Moving House

My parents are moving house soon.

They own a bungalow, worth £150k, and they owe 35k on it (so I guess they don't OWN it.. but you know)

They have seen a house they want for £105k. They really want to remortgage for £140k, so they have enough cash to buy that house. Then sell the bungalow and make profit.

They went to estate agent mortgage advisor, and he told them they're too old for a repayment mortgage (dad is 47, mum is 50). He said because it would only be over 18 years, it would be 1200 a month. With my mum included its only over 12 years, it would be 900 a month.

He advised an interest only mortgage, for 400 a month, but there are significant penalty charges for repaying in full in the first two years. They are considering this, and letting me rent it for 2 years, then I get my own place after. But they're swaying towards just trying to sell it, and risk losing the house they want.

Any other options you can think of?

Indeed that's something I proposed to them... they said they will look at it... I'm not sure either how it would work

[chops147]

peeps who buy houses at auctions get bridge loans they usually charge about 1% a month but you can pay it off whenever you want.
the loan is secured against the property that you buy.

other tip is find a good mortgage broker cos the banks often offer them better deals.

I think they asked about a bridge loan but cos of the situation it wouldn't apply or something. That's all they told me about that

[chops147]

how about they keep both houses do the interest only one and rent the other one for 600 a month thus making 200 a month profit

Originally Posted by camarda

let ya parents do what they want

let them come to their own decision and tell them you fully accept any decision they make

I've told them that, at the end of the day I wana be moving out ASAP so its totally their choice I just wanted to help any way I could with any other ideas on mortgages etc...

They are looking at renting it out, but they are scared that if nobody rents it, they will be paying quite a lot of money to run both houses

[Rebus]

Originally Posted by danieljamie

They are looking at renting it out, but they are scared that if nobody rents it, they will be paying quite a lot of money to run both houses

Then *you* should call up your local lettings agent, and *you* can invite him/her over to review the property with respect to renting.

Agent will then give you

• a summary of the local lettings market, i.e. ask him/her:
  • "what is the demand for this sort of property, in this street?"
  • "how long does it take to get a property similar to this rented?"
• the predicted rental amount per month

[Phil]

Originally Posted by danieljamie

My parents are moving house soon.

They own a bungalow, worth £150k,

and they owe 35k on it

they want for £105k.

they have 115 equity.

how does it work out they need another mortgage???

surely the equity on the current property will clear the bungalow leavin probably nothing after surveyers etc.... but frees them mortgage payments forever.

they could then put the house in ur name, ur remortgage for them for the ammount they require...

u pay the due... and when its paid off... u own ur own property.

god forbid when they pass away u have 100k + property to begin an empire with.



would that work?

[Breaker]

As I see it their are a few options and it's difficult to assess without more information but I'll try and offer some opinion.

Firstly the housing market is in a bad way and over the next few years it's inevitable that interest rates will rise, making (interest only/tracker) mortages a lot more expensive add to this current house prices are still approxamtley 5 times the average household wage and historically after every crash have dropped to around 3 times average earnings. This still hasnt happened yet and everything indicates that it will do so over the next 5 years. The equity in your current property is only worth 150k when someone pays that for it, 150k is within range of a fair few people though so really depends on demand in your local area and who your bungalow would appeal to ect.

e.g A first time buyer will need to put together around at least 15k in savings to buy this property at terrible interest rates if they have relevant earnings more like 60k to get good rates, this is something that has happened in the last few years, therefore most potential buyers have been caught off guard and not had the chance to start saving early and can't afford deposits. 2nd and 3rd time buyers are likely to be in a similar position to your parents and reliant on they're property selling to be able to make the move and in the current circumstances lots of people are delaying selling in the hope that the market will pick up and they get the prices quoted before the crash.

Because of these factors the rental market is generally very strong and getting stronger, as people are postponing purchases in search of bargains and to save up deposits. As interest rates rise it's likely that rental prices will rise in line, this will bring sale prices down further as it will take people longer to save deposits, their will be less purchasers and defaults will rise with those that are over stretched with big mortgages (basically will be more available houses but less buyers). There are people out their with cash and developers/buy to letters who might snap it up, but again depends on the property/location and the potential to make money from it.

IMO the least risky quick option would be to sell now (if they can) offer to purchase the new place in cash with no chain (which is hugley prefferential) for a lower price and pocket a lump sum of cash which they could later use to help you with a deposit if they wish.

The second option would be to take up a second mortgage, rent your current place out and use the rental money towards the mortgage, long term this is probably the best option (you potentially end up with two houses) but comes with risks, from rates rises, tenants leaving/not paying, and potentially still having to contribute a monthly outgoing for housing. This is even more risky if you plan to sell in the near future as prices could drop drastically and you could end up losing a large stack of the equity currently in your property and their is no guarentee as to how long it will be on the market for.

[chops147]

breaker that was an awesome post I'm currently interested in property and that has given me huge insight I hope my rent doesn't go up I struggle as it is!!