Should we sell up and rent? WWYD?

[chosenone]

Any thoughts appreciated. Our little 2 bed semi was only meant to be a starter home 2 kids and a recession later we have little equity, but we've outgrown it! I've been trying to make the most of it, its decorated nicely etc but we've outgrown it, our decision to have a 3rd DC seems to be scupperred beacause of our little house! So which option?

Option A

sell it and possibly make 10 grand if we're lucky or cover the mortgage if we take a low offer. Valued at peak £140, valued now at £125 owe £115 on it? we could then go and rent a nice sized family home for an affordable amount.

Option B

Grin and bear it for another 2 or 3 years, Keep making it nice, keep overpaying on mortgage and have another DC that sleeps in with us until we move.

It is a nice little cottage, with small garden and cellar and loft storage, the area isn't great but our road is a quiet cul de sac and neighbours great, DS in lovely church school near ish. It is small and have boy and girl sharing, no off road parkingb etc WWYD?

[skinsl]

thought about renting it out? is it an option?
or loft conversion or extension?

that way you stay with your mortgage co.

just thinking that if you drop out of the mortgage ladder, who knows if/when you get back in, or what economic situation is if you wanted to get back in.

[rebl]

I don't think I would go with option A. You're on the housing ladder, alright on the wrong rung for your situation but it is still a big step in the right direction.

I would go with Option B and cope.

[chosenone]

yeah thought so! I guess we can make do and since DH in the building trade we've thought of converting the loft I guess it all adds value at some point!

[nikos]

But if house prices rise they are only going to do so very slowly over the next few years. Now might actually be a good time to upsize as youmight be able to knock quite a bit off the asking price of any property you move to.
How much could you afford to increase your mortgage to and what would that buy you in the area. If you can aford the mortgage then it might be a good time to make the jump. If your dh is a builder, could you buy a property to do up and therefore get more for yourmoney?

[captainaffray]

If you get off the housing ladder now it will be v difficult to get back. No mortgage lender is going to accept a £10K deposit at current Loan to Value rates for a new purchase, and is not likely to for the next couple of years

If you husband is in the building trade. Make plans for an extension and get local estate agents to give valuations post extension \ loft \ cellar conversion. Typically the rise in value out strips the cost of construction, giving you the badly needed space, and more equity when the market is more favouable to move, and banks arn't so risk-averse.

[skinsl]

once you have the figures, you could try and remortgage for the extension/conversion and with interest rates lower it might be cheaper than you think, depending when you got your last mortgage

[chosenone]

Thanks guys. I thought we'd have to get a personal loan as little equity in the house, then I was worried about remortgaging a house with little equity IYSWIM but I guess if we turn it into 3 bedrooms surely we'd recuperate the money straight away? But would the mortgage provider lend us that amount taking us up 100%? Or would they see that because its house improvements its worth it? Is that what you mean by risk adverse? Our mortgage is cheap at the moment as its a tracker up for renewal in just under 2 years!

[ampere]

Unless you're 'used to it', I wouldn't rent.

You have precisely 60 days security of tenure in a renter, and that's not a good thing with possibly 3 kids, schools, jobs to consider. There is also that unspoken issue of second-class citizenship that goes with renting! (I rent so I can say that cos I KNOW).

Also you're sort of stuck with it, whatever the colour of the walls etc!

'Risk-averse' in this context means the banks just aren't taking any risks, ie they won't lend the 95%-100+% house price values they did pre-crunch which they DID because they saw it as low risk as 'house prices only go up, don't they'? They'll only lend what they estimate they can recoup over the span of the mortgage if they have to repossess it; so if you want a house for £150,000 with a 100% 20 year mortgage, the banks MIGHT think- "Well, it's now possible that over the next 20 years that house MIGHT at some stage dip to a value of £120,000. If THAT coincides with repayment default, we stand to lose £30,000 in a repo sale"- so they won't take the risk.

I'd make the most of the property you have if I were you.