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Hi All,

I have been a long time lurker on this forum and find it a great source of information. It has mirrored my sentements of the housing market over the past 4 years.

I was one of the lucky ones and bought my 1 bedroom flat some 12 years ago for £35,000. One failed relationship, a messy but relatively inexpensive divorce and I find myself in 2007. I have a mortgage of 29k ( unfortunately had to make some divorce payments ) and the flats market value is probably 140k. I am very happy with the flat but as I have a new girlfriend and I imagine that within the next 2 years we wil settle down and start a family the 1 bedroom flat will have to grow at some point in the future. The question that I am asking myself is, do I cash in now STR ????? I have always been advised that once on the property ladder not to jump off as its hard to get back on. And is equity greed a good enough reason to sell ???? If prices went down by 50% I would still have a certain amount of equity and also over that period of time the security of somewhere to live.

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Flog the khant!

Why? Well anything better is going to be substantially higher priced in the current market, requiring a significant mortgage on your part in what could be the start of a a period of much higher IRs. If they keep going up? Who cares, you wouldnt have been able to afford it anyway, up sticks, emmigrate and realise just how much further your sterling STR fund can go.

Edited to add: even if you just rent for 6 months, check the market out and then buy back in, it will pay for itself in the premium you demand for having no chain.

Edited by DabHand

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As your mortgage is pretty low, I guess there are 2 ways to look at it.

1: You could STR in the hope of a crash coming soon. Therefore your equity will potentially go further when you decide to buy again, as you are in a strong position etc, etc, etc. However, if for whatever reason, IR's go back down & fuel another mini-boom, you could miss the leveraged growth of the equity in your property.

OR

2: Stay where you are. As your mortgage is not massive, I guess you can afford the repayments easily so therefore are not likely looking at foreclosure from the bank. If there is a crash, the price of your flat may fall, but at the same time, the price of the flat that you want to buy may fall as well, so proportionately things stay pretty much the same. However, had you STR'd & there was a crash, you could have possibly jumped a little higher when you decided to get back in.

Either way, it is a bit like putting all your chips on red (admittedly, the odds are stacked in favour of at price stagnation at the moment).

Personally, I suggest that you make the decision that is right for you and you alone, taking into account your current life situation. There are a lot of people here who are more economics savvy than me who have been calling crash for years and sound economic principles dictate that they were correct. However, Gordon & his MEWacle economy just kept on trucking. Logic says something has to give at some point....

HTH

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I STR'd myself in December but it was a relocation that prompted that - I would have had the transaction costs of selling and buying with or without a period of renting in between.

I would be cautious about doing the same if you're already in a property which is satisfactory, because of the costs involved (money, effort and time)

Who knows how long the property market can keep its head above water? Could be years until you see big enough drops to reward an STR strategy.

Just my opinion though.

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Hi All,

I have been a long time lurker on this forum and find it a great source of information. It has mirrored my sentements of the housing market over the past 4 years.

I was one of the lucky ones and bought my 1 bedroom flat some 12 years ago for £35,000. One failed relationship, a messy but relatively inexpensive divorce and I find myself in 2007. I have a mortgage of 29k ( unfortunately had to make some divorce payments ) and the flats market value is probably 140k. I am very happy with the flat but as I have a new girlfriend and I imagine that within the next 2 years we wil settle down and start a family the 1 bedroom flat will have to grow at some point in the future. The question that I am asking myself is, do I cash in now STR ????? I have always been advised that once on the property ladder not to jump off as its hard to get back on. And is equity greed a good enough reason to sell ???? If prices went down by 50% I would still have a certain amount of equity and also over that period of time the security of somewhere to live.

keep it rent it out....

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do I cash in now STR ?????

Yes if you think HPI is over, no if you think house prices will keep going up same as the rates. What do you think?

I have always been advised that once on the property ladder not to jump off as its hard to get back on.

:lol:

Do you think those, who jumped off the property ladder in mid 80's, found it hard to get back on in late 80's?

is equity greed a good enough reason to sell ????

yes, especially if you believe the timing is right. Some people will refuse to sell because of their greed and they will end up chasing the market down.

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Your replies echo my exact feeling :-)

On the one hand I have thought that the market is at the top for the past 2 years and this year all the evidence is pointing to a slowing economy what with interest rates rising ( but still historically low ) and all the bad subprime news from the states.

So I should sell............but what to do with the money ???

90% cash - high interest

10% gold

But gold is very high and Fiat money has its problems

What about the stock market ???? but will the bubble burst ??? My pension is all tied up in stocks, so are parts of my ISA.

Okay I should keep my place, no hassle, no rent incresse ( payments at mo are about £450, rent is about £600 for the same property ) but also no Money in the bank and what if prices do drop and a 3 bedroom " normal " house does go down to £150k in 3-4years and my flat is only worth £60k, all that equity dissapeared.

I am finding this a very difficult desission.

Although if house prices do crash god knows what state the country will be in. Everyone round my way appears to have everything on credit. They all have 100K + interest only mortages, 2 new cars, Plasma TV's, new conservatorys, go on 3 holidays a year and work in £25k jobs for the council !!!!!!!!!!!!!!!!

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I agree, overpay your mortgage and get it paid off as quickly as possible, this will give you the equivilant of £600 pm tax free pay increase guaranteed.

As you say what to do with the money, so you dont really need a huge wad but £600 pm tax free you could save or spend whatever mood youre in!

Your flat is plenty big enough for the moment and you can move whenever you want.

If the market goes down you can upsize and still only have a small mortgage, if it goes up so will your flat's value so you will still have a big deposit and so a smaller mortgage.

Well done, this is just how the housing market should work.

Renting is crappy, it's expensive and a royal pain if you want anything fixed or replaced or want to decorate, nothing beats having your own home that you can comfortably afford.

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Guest The_Oldie
Renting is crappy, it's expensive and a royal pain if you want anything fixed or replaced or want to decorate, nothing beats having your own home that you can comfortably afford.

Renting is not expensive, my rent is half of the interest on my house capital.

When something needs fixing, it's not your problem and expense.

I owned my own house for many years, the last ten mortgage free, so am in a pretty good position to compare. Home is where the heart is and a rented home is no different in that respect from one you own, or in most cases, the bank owns.

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Just sold my flat after 4 years ownership, got what I paid due to market flooded with new build flats. Despite living in an area with 0% official unemployment rate, buyers were rare and a lot of the BTLers in the block selling at the same time.

Property is mean't to be lived in, not an investment vehicle. If you like living in your flat, and don't mind leasehold [i personally would like to see this form of feudalism banned], then stay put.

The primary problem with property is the method of finance, anyone with a large mortgage relative to the value of their property is in a very exposed position. You seem to be in a relatively benign financial position, buying a house now [with a larger mortagage and removal costs] will increase your exposure to a slump in the market.

Two questions: (1) Why do you want to move?, (2) Can you afford it?

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Guest portwinestain

The strong point is , is that your property is unsuitable. It's a one-bedroomed flat and it's too small. Sell it, I would. At worst we have stagnation.As another poster said you will be in a strong position because of no chain and let's not forget the sub-prime debacle - that money might come in handy if you want to buy back in quick.

Imo prices for flats cannot go up anymore.

If you're in London then I have no advice :blink:

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I dont want/need to move now, but as my flat has only one bedroom I will need to move in the next few years due to starting a family.

I would not buy a new property this year that is for sure and probably wouldn't even contemplate buying for 18months - 2years untill I start to see how things pan out.

Whats being going round in my head is it worth pocketing the 100k equity now but then have to pay rent for 12 - 24 months. This would allow me to have smaller debt exposure in the future

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Renting is not expensive, my rent is half of the interest on my house capital.

When something needs fixing, it's not your problem and expense.

I owned my own house for many years, the last ten mortgage free, so am in a pretty good position to compare. Home is where the heart is and a rented home is no different in that respect from one you own, or in most cases, the bank owns.

So am I, I started renting end of last year after getting so fed up with chains collapsing, I pay £100 pm less than I did on my IO mortgage, and much less than I would on the house I was set to buy, which is 3 houses away from the one I am renting, so yes its a better deal, and I have my deposit to boot.

However, I still pay over a grand a month in rent which I class as expensive, and I was also saying that in context of the original poster who's mortgage is £450 but to rent the same place would be £600.

Yes repairs are the landlords responsibility but he does these in his own time, our heating went over xmas and there was no out of hours number to call - crappy, our dishwasher leaked and it took them over a month to replace, washing up = double crappy, the kitchen tap broke and was gushing water so we had to turn the mains off, they couldnt get anyone out till the following Monday so we had to sort it out ourselves and yes we did get the money back but it was a fight and took weeks and loads of phone calls.

I cant decorate well I can but have to put it back when i leave - crappy, I have crappy torpedo proof curtains in my bedroom that let neither light or air in at night, crappy.

You are so right, home is where the heart is, I can't wait to buy a house again and make it into a home, but no I will not pay through the nose for the privilage so for now its renting, which I find expensive and crappy.

Plus the bank only owns it till the mortgage is paid off then its all yours.

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