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Which makes financial sense - sell to release equity or keep bigger property ?

(24 Posts)
ginorwine Sat 17-Dec-16 22:12:43

We have a house worth and under offer for 250 k and have seen another house for 174 k which wd make us mortgage free as well as give us approx 40k in bank with which to help dc get on housing ladder as young adults rather than when we pass away .
We could rent our house ( current ) for about 300 per week or more but don't want that option .
Some people have said the house is our best investment as it will only increase in value so it would be best to hold on to it .
We are in 50s with 25 k left on mortgage but could reduce it by 10 k this year and another 9 k when I am 55 in two years making the mortgage very small .
What is the best option money wise ? We are not savy people !

Bearbehind Sun 18-Dec-16 11:22:22

The best option depends on loads of factors

- which house would you prefer to live in? If you're only in your 50s you've potentially got a long time to live in a house you like less than your current one
- how old are the children? If they're young now then you could keep the current house and save once your mortgage is paid off
- the potential price rises of both houses. This is really a shot in the dark unless one property is in an up and coming area or one is about to have a tip built beside it

Garyfetacheese Sun 18-Dec-16 11:31:41

I think it depends on what you have arranged pension-wise. Don't leave yourself short of money in retirement in order to give a big lump sum to your children to buy property. I would probably just continue paying the mortgage and downsize when it's just the two of you, freeing up (even more?) money to spend how you wish.

TalkinPeace Mon 19-Dec-16 21:12:16

could you take in lodgers and get the £9000 a year tax free to clear the mortgage PDQ and then provide help for your kids while still enjoying the house?

ginorwine Tue 20-Dec-16 11:35:46

My husband retires in 3 years as his job is v v stressful

He will have 16 k pension will get 15 k after tax
Then I will get 3 k
Pa too
His pension would just about cover the running costs of this house but no spare for hols emergencies etc .
Dh says it's house poor ish and money ( to us ) rich or house rich ( love it ) but money v poor / tight .
I will post poss house if I can !

ginorwine Tue 20-Dec-16 11:39:33

We only have three years of dh working and 15 left on a mort of 25 k
The mort is currently 237 pm but we have one child at uni and a second to go next year at approcx 800 pm support
We wd be better off letting them get full loans etc but we did promise to try to pay accom costs to teduce their dept and as we are doing it for our ds at mo it doesn't seem fair to support him and not dd when she goes ...

ginorwine Tue 20-Dec-16 12:36:18

Hi bear
Thanks reply
Our dc are 19 and 18 we wd be pay mort into retirement dp is 60 in three years and will retire but get pt job as his current job is v v stressful
We wd have 13 left to pay and no room to save as we wd be living if oensions ( if we lucky we cd get pt jobs but can't rely on them being available / predictable so gave to factor the set income we kno we will have )

TalbotAMan Tue 20-Dec-16 12:59:24

Decisions like this are very difficult since no-one can see the future.

That said, my gut feeling would be to hang on to the big house at least until your DH retires, and do as much as you can to get the mortgage down. It would give a clearer picture if we knew what you both earn. If he retires in 3 years with a pension of 16k in his late 50s or early 60s, it's likely that money will be tightest at that point as state pensions won't kick in for a while yet so that is the point to aim to be mortgage free. I'd also ask whether, if you have 40k in hand, you're going to be able to resist spending it; some can't. My personal thoughts are that the housing market is unlikely to start dropping, so downsizing then is likely to produce the greatest financial benefit. Cash, on the other hand, currently has very poor returns.

Bearbehind Tue 20-Dec-16 14:25:57

I know in an ideal world people would help their children get on the property ladder but it sounds like you'll be leaving yourselves very short by doing so.

If you did downsize I'd think very carefully about giving up your nest egg and living on your pensions from 60.

You've already paid for them to go to uni, unfortunately there's not a bottomless pit to keep supporting them.

TBH I'd be more inclined to let them take the full loans at uni as it's cheap borrowing and then see how they get on job hunting.

If they never get a job earning a salary high enough to pay the loan back it's unlikely they'd be able to buy a property anyway even with your deposit; sadly £20k each, whilst better than nothing, doesn't go very far when buying property.

ginorwine Tue 20-Dec-16 14:27:23

He earns 55 k for next 3 years
I am on zero contract hrs but earn approx 6 k

One of our issues is that we want to stay in our locality - after trying to move out in theory to a more sensible house we just don't want to - bottom line . In our locality there are only 4 streets which we could buy on and within those streets smaller houses , according to trends researched via right move , the houses that we could downsize to come on the market about once every 5 years . Within that some of those may not be ok for us as the kitchen extensions stick out in a long thin shape With several of them and overlook the neigbours kitchen and at an angle the back room also . The housewe have seen is rare in that it has a flat back - the kitchen spans the house at the back - so not overlooked .
So one consideration is we will only have a very small choice of houses to choose from and may remain here by de fault due to that even if we were struggling money wize - a friend of ours tried to buy in this area fir two years but eventually gave up as there were none that came on market without those compromises . It's a quirky area of 1880 ish massive medium and cottage type terraces .

ginorwine Tue 20-Dec-16 14:31:55

Hi bear
At the moment they can't get full loans at uni - have just rang student support and due to husband s income will get loan of 4600 only offered to them - accom alone fir ds this year was 6 k - it's assumed I think parents too up as it's based on parental income ? I wonder how people with non supportive parents who have similar income but choose not to support manage as they wd only be offered same as our dc !

Bearbehind Tue 20-Dec-16 14:38:05

If the house you're thinking of moving to is right for you in the long term and there's not many that would be then I'd probably go for it.

I'd still get the kids to get the maximum uni loans they can, hold on to your equity money and take a view in a few years time what you want to do with it.

ginorwine Tue 20-Dec-16 14:52:44

Thanks bear
I'd love to stay in this house until I pop my clogs ( stairlift already quoted for!)
It wd be this house which I love with v little cash to do stuff or a small house and holidays / adventures / choices like an updated car when required . I'd never want to leave this one for the other one if I had this and some cash flexibility - so I guess I need to ask will we stay here in thoses circumstances or go for the inevitable ( probable !) now due to limited avaliability , rather than later .
Our logic to release cash fir kids is you can get houses locally for 125 to 140 k first time buyer ones so it may help our dc unless they live Ina more expensive area .
Thanks all so much .

titchy Tue 20-Dec-16 15:37:30

Given your kids are only 19 and 18 I'm not sure why you want to sell now to give them a deposit? If smaller houses come in the market once every five years then why not wait five years? You'd have had a couple of years of living as a pensionable couple with limited income, and your dcs would have a slightly better idea of what they were going to do long term.

It's more than likely isn't it that they won't actually live near you and thus be able to buy from the large choice of cheap starter homes anyway.

ginorwine Tue 20-Dec-16 16:15:00

I kno what you mean !
It's just that we have v good offer on our house ! We wd sell v fast again I'm sure ( full ask price ) it's more to do with anxiety about limited options of future house as they are quite quirky and some are abs no no s !

ginorwine Tue 20-Dec-16 16:17:39

E.g. Some of the smaller ones are 8 steps up As on hill
Others have long frount garden s and you have to walk accross yr neigbours frount path to get to your door - this house has neither - quite rare in fact only about 12 like it

ginorwine Tue 20-Dec-16 16:19:51

Titchy the deposit for the kids was a happy side effect to us having more money ourselves - we wd have no mort and about 20 k as well as helping kids - my dh retired in 3 years at 60 and there wd be struggle till got state pension ..

titchy Tue 20-Dec-16 17:25:32

But you said earlier that given the choice between current house and no money, and new house a spare money, that you'd stick with current house because you love it....

If the reverse is true then sell! But if it's not don't...

ijustwannadance Tue 20-Dec-16 17:36:17

I personally would sell. You will still have a house worth £170k. No mortgage to pay means extra money per month towards the dc's uni costs. Perhaps your DH could even then consider early retirement or a less stressful job.
If house prices increase then they will increase whether house was £170k or £250k.

ginorwine Tue 20-Dec-16 17:39:04

Titchy what do I mean ? 😄💐sorry with the stress my grey matter is sluggish n I'm unsure wit u mean ? 😄

lovelearning Tue 20-Dec-16 17:54:01

I'd love to stay in this house until I pop my clogs ( stairlift already quoted for!)
It wd be this house which I love with v little cash to do stuff
I'd never want to leave this one for the other one

ginorwine, this house is your Home.

( the deposit for the kids was a happy side effect )

TalkinPeace Tue 20-Dec-16 20:16:17

Did you read what I said about the £9k tax free per year to stay in your house while clearing down the mortgage ?????

ginorwine Tue 20-Dec-16 21:46:17

I just did ! 😄❤️Thanks xx

ginorwine Wed 21-Dec-16 20:46:31

Thanks for all yr support everyone I do appriciate .

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