3% living rent free so infact by staying out of the market you save money becuase come Oct house prices will be negative again as the doom and gloom sets in although it seems markedly up today which is a bit early for my estimations but then schools back next week and everyone is looking at paying off their holiday expenses so could explain it.

So by watching houses fall and renting for free you are not losing anything just gaining becuase your next house will cost less, but interest rates will be up closer to 10% me thinks come Xmas or early next year. ;)

Top man. Sounds like good advice. Interst rate issue is the problem.

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Top man. Sounds like good advice. Interst rate issue is the problem.

careful....did you see this horror?

http://www.greenenergyinvestors.com/index.php?showtopic=7555

as i said, DIVERSIFY.

Many are bearish on the GBP. If Merv introduces a negative interest rate on bank reserves held with the BofE, then look out for a money tsunami. Oh, and capital and exchange controls. They are closing the net, so look around you carefully.

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