My Story

[welshstu]

We bought last july which was obviously a mistke given whats happened since- got caught up in the have to get on the ladder stuff... we only borrowed between 2-2.5x joint income and put down a 10% deposit and fully intended to stay for at least 5 years. However have now been offered a job in another city that is just too good to turn down and so have accepted the job- will be a big jump in earnings so not taking it isnt really an option

We're aware that we won't get back what we paid and would accept losing the whole %10 deposit if it means we can get rid of the proprerty. Been on the market a month and not had much interest- put it on at the same price we paid with the expectation that we would get offers 10-20% below and try and negotiate up to just losing %10 It seems that the market in this northern city is very dead indeed- It's a fairly desirable area and a large victorian house with huge gardens...

what would anyone suggest given that we can't slash the price below %10 - if we had other savings would it makes sense to pay off a lump of the mortgage so that we could reduce the price further? Obviously this will get the usual heckles of smug people commenting on another property loser but just wondering if this site has any civilised people who might have an opinion... Not looking for MSE hugs btw just some ideas

Comment added by the mods: New member, just joined, 1st post some sob story and inviting responses. Respondents to the thread please make up your own minds whether this story is genuine or a wind-up.

Edited July 27, 2008 by Bubble Pricker
added Troll warning

[Guest sillybear2]

The house is simply worth what it's worth to a buyer, your mortgage doesn't come into it, hence your can't expect people to tailor their bids to your personal debt levels.

[adrian777uk]

sillybear2 has a point, and anyway reducing the price probably wouldn't help much at the moment, the buyers simply aren't there. Is there no way you can afford to rent it out for the medium to long term?

[mirage]

Rightmove link plz kthanx. If not, then tell us the city as a minimum.

Seriously though - best of luck. Can't be any fun at all. I would try to raise capital to pay off your negative equity, accepting a lower price if you can sell it anywhere near what you are hoping for, cutting losses early.

If not, then you are probably better off trying to rent it out, effectively drawing out your loss over a longer period.

Edited July 26, 2008 by mirage

[IMHAL]

We bought last july which was obviously a mistke given whats happened since- got caught up in the have to get on the ladder stuff... we only borrowed between 2-2.5x joint income and put down a 10% deposit and fully intended to stay for at least 5 years. However have now been offered a job in another city that is just too good to turn down and so have accepted the job- will be a big jump in earnings so not taking it isnt really an option

We're aware that we won't get back what we paid and would accept losing the whole %10 deposit if it means we can get rid of the proprerty. Been on the market a month and not had much interest- put it on at the same price we paid with the expectation that we would get offers 10-20% below and try and negotiate up to just losing %10 It seems that the market in this northern city is very dead indeed- It's a fairly desirable area and a large victorian house with huge gardens...

what would anyone suggest given that we can't slash the price below %10 - if we had other savings would it makes sense to pay off a lump of the mortgage so that we could reduce the price further? Obviously this will get the usual heckles of smug people commenting on another property loser but just wondering if this site has any civilised people who might have an opinion... Not looking for MSE hugs btw just some ideas

Ok I'll give it a go.

There is no miracle cure, only hard facts. You have to accept that you are facing a loss - the question you need to ask yourself is how would I feel in 12 months time when the property market has deteriorated by another 10-15% and you are trying to sell into that - or in another 2 years when the market has fallen by 30% from this point. If the answer is worse then you need to mark down the property so that it will sell now and count your blessings.

If you are stuck in negative equity and cannot sell then you will have to rent it out (if you can) and subsidise the rest of the mortage for quite possibly up to 10 years.

In my opinion if you can get rid now that would be wise - you can then rent and wait for a better property for less money - the money you will save by renting will help pay back the loan for any losses incurred. You say that your salary has increased - well that helps too.

In this game - you win some and you lose some. You will have to accept that this time around you have lost and there is a price to pay. Failing to accept that fact will lead to greater losses - good money after bad and all that.

HAL

[Guest Steve Cook]

We bought last july which was obviously a mistke given whats happened since- got caught up in the have to get on the ladder stuff... we only borrowed between 2-2.5x joint income and put down a 10% deposit and fully intended to stay for at least 5 years. However have now been offered a job in another city that is just too good to turn down and so have accepted the job- will be a big jump in earnings so not taking it isnt really an option

We're aware that we won't get back what we paid and would accept losing the whole %10 deposit if it means we can get rid of the proprerty. Been on the market a month and not had much interest- put it on at the same price we paid with the expectation that we would get offers 10-20% below and try and negotiate up to just losing %10 It seems that the market in this northern city is very dead indeed- It's a fairly desirable area and a large victorian house with huge gardens...

what would anyone suggest given that we can't slash the price below %10 - if we had other savings would it makes sense to pay off a lump of the mortgage so that we could reduce the price further? Obviously this will get the usual heckles of smug people commenting on another property loser but just wondering if this site has any civilised people who might have an opinion... Not looking for MSE hugs btw just some ideas

You have lost an, as yet, indeterminate amount of money on the house.

As things currently stand

You have, potentially, three choices:

1) you sell and take the loss and do not buy back in, taking whatever loss is incurred

2) you let it out and rent a property in the new place you are going to

3)You sell at a loss, but buy at the same time in the new place you are going to. If you get the new place at the right price, your loss is simply transferred from one property to the other. You are no better of in terms of you loss, but at least you have transferred it to your new location.

I suppose a logical strategy might be:

Go for (1) down to a predetermined limit, below which you would not simply sell. If you couldn't sell above your limit and was fairly sure that the new place you were going to was a long term prospect, then go for (3). If you are less sure about the long term prospects at the new place, go for (2).

Doomsday scenareo

If you think that the housing market is going to face an armageddon type meltdown and lose up to 70% off the peak over the next few years, then:

Sell now at whatever price the current market dictates and minimise your losses.

I am bound to say I believe the market will drop at least 50%.

So, you can guess what my strategy would be.....

Edited July 26, 2008 by Steve Cook

[Elizabeth]

You may have to live in a smaller house. I know it seems a bit alien, but think about it. And remember if you have kids of the same sex they really can share a room. Little things but they are all survivable. I mean, really survivable. Its just your ego that stands in the way. (PS: it was just tough luck. Owning a house doesn't make you a loser. Neither does getting a better job - but you obviously have some strong luck running in both directions)

[Downtraded]

We bought last july which was obviously a mistke given whats happened since- got caught up in the have to get on the ladder stuff... we only borrowed between 2-2.5x joint income and put down a 10% deposit and fully intended to stay for at least 5 years. However have now been offered a job in another city that is just too good to turn down and so have accepted the job- will be a big jump in earnings so not taking it isnt really an option

We're aware that we won't get back what we paid and would accept losing the whole %10 deposit if it means we can get rid of the proprerty. Been on the market a month and not had much interest- put it on at the same price we paid with the expectation that we would get offers 10-20% below and try and negotiate up to just losing %10 It seems that the market in this northern city is very dead indeed- It's a fairly desirable area and a large victorian house with huge gardens...

what would anyone suggest given that we can't slash the price below %10 - if we had other savings would it makes sense to pay off a lump of the mortgage so that we could reduce the price further? Obviously this will get the usual heckles of smug people commenting on another property loser but just wondering if this site has any civilised people who might have an opinion... Not looking for MSE hugs btw just some ideas

You don't say you're age or how secure the job is.

Usually the "house lottery" game we all play makes a bigger difference to our finances than our wages but this effect is more marked the older we are.

Whichever way you look at it, you've already "lost" the deposit (and probably more).

The important thing is to look at this in perspective. Its not the fact that you will "lose" money by selling - its already lost in a way.

Its the fact that you will be free from a depreciating asset that you no longer want.

If I was less than 30, I would reduce by 20% now. I would aim to take out a long term loan for any shortfall (if you have to), move on and forget about the "loss". Over the rest of your life you will make up the shortfall easily.

Look at it this way, the loan is equivalent to buying a new car. You don't have the same car for the rest of your life.

Why make this house purchase a millstone?

If it doesn't sell at a 20% discount, you know you're in so deep, that you will have to rent it out (hopefully not).

Bear in mind that once you sell, you no longer have a mortgage to pay.

[Caribbean Beauty]

Watch out for the elephant in the room of this thread - the mystery "new job". Massive unemployment is coming to all non civil service/local authority/government/NHS etc workers, except possibly to private sphere work such as debt collection agencies, bankruptcy lawyers and so on.

Evaluate the company you are heading for, study their stocks, profit figures, loans, capital, very carefully - if there is the possibility of downsizing the newbies will be first to go, to reduce redundancy liabilities, so you may decide to stay with your old job who may or may not have to pay you more if you get the boot at home. Happy days!

[Guest Steve Cook]

Watch out for the elephant in the room of this thread - the mystery "new job". Massive unemployment is coming to all non civil service/local authority/government/NHS etc workers, except possibly to private sphere work such as debt collection agencies, bankruptcy lawyers and so on.

Evaluate the company you are heading for, study their stocks, profit figures, loans, capital, very carefully - if there is the possibility of downsizing the newbies will be first to go, to reduce redundancy liabilities, so you may decide to stay with your old job who may or may not have to pay you more if you get the boot at home. Happy days!

yes...quite so

[huw]

We bought last july which was obviously a mistke given whats happened since- got caught up in the have to get on the ladder stuff... we only borrowed between 2-2.5x joint income and put down a 10% deposit and fully intended to stay for at least 5 years. However have now been offered a job in another city that is just too good to turn down and so have accepted the job- will be a big jump in earnings so not taking it isnt really an option

We're aware that we won't get back what we paid and would accept losing the whole %10 deposit if it means we can get rid of the proprerty. Been on the market a month and not had much interest- put it on at the same price we paid with the expectation that we would get offers 10-20% below and try and negotiate up to just losing %10 It seems that the market in this northern city is very dead indeed- It's a fairly desirable area and a large victorian house with huge gardens...

what would anyone suggest given that we can't slash the price below %10 - if we had other savings would it makes sense to pay off a lump of the mortgage so that we could reduce the price further? Obviously this will get the usual heckles of smug people commenting on another property loser but just wondering if this site has any civilised people who might have an opinion... Not looking for MSE hugs btw just some ideas

Chances are you won't find a buyer prepared to pay 90% of what was presumably the peak price, everything's possible but I think it's fair to proceed on the basis that it's not going to happen.

So you can:

1. stay put, which might actually be the wisest thing if your current job is more secure/recession proof than the new one.

2. rent the house out while making up the mortgage shortfall and maintenance costs out of your salary. Presuming that you plan to rent in the area where the new job is, your own housing costs should be lower; this together with the higher salary might make it doable.

Unless you can raise the funds to cover the negative equity that will be crystallised by a sale, I would say marketing it amounts to getting a load of stress for no discernible benefit. Having said that, in the last HPC I believe lenders were letting borrowers take their NE to a new house ... might be worth discussing it, perhaps? To keep within the terms of your loan, I imagine you'll need to inform them of any rental arrangement in any case.

[Harry Sacks]

We bought last july which was obviously a mistke given whats happened since- got caught up in the have to get on the ladder stuff... we only borrowed between 2-2.5x joint income and put down a 10% deposit and fully intended to stay for at least 5 years. However have now been offered a job in another city that is just too good to turn down and so have accepted the job- will be a big jump in earnings so not taking it isnt really an option

We're aware that we won't get back what we paid and would accept losing the whole %10 deposit if it means we can get rid of the proprerty. Been on the market a month and not had much interest- put it on at the same price we paid with the expectation that we would get offers 10-20% below and try and negotiate up to just losing %10 It seems that the market in this northern city is very dead indeed- It's a fairly desirable area and a large victorian house with huge gardens...

what would anyone suggest given that we can't slash the price below %10 - if we had other savings would it makes sense to pay off a lump of the mortgage so that we could reduce the price further? Obviously this will get the usual heckles of smug people commenting on another property loser but just wondering if this site has any civilised people who might have an opinion... Not looking for MSE hugs btw just some ideas

Will the rent cover your mortgage, or the majority of it?

You should rent the place. You don't actually need to sell it do you?

[Qplate]

I agree if the figures are managable rent it for as long as need be that way if or should i say when the market picks back up possibly quite a few years but it will recover then sell! Also are you on a repayment mortgage or interest only as you could slash it back to interest only to balance the figures if renting is possible....

[cells]

you can rent the place.

you can sell, perhaps if less than the price you paid make up the difference in savings or loans.

[darwin]

Sounds like you should forget about moving and stay in the old job, if that's possible.

[Mr Nice]

without knowing the prices involved it's really hard to say, but I would strongly recommend renting in the new city instead of buying right away.

you also really don't know how much negative equity you would have to cover in your current house until you actually sell it.

I would set the price as close to your limit of loss as possible and go for a sale as soon as possible, bleeding losses can be just as expensive even if they take longer.

if you can't get your minimum, you can try to rent but that really leaves you open to long term further losses.

the worst thing that could happen is that you move to your new job, and still get bankrupted because of the old house constantly costing you money.

[welshstu]

Thanks for the responses- to asnwer a few questions

1) we're on repayment and the expected rental would cover 92% of the mortgage- if we changed to IO then it would cover 118% of the mortgage... so renting it out seems a no brainer. However we're on a 2yr fix that ends next July. So the worry with renting is that when we come to the end of the fix, we wouldnt be able to get a new fixed rate due to low loan to value ration so would get lumped on the SVR. which if rates shoot up in response to inlation would not be pretty- my own take is that rates are likely to come down over this period- going into or flirting with a recession will mean there will be political pressure for cuts and also perhaps reduce inflation as demand is reduced- as seen with oil recently... though i am clearly no expert on this

2) job security- same industry but much bigger company who are part of a large conglomerate and i think pretty secure- lots of jobs in the industry at the moment and some of the work is contracts from gov departments... Not the most secure job in a recession, not the least either. Staying in same job isn't really an option as the future career prospects and salary of new position are much much better- same for my other half too.

3) Definitely will be renting in new city to start with- don't know the area well enough to know where to buy and this is obviously not the best time to be buying

4) Under 30 no kids- so can rent somewhere cheaper in new city and this combined with higher salary will enable us to make up the shortfall on the mortgage from the rental income- just the fear of being stuck on a high SVR when we come off our fix that is the problem... would rather cut our losses and move on but that doesnt seem possible

sorry but not going to give rightmove link- advertising that you are desparate to sell doesnt seem like a good strategy- wouldnt be a surprise if we suddenly got offers of 75% of asking would it!!

[Girly girl]

I agree if the figures are managable rent it for as long as need be that way if or should i say when the market picks back up possibly quite a few years but it will recover then sell! Also are you on a repayment mortgage or interest only as you could slash it back to interest only to balance the figures if renting is possible....

This is what I would do in your situation, it's all very well saying loose the deposit take a hit etc but the property value will go up again it's just a case of now considering the house to be part of your long term future, we sold in 2005 the last dip wish we'd kept renting it out because the prices did recover again.

In terms of renegotiating your mortgage at the end of the term, just don't tell them you're renting it out. Millions of people have been doing this without consequence for the past 5 years, why should you suddenly start paying more when nobody else has.

I think you'll be just fine, keep paddling.

Edited July 27, 2008 by Girly girl

[Guest happy?]

Watch out for the elephant in the room of this thread - the mystery "new job". Massive unemployment is coming to all non civil service/local authority/government/NHS etc workers, except possibly to private sphere work such as debt collection agencies, bankruptcy lawyers and so on.

Evaluate the company you are heading for, study their stocks, profit figures, loans, capital, very carefully - if there is the possibility of downsizing the newbies will be first to go....

Not necessarily. Age discrimination legislation now means that last-in first-out policies could prove very costly to a business. LIFO policies generally affect the young disproportionately (because for most businesses new recruits tend to be younger) if the redundancy policy doesn't stand up to scrutiny age discrimination could be very costly for the company involved.

[Mr Goodcat]

In terms of renegotiating your mortgage at the end of the term, just don't tell them you're renting it out. Millions of people have been doing this without consequence for the past 5 years, why should you suddenly start paying more when nobody else has.

I think you'll be just fine, keep paddling.

I'd be a little cautious of this option. I work for a building society, not Nationwide, and we have recently started to make a big clamp down on people who are renting and havn't told us. It's really not too hard to find the people who have done this, we know what property that we have lent on and if they have told us that they live somewhere else we write to them to see if they are renting it out. If they say no we then send in the investigators to see what they can find.

All this is a recent addition to what we do so, although people have got away with it for 5 years, I don't think they will be getting away with it for much longer.

[keef]

If they say no we then send in the investigators to see what they can find.

I'm intrigued by this, but I'll not skew the thread by pursuing it.

[Mr Nice]

it actually sounds like you aren't in too bad of a position.

I would just try to get everything settled as soon as possible so that if anything ends up not going as planned, you have as much time to deal with it as possible.

it sounds like you will probably have a bit more savings at the new place, I would set up an account like an emergency fund. if the worst happens (say prices DID go down by %50) an extra stash of money would come in pretty handy.

otherwise, good luck at the new job.

Edited July 27, 2008 by Mr Nice

[John51]

doesnt seem like a good strategy- wouldnt be a surprise if we suddenly got offers of 75% of asking would it!!

Assuming your asking price is 90% of what you paid, the 75% offer would give you loss of 32.5%. tbh I'd bite their hand off if such a generous buyer did exist. (They may not.)

It seems you wouldn't be that bothered about the fall in house prices if the job offers hadn't happened so I'm trying to look at it in terms of number of months to clear the debt if you sold in a hurry.

Current income minus mortgage is £x per month.

New income minus rent is £y. If £y minus £x is used to clear the negative equity debt, how long would it take?

Sort of how long do we have to work in the new place for the old wages?

[mirage]

This is what I would do in your situation, it's all very well saying loose the deposit take a hit etc but the property value will go up again it's just a case of now considering the house to be part of your long term future, we sold in 2005 the last dip wish we'd kept renting it out because the prices did recover again.

But we are not in a dip. We are at the early phase of a large crash. Clearly it was a bad move in retrospect to sell in 2005 rather than 2007. This is no re-run of 2005.

This "prices will go up again" mantra is irrelevant. If they go down in the meantime you have lost that money forever. In any subsequent rise you are in the same position as someone who buys at the bottom and sees the same recovery - MINUS THE MONEY YOU HAVE LOST FOREVER.

The decision to hang on versus sell is no different to the decision to buy speculatively versus not, save for the costs and hassle of the transactions. If it is such a good idea to keep hold of a house that is falling in value, why isn't it a good idea to purchase that house as an investment?

[Guest Steve Cook]

But we are not in a dip. We are at the early phase of a large crash....

Agreed. This is going to be the big one, I think