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Guest UK Debt Slave

What To Do? I Need To Make A Quick Decision

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Guest mattsta1964

I've got about 84K to pay on my mortgage, much less than a lot of people but still too much debt in my opinion

Do I sell now or weather the storm???

I've got a fixed rate for the next 4 1/2 years and i'm overpaying 500 squid a month to try and reduce my liabilities. I'm single, so can't count on a second income to help me out. I can also rent a room to keep a reserve of cash coming in.

It all depends on my employment situation I suppose. If I can stay in employment for the next 4 1/2 years I can payoff a big chunk of the mortgage. I don't have any unsecured debts or credit card bills but being self-employed, I don't have any job security either.

I've got a feeling the recession is gonna be VERY VERY bad when it comes. I think the USA is very nearly bankrupt and the knock on effects here will be catastrophic if their economy collapses ( I really believe the Yanks are screwed bigtime)

The big question has gotta be, inftation or deflation. Deflation would seem to be the worst case scenario as debts will become even harder to service than they would be in a high inflation economy.............(Assuming It's still possible to work that is!) I might be completely wrong of course

I have a feeling it might be sensible to sell up, cut my losses and be totally debt free for the impending crisis.

Any thoughts peeps????

I couldn't give a toss about making money in the property market. I'm just desperate to keep my home if I can

Good luck everyone. We are in for a very rocky ride (starting very soon now)

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Guest mattsta1964

Are you in a recession proof job???

i.e. not a flower pot designer

Contract mechanical engineer, but with manufacturing dying so fast in the UK, I can't guarantee that I'll still be in work in a couple years time. I work for a US owned company too which scares my pants off! LOL

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I dont honesty think you re in a dire siuation - little debt/mortgage (and overpaying while rates are low is an excellent idea) - no other mouths to feed etc...

We will still need your types of people working in the advent of a recession.

We cant predict the future - your US company may be bought out by a rich chinese company for example.

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Guest mattsta1964

Really not too sure re. this bankrupt Amercia and fortelling of doom, the USA administration has recently proved just what lengths they are prepared to go to to save their economy.. :(

Excellent. Constructive remarks so far. I was hoping so :)

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Well I thought I was panicky and paranoid until I read your post.

Chill out! You're single - you could take in a lodger - you're no worried about second guessing the market to make money ... a friend of mine's young lad is just starting a mechanical engineering apprenticeship with a very big company - they obviously foresee a demand for their products and skills in the future.

You have to keep a grip. In the last recession not everyone lost their job. I'd stop overpaying the mortgage a bit and save up some cash to tide you over if things do turn out badly.

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Guest mattsta1964

Well I thought I was panicky and paranoid until I read your post.

Chill out! You're single - you could take in a lodger - you're no worried about second guessing the market to make money ... a friend of mine's young lad is just starting a mechanical engineering apprenticeship with a very big company - they obviously foresee a demand for their products and skills in the future.

You have to keep a grip. In the last recession not everyone lost their job. I'd stop overpaying the mortgage a bit and save up some cash to tide you over if things do turn out badly.

I do have some savings, not very much mind.

I have to confess, I am very very paranoid about all this! LOL LOL! Maybe i should take a break from the forum before I turn myself into a nervous wreck! There are some doom mongers but some excellent arguement too. This is an excellent forum. I'm a little addicted I think.

Time to open that bottle of splosh and have a swifty methinks.

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As some posters above have intimated it depends a lot on your personal situation.

1. Your belief in the market.

2. Your ability to withstand a correction

3. Your gearing

4. You psychological/personal ability to chuck it in and start renting/staying with your girlfriend/whatever.

Number 3 is key. You have c. £80,000 debt and if your property is, say, a bit less than average price - £160,000 then your gearing is 50%.

If prices fall by 10% then your property is worth (£160,000 - £16,000 = £144,000) and your gearing is now 55.5% i.e. you own less of your house.

The lower your gearing - the more able you are to withstand a correction.

The more secure your income - the more able you able to withstand a correction.

Essentially, you've got to do the sums yourself.

Good luck.

ps - and if you're a bull and believe that prices will go up, then stick in there.

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Peronally, if you like the place you live, and only have 80k in mortgage I'd stay put. Being able to overpay by 500pcm shows that it's definitely affordable to you at the moment. The only thing I'd advise is to build a decent amont of savings should the worst happen and you have a dry spell work wise. I have enough stashed away to live comfortably for 2 years....some might think this is excessive, but if you manage to put a years take-home to one side then you'll proably feel a lot more comfortable having a mortgage.....it'll give you room to find new work should things dry up.

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stay put a house is a house, and you have bought yours to live in.... live in it, take on a lodger overpay more, if your overpaying 500 quid a month it will bring your morgage down really quickly anyway keep going ;p. Building up some savings might be a good idea if your worried, but as you have alot of equity in your house you should always be able to sell if you need to...

Try putting the figures into excel, and calculate when you will have paid the morgage off at your current rate.

Edited by moosetea

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I know how easy it is to get sucked in by the doom and gloom.

If it does all go horribly wrong, there are many many others who will be much worse off. You could probably live on min wage by the sounds of it, with clever management of your outstanding mortgage.

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Guest mattsta1964

I know how easy it is to get sucked in by the doom and gloom.

If it does all go horribly wrong, there are many many others who will be much worse off. You could probably live on min wage by the sounds of it, with clever management of your outstanding mortgage.

Thanks for your constructive posts everyone.

Much appreciated

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If you're overpaying 500 quid a month (and assuming your normal monthly payments are 400 quid at 5.2%) then

you will have your mortgage paid in 9-10 years.

What's the interest rate on your mortgage?

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Guest mattsta1964

If you're overpaying 500 quid a month (and assuming your normal monthly payments are 400 quid at 5.2%) then

you will have your mortgage paid in 9-10 years.

What's the interest rate on your mortgage?

4.79% fixed for 5 years

Monthly repayments are £612 and I make an additional £500 monthly repayment at the moment but bear in mind,

I'm a self employed mechanical engineer and work is thin on the ground at the best of times. If all goes according to plan, I might get 2 years on this current contract before I have to stop work in order not to lose the tax deductable benifits I get as a contractor. (24 month rule). With manufacturing disappearing so fast, I'm not optimistic about being able to keep this up for 5 years. Shame cos i could pay off most of the mortgage in 5 years.

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4.79% fixed for 5 years

Monthly repayments are £612 and I make an additional £500 monthly repayment at the moment but bear in mind,

I'm a self employed mechanical engineer and work is thin on the ground at the best of times. If all goes according to plan, I might get 2 years on this current contract before I have to stop work in order not to lose the tax deductable benifits I get as a contractor. (24 month rule). With manufacturing disappearing so fast, I'm not optimistic about being able to keep this up for 5 years. Shame cos i could pay off most of the mortgage in 5 years.

It really does depend whether or not you believe there'll be a crash. If you do think so then you may as well sell up and make interest on the profits and continue to save as much as you can.

If you don't you are in a very enviable position. £80k or so is peanuts at less than 5% which is evident because you are managing to overpay by £500.

I'm an engineer myself and was made redundant in April of this year because the company relocated. I went to the new site for six months for an extra bonus but was offered the first job that I applied for.

You are self employed so no doubt earning far more than I am but you won't have a problem finding a new job because there are equally less engineers these days. Let an agency do all the work should the need arise but for now be happy because you are far more comfortable than FTB'ers.

How old are you out of interest and where abouts do you live?

Edited by enworb

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Cheer up :) its not all doom and gloom as many people on here would predict.

Does it really matter if your house price valuation goes down by 20%? why would you care if your not looking to sell it?

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Just re-read this post. You said 'I need to make a Quick Decision'.

No you don't. The market is still going up in many places. If we get a correction, it won't happen overnight. Take your time and make the right decision for you.

Having read your further posts - to me it is a no-brainer. Stay put but save up a bit.

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Also try thinking about 'how far' houseprices could crash under various interest rates.....

If we do have deflation and salaries dive, interest rates may drop and you might find houseprices stay level as the debt is cheaper, if we inflate out of this interest rates rise houseprices drop by 20% to 30% your not going to be in negative equity...

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If you sell up now you will incur a penalty from the mortgage company, just something to bear in mind. I don't think manufacturing is dead quite yet, but it is shrinking.

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Guest mattsta1964

Cheer up :) its not all doom and gloom as many people on here would predict.

Does it really matter if your house price valuation goes down by 20%? why would you care if your not looking to sell it?

No. You're missing the point here

I never bought a home to make money. I bought a home to live in and to have a sense of security (LOL!)

My security is not threatened by a crash in the housing market, but my ability to pay the mortgage in future could be if I cannot work in my profession.

If I can stay in well paid employment for a few more years, I will be able to service the remaining mortgage on a much lower salary, perhaps doing an unskilled job.

Paying more into my mortgage now and doing without holidays and a nice car etc is an insurance policy if all goes pear shaped

As for saving for a pension.............................LOL! Forget it! That really is not gonna be possible

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No. You're missing the point here

I never bought a home to make money. I bought a home to live in and to have a sense of security (LOL!)

My security is not threatened by a crash in the housing market, but my ability to pay the mortgage in future could be if I cannot work in my profession.

If I can stay in well paid employment for a few more years, I will be able to service the remaining mortgage on a much lower salary, perhaps doing an unskilled job.

Paying more into my mortgage now and doing without holidays and a nice car etc is an insurance policy if all goes pear shaped

As for saving for a pension.............................LOL! Forget it! That really is not gonna be possible

if the worst comes to the worst you could change to IO... 84k, thats only 300 quid a month, the rent your tennant brings in would cover it... dont worry...

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Guest mattsta1964

If you sell up now you will incur a penalty from the mortgage company, just something to bear in mind. I don't think manufacturing is dead quite yet, but it is shrinking.

Yep. You're spot on there. The redemption penalty I would incur for redeeming the mortgage is another good reason for staying put

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  • 302 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%



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