Jump to content
House Price Crash Forum
Sign in to follow this  
panholio

Some Advice

Recommended Posts

Morning,

3 1/2 years ago I bought a house with my girlfriend. At roughly the same time I joined this site but was too far gone with the process to pull out of the purchase and went ahead. The proposal seemed sensible enough I guess (not in hindsight but hey), 3 times joint salary and we had stable jobs... but we went for a 95% mortgage.

We paid £177k for a three bedroom stone end terrace in a nice suburb of Leeds. It's a great house and has had the cellar and roof space converted so there really is plenty of space. The only compromise was the lack of off street parking but we both have company cars so I wasn't too bothered. I contributed the majority of the deposit.

Well the inevitable has happened and we have now split up. I'm left with a couple of choices and I'm after some of the straight talking advice this site is known for.

There is no equity on the house based on an estimate of it's current value. If I wanted to f**k about for ages the agent reckons I could get within 5k of the original sale price but if I want a quick sale would see a chunky loss after fees etc. Identical house 2 doors down (has no cellar or attic conversion though) literally sold 2 weeks ago for £157k.

My ex absolutely doesn’t want to take the house on (couldn’t afford it).

So my choices - keep the house. The mortgage term is currently 18 years (this was my attempted effort to avoid the 35 year loan trap a lot of FTBs fall into, sensible me eh). As such I could increase the term (bank happy with this) to reduce the payments to allow me to keep the place. The mortgage is fixed until 2013 at something hideous like 5.75%. I'd pay fook all off in that time so it would be a total gamble against prices rising/ falling and what I could do with the mortgage at the end of the term. My ex gets a clean break and we just move on.

Option 2 as above but take in a lodger - I could charge up to £4250 a year tax free and maintain the mortgage term. I'm an irritable ******er though so it would need to be the right kind of person. Not sure about someone in "my" house.

Option 3 I cut my losses and sell. Take the hit and try and get back on my feet. I reckon I'd be at least 5k down - in theory my ex should share this I guess.

I have a good job which is currently pretty stable and I earn decent money.

So my original question - where do you honestly think prices will go now? Is it too much of a gamble to keep the place right now or would I be silly to sell and just hold out?

Cheers ;)

Share this post


Link to post
Share on other sites

Morning,

3 1/2 years ago I bought a house with my girlfriend. At roughly the same time I joined this site but was too far gone with the process to pull out of the purchase and went ahead. The proposal seemed sensible enough I guess (not in hindsight but hey), 3 times joint salary and we had stable jobs... but we went for a 95% mortgage.

We paid £177k for a three bedroom stone end terrace in a nice suburb of Leeds. It's a great house and has had the cellar and roof space converted so there really is plenty of space. The only compromise was the lack of off street parking but we both have company cars so I wasn't too bothered. I contributed the majority of the deposit.

Well the inevitable has happened and we have now split up. I'm left with a couple of choices and I'm after some of the straight talking advice this site is known for.

There is no equity on the house based on an estimate of it's current value. If I wanted to f**k about for ages the agent reckons I could get within 5k of the original sale price but if I want a quick sale would see a chunky loss after fees etc. Identical house 2 doors down (has no cellar or attic conversion though) literally sold 2 weeks ago for £157k.

My ex absolutely doesnt want to take the house on (couldnt afford it).

So my choices - keep the house. The mortgage term is currently 18 years (this was my attempted effort to avoid the 35 year loan trap a lot of FTBs fall into, sensible me eh). As such I could increase the term (bank happy with this) to reduce the payments to allow me to keep the place. The mortgage is fixed until 2013 at something hideous like 5.75%. I'd pay fook all off in that time so it would be a total gamble against prices rising/ falling and what I could do with the mortgage at the end of the term. My ex gets a clean break and we just move on.

Option 2 as above but take in a lodger - I could charge up to £4250 a year tax free and maintain the mortgage term. I'm an irritable ******er though so it would need to be the right kind of person. Not sure about someone in "my" house.

Option 3 I cut my losses and sell. Take the hit and try and get back on my feet. I reckon I'd be at least 5k down - in theory my ex should share this I guess.

I have a good job which is currently pretty stable and I earn decent money.

So my original question - where do you honestly think prices will go now? Is it too much of a gamble to keep the place right now or would I be silly to sell and just hold out?

Cheers ;)

This is easy.

a) IR of 5.75% is cheap. Norminal savings IR should be at least 5%. You are obviously very young.

B) logger, your choice of lifestyle

c) lossing 5K is a no brainer. 24-36 months down the line you'll probably pick up your own house again at 40% discount. Next 24 months there is a lot of uncertainty as people refuse to beleive house prices can and should fall. The show hasn't even begun yet. I took a hit of £35k once on a property and just thought of myself as Tom Cruise in Risky Business driving that Porsche into the lake. Best money decision I made. Got my money back and more since then.

A fact is a fact no matter what the media or Labour government tries to tell you. Things are bad. They can'ty change the fact. They can only put funny glasses onto the sheepie.

Edited by 888

Share this post


Link to post
Share on other sites

How much do you like the house? Do you love the adventure of moving, or hate the hassle? Does the risk of neighbours-from-hell at a next place bother you?

(in other words, the money is just one of many considerations).

My brother faced a similar situation: he and his then-fiancee bought in 1989 on double-miras. When they split up, he bought her out and struggled with the mortgage on one salary, but eventually sold at a profit (and is now married to a much nicer girl :) ).

Share this post


Link to post
Share on other sites

So my choices - keep the house. The mortgage term is currently 18 years (this was my attempted effort to avoid the 35 year loan trap a lot of FTBs fall into, sensible me eh). As such I could increase the term (bank happy with this) to reduce the payments to allow me to keep the place. The mortgage is fixed until 2013 at something hideous like 5.75%. I'd pay fook all off in that time so it would be a total gamble against prices rising/ falling and what I could do with the mortgage at the end of the term. My ex gets a clean break and we just move on.

Option 2 as above but take in a lodger - I could charge up to £4250 a year tax free and maintain the mortgage term. I'm an irritable ******er though so it would need to be the right kind of person. Not sure about someone in "my" house.

Option 3 I cut my losses and sell. Take the hit and try and get back on my feet. I reckon I'd be at least 5k down - in theory my ex should share this I guess.

Cheers ;)

5.75% is nothing like unusual historically. Could you cope with 9%?

You've a 3 bed house. Unless bedroom 3 is tiny, it might be better to let to 2 (unconnected) people - owner & lodger sharing a house is psychologically very difficult; if there are 3 of you the dynamics are a lot more fluid. That way you have time to consider your options and see which way the wind is blowing. Don't get hung up on HMRC's £4250pa- that's letting the tax tail wag the commercial dog. (Unless you are hiding from HMRC for other reasons!)

Share this post


Link to post
Share on other sites

Thanks for the replies and thoughts. I've got a lot of thinking to do. My initial estimate of a 5k loss is probably a bit of an optimistic one. It'll be worse than that.

I'm leaning towards keeping the house. It's in a place I want to be, near where I work (although that's not a deal breaker for me) and it is a great house. I don't need to take in a lodger. I guess the option gives me some more financial flexibility in the future.

Edited by panholio

Share this post


Link to post
Share on other sites

Thanks for the replies and thoughts. I've got a lot of thinking to do. My initial estimate of a 5k loss is probably a bit of an optimistic one. It'll be worse than that.

I'm leaning towards keeping the house. It's in a place I want to be, near where I work (although that's not a deal breaker for me) and it is a great house. I don't need to take in a lodger. I guess the option gives me some more financial flexibility in the future.

And don't forget to factor in £4K of selling costs - 2% estate agents fees, conveyancing, removals, general hassle....

Share this post


Link to post
Share on other sites

this happened to me 3 years ago and i went for option b. I was lucky tho as they have both been friends and i work away a lot.

Am currently considering option c again now due to anticipated falls and the opportunity to get out with a small profit

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 153 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.