to not know what to do regarding moving house

[whatstheworstthatcanhappen1]

So bit of background we bought our house back in 2007 and paid over the odds, first time buyers, young and rushed into it due to excitement. Within 3 months the market crashed and house value lost about 10k.

The house is 2 bedrooms and we now have two children, boy 9 and girl 3. i am desperate for them to both have their own rooms and it's been a dream to try and save for a deposit to move house. We currently struggle monthly due to childcare costs so no spare cash.

Anyway last Sunday I won £10,000 at bingo. just don't know what to do, do we use that as a deposit but may struggle to pay for other costs of moving or do I use it to put a stud wall up in our room to create 2 small rooms? could also pay debts off too to make things more comfortable on a monthly basis?

I feel if we don't use it to move we will look back and regret it.

Possibly have about 2k equity too.

We are buying the house we already live in. We own another house which we rent out. It's a private sale as my dad owns our house. The costs are £800 solicitors fees, £259 mortgage broker fee (well worth it), and £280 mortgage arrangement fee.

We are buying this house for 100k so probably similar costs to you. If we had used an estate agent for any reason there's a local one for £295 set fee so not that much.

We don't have any debt but we have £1200 on a credit card outstanding (was used fraudulently abroad and taking ages to sort out) so that was just taken off the amount we could borrow.

We were stuck in a little two bed before we moved here and I'm so glad we moved to this house which is a 3 bed semi with massive garden. I'd go for it if I was you!

I think you should clear the credit card debts. Paying minimum amount each month is a big mistake as the interest rates are so high. No point in going to a new house with this £5K debt still hanging over you. Or at least say pay off half the credit card debt or even £2K of it which will still leave you with £8K towards your house. I'd go for the move but think carefully first. I wonder how much of the £130 is interest and how much going towards the debt. How long before your DD starts school and your childminding fees are reduced.

Don't forget to factor in an increase of interest rates which is being rumoured to come in later this year.
I heard it is likely to increase to 4%.

I'd cost it all up, check if you can borrow and buy the bigger house if the numbers add up.

My thinking is

• you'll only have this money once
• if the house is sound, you can live with dodgy decor or a tired kitchen for a couple of years
• once you've moved you can start shuffling those credit cards to interest free deals and pay them off qucker

We went the stud wall route about five years ago. We own place we really like in the heart of the city, 2 BR, 2 DC, a large living room. We split the largest room, now there is space for everyone. The wall looks good, and if we still live here when DC move out we can get rid of it. I don't regret not moving.

How big was the bedroom you separated?

Unfortunately my daughter just misses out on school this year so will start next September but the free hours are meant to be going up to 30 hours this September so that will clear all costs as I work 30 hours.

I am due a bonus at work in April of around £900 so that will help too.

I am going to get quotes on everything, get my house valued and take it from there. Thank You for everyones advice.

bearbehind I would strongly recommend NOT using the EA broker. I was just suggesting that they might give an idea what the OP can borrow, before she works out what she can afford. There's also London and Country online.

FWIW, I didn't use any broker. I find my own mortgage online with HSBC. I wouldn't want to waste anyone's time except the EA . They earn enough from my fees anyway!

Some of this advice is really suspect, OP. You aren't going to be borrowing a huge amount 60-75k at most. At that level it doesn't make sense to pay off your unsecured debt first - you should be able to comfortably afford both (provided your joint income is at least 20-35k). In the unlikely event that you can't afford the credit card debt in the future that's unsecured - so you'll never lose your home over it (at worst you'll get a ccj). Suggest you leave the thread and do a bit of research.

With UK growth figures the way they are rates are and the margin banks make on mortgages, there's no way rates will go up to 4% straight away. The bank I work for is planning for rates ot 2.5-3% in the unlikely event that the rates increase by a whole percent which isn't likely as BOE will prob only increase by a quarter percent if that. Most banks will plan to absorb any tiny increases/hike up rates for unsecured lending.

'I heard'....as always, nonsense.

I'd love interest rates to rocket to 4% if the banks followed suit with savings rates. But it is not happening. The mortgages would go up much quicker and large numbers of people would default.

I don't think the advice is 'suspect' spaceyboo

To me 'suspect' is telling people things that aren't true/ are incorrect.

That's not the case here- people have just different priorities ie some would prefer to clear the debts first, you clearly wouldn't.

If you work in a bank you'll know that £5k unsecured debt could have a big impact on what a lender is prepared to lend if the applicants have lowish salaries or highish out goings.

I'd definitely use it to move. How often would anyone have 10k plop into their lap? Good luck

This is a great tool to look at overpayment calculator

I think you should pay off your debt (est 5k), use the remainder to pay off your mortgage and then use the money you save on cards repayments (est 130 a month) to overpay your mortgage some more every month.

If you look at the calculator (I have estimated your house is worth 70k and you pay 5% rate), your 10k could mean your mortgage debt is reduced by 13k in 4 years time & you will have cleared your 5k credit card debts, thus making your 10k worth 18k to you within 4 years timeframe.

At that point, you will also be free of nursery fees and can think about moving.

Have you thought about renting your existing house and using £8k as a 10% deposit on a new one? Would this cover the existing mortgage? Then you have a big safety net in the future

It always astounds me the number of people who suggest just renting a property out

It's not a fail safe plan even if you go into it with your eyes wide open and intend to become a landlord.

To even consider it when you have debts, 2 young children and therefore no safety net to cover unexpected costs associated with the rented property would be madness.

Yeah I've watched too many programs like can't pay we'll take it away and see when renting so really wrong.

I have requested a few viewings in the area to see what we can get for our money and will take it from there. Thanks for everyone's ideas

whatstheworstthatcanhappen1 No big lecture from me but I'd be doing my damnedest to get rid of the credit card debt first!. That's costing you a lot there're very expensive things to use for credit. Unless you pay them of in full each month there're a very expensive way to borrow.

Yes i read that you want to get on with the project and good luck to you with that but the cards! spawn of Satan and anyone else who tells you otherwise they must work for Barclaycard!.

Bearbehind Good advice there I'm a landlord and its not quite as easy as it seems we had a rental "void" this year cost a bit there were reasons but I've enough reserve to cover that but if it were early days and a bit hand to mouth it isn't quite as good as it seems!

I would move. You only get one life and wouldn't it be great for your son to have his own bedroom before he starts senior school? I agree with spaceyboo.

I'd move - with the £10k deposit - and then see if I could add the credit card debt to the mortgage. Overall same amount of borrowing but a small increase in mortgage is a negligible increase in monthly repayments.

And then I'd cut up all cards bar one (for emergencies) and only otherwise use it if I could pay the balance in full at the end of the month.

Congratulations OP. Me personally, I would use the money to buy the house.

katienana Spot on.

Your right katienana it means so much to be for them to have their own rooms and he'll be at secondary school before we know it.

Just need to go for it, think I am going to look into the help to buy scheme first.

Help to Buy is for first time buyers only

You don't pay Stamp Duty Land Tax if the property is less than £125k.
That said, your EA's costs on your sale, which attract VAT, will eat up just over £700 of your £10k (estimating at 1% of £70,000 plus VAT), plus legal fees for any half decent lawyer of £1500 for both sale and purchase, including VAT.
I personally would prefer clear credit and wouldn't consider moving unless the increase in equity was significantly more than £10k.