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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

to be so fed up that my house has not increased in value in TWELVE YEARS

130 replies

chocolatemixedwithdogfood · 01/06/2017 19:37

That, really.

It's in a not very great part of Glasgow - not horrific but not posh either - but it was all we could afford at the time. We paid £165,000 for it in 2006. Then increased the mortgage by 10,000 so we could convert the attic. Thinking that within five years we'd sell it for around £200k and move somewhere a bit bigger as our family grew.

Upshot has been that its valued has remained what we paid for it at the very most - we were told that it would fetch between 150-165 maximum by an estate agent this year.

We have rented it out for the past six years as our family got bigger and we needed another bedroom. And we rent our house.

It's in good condition, lovely big garden, nicely painted, though the current tenants are not keeping it in great condition with their huge dog and it will need a massive deep clean when they leave, however they are good tenants in that they always pay on time and keep the garden nice, etc.

Just wonder if it will ever increase in value, and if we will ever be able to afford a bigger house or will be forever renting.

OP posts:

MacarenaFerreiro · 02/06/2017 08:24

You thought you were getting something for nothing, had no plan to pay back the capital and you'd be bailed out by property prices going on rising forever

Exactly. When we took out our first mortage in about 1997 interest only was all the rage, backed with an endowment to pay off the capital. When we remortgaged a couple of years later we switched to a repayment mortgage. When we took out our first mortgage it was always made crystal clear that we had to have a plan for repaying the capital 25 years down the line when the mortgage matured. It's hugely irresponsible just to keep paying the interest with no savings or ISA or whatever to repay the capital.

If OP hasn't been repaying any capital and sells her house for roughly what she paid for it, she is in exactly the same position as she was 12 years ago. No equity and no deposit for a larger property. In her position I would be thinking of staying where I was and renegotiating a repayment mortgage as soon as humanly possible. OP - you need independent financial advice. Can't believe you've left it this long, tbh.

MyCalmX · 02/06/2017 08:25

OP your complete lack of knowledge on your mortgage is shocking. Clue yourself up first there then come and have a moan that your house hasn't made any money.

If you'd paid it down you'd now have some equity.

How big is your home and how big is the one you moved to? Can you move back and save hard?

Kokusai · 02/06/2017 08:34

Sorry should have said, it was an 100%mortgage and it's interest only. So no equity

Fucking hell why haven't you switched to a repayment mortgage??? There is no way on earth you would get an interest only moretgagw now thank god, much stricter rules about them.

You were one of the unlucky ones. Borrowed an irresponsible amount on an interest onlymmortgsge with no ability to pay it back at the height of the market.

Kokusai · 02/06/2017 08:37

I also bought at the peak and sold my house for less than I payed for it. But after 8 years of repayment mortgage payments I still walked away with more equity than I put in.

i am so shocked that with all the news about mortgages and house prices the OP hasn't tried to deal with her situation before now and move to a repayment mortgage.

Kokusai · 02/06/2017 08:37

She will need at least 5% of not 10% deposit now. So she is in a WORSE situation.

Kokusai · 02/06/2017 08:41

Anyone saying'but why didn't you realise'? Is probably just lucky it hasn't happened to them. It's not a slur on your character

There isn't no shame in having been sold a 100% interest only mortgage back in the ore Global Financial Crisis years.

There is a huge amount of ignorance not to have done anything about since 2008 when it has been alllllll over the news.

expatinscotland · 02/06/2017 08:41

When you treat basics like shelter as investment vehicles, you need to accept that as such, there's a chance the vehicle will not increase in value or even go down. YABU.

Kokusai · 02/06/2017 08:42

*there is no shame

I can't type

CBeebiesaddict · 02/06/2017 08:44

YABU. Surely in 2008 you realised your plan wasn't going to work and you would need to switch to repayment? I realise that redundancy was bad luck but SAHP was a luxury you couldn't afford.

Mummyoflittledragon · 02/06/2017 08:45

ThroughThickAndThin

I think you're talking about a very different product. I'm a btl landlord with a few properties all on interest only until very recently so I have knowledge of several products and the way the mortgage market works. Op may be lucky and paying a low svr. But as I say I would be very surprised. As others have mentioned, op would need a deposit these days so it's going to be very difficult to change products.

Mummmy2017 · 02/06/2017 08:46

If you think the house will never increase, unless you have an Endowment policy on it why don't you just sell up and buy a new one, as it's not doing you any good, as your mortgage payments are not making you any profit.

ShatnersWig · 02/06/2017 08:51

Not everywhere will increase in value and some properties will always have a ceiling based on the type of property and where it is located.

I have a one bedroomed flat. Quite cul de sac. It's not in block, just four of us, two up two down, all own entrances and I have my own large garden and conservatory. The kitchen could do with a bit of updating as could the bathroom. But I'd never get that money back because there is a ceiling price on a one-bed flat where I am.

SquitMcJit · 02/06/2017 08:58

But to posters who are saying " why don't you switch to a repayment mortgage?" how can you do that if you are stuck in an IO mortgage with no means of raising a 5-10% deposit? Isn't this why people are stuck in a bad situation with IO mortgages, even if they know it's not good?

VeryButchyRestingFace · 02/06/2017 08:58

I've looked online though and houses in the same street are going for offers over £140k or fixed price £150-55.

Have you looked on the 'sold prices' area of the Rightmove site, OP?

The sold prices are often higher than the asking price. I'm in a different part of Glasgow (also not Newton Mearns) and when the bloke upstairs from me put his flat on the market last year for £100k, it sold within 3 days for £117k.

The asking prices aren't always indicative.

expatinscotland · 02/06/2017 08:59

People who bought during the bubble over here (I'm west of you) are taking a bath in the losses if they can even sell the thing. That's the way the cookie crumbles. I'd get out now, especially with all this political instability, you could lose money rather than just break even, but hey, keep dreaming!

Mummyoflittledragon · 02/06/2017 09:07

expat - you talk sense. If op had a deposit and was paying off capital it would be different as houses do eventually go up because of inflation. But op could potentially get to the end of the 25 yr mortgage before this happens if the political situation go awry.

AngelicaSchuylerChurch · 02/06/2017 09:10

This is a 100% interest only mortgage, no way would they be with a lender with a low SVR.

To add to this - I very much doubt that OP has remortgaged to a 100% BTL mortgage in order to let her house, so she must have got consent to let on her residential mortgage (and by God, I really really hope that you have got this, OP). The lender will typically add 1.5 - 2% to the interest rate if giving consent to let, so OP could well be paying 7-8% interest.

slithytove · 02/06/2017 10:07

If you overpay your interest only mortgage, yes it does reduce the capital.

slithytove · 02/06/2017 10:13

Op. Have a look at your mortgage agreement and see if repayments are allowed, it could be as much as 10% of the loan amount annually. Start paying extra each month if so. This will start reducing the loan capital - but do double check this with your provider.

We have just been advised to do this on a btl I own as a way of having more flexibility.

Kokusai · 02/06/2017 10:45

The OP will almost certifiably be able to move to a repayment mortgage. I am not saying she will be able to fix at 2%.... but it is highly likely she can switch onto a repayment mortgage. She is on an IO with no repayment vehicle, this is not a great situation for the bank either.

Firesuit · 02/06/2017 11:16

At the individual level, there is absolutely nothing intrinsically wrong with interest-only mortgages.

Castigating someone for having one is the same as castigating them for not building up savings. Making capital repayments on a mortgage is just one way of doing that, and while it's a reasonable way, it's not the only way, and not necessarily the best way.

I gather interest-only mortgages have been regulated out of existence, and I can see societal benefits from that, such as making the banks more stable, the property market less bubbly, and maybe forcing feckless individuals who could and should save do so when they otherwise might not.

It may be good that certain people are forced to save in a particular way by the nanny state, but it does not follow from that that anyone who doesn't save in that way is an idiot. For example, I will probably pay an average of 10% tax on my pension balance, having obtained between 38% and 47% tax relief on the money that went in, so someone in similar circumstances would have been hugely better off choosing to save via a pension, if they had to choose between pension and mortgage reduction for savings.

I had an interest-only mortgage which I happened to almost entirely pay off just as the crisis was starting. I don't regret paying it off, but it's arguable that it would have been financially a better move to have kept it, given that my mortgage interest rate for the last 8 years has stayed below 1%.

TrickyKid · 02/06/2017 11:21

We're in the same position. Can't move, so have to make do with a two bed house. Worse things happen, I try not to worry about it.

MissDuke · 02/06/2017 11:30

Op what a nightmare You definitely need to gather together all mortgage paperwork and either go to a friend who is knowledgeable in these things or ask for recommendations for a trustworthy financial advisor.

Just to put things on another slant - we bought our house in 2005 for £120k. We put in a new kitchen, bathroom, replaced the garage roof, took out the old stone fireplace and replaced it with a beautiful wooden one. In addition to the usual decor costs and other minor maintenance issues. We recently sold it for £117k. However we were happy to let it go at that to get our 'dream house' which was already for sale so we priced it to sell and took the first offer (well we haggled them up a bit). We were able to do this because we had saved like mad all those yrs ago and put down a 16k deposit (we stayed living at home until we got married at 23 to enable us to save and put every penny of wedding present money and also money my dad gave us for the wedding and did the wedding very cheaply). We then overpaid on our mortgage every single month. We also had an amazing interest rate as it tracked at 0.25 above the base rate which was total luck on our part to be fair as who knew the rates would drop so low. Everytime the rate dropped we still paid the same amount in so we were overpaying by more and more. Anyway we also were able to go on to reduce our term a few yrs ago without changing product so that basically at the start of this yr we had 15k outstanding and the term was reduced to just 5 more years.

We decided to move as we desperately needed more room though it was heartbreaking leaving behind that tiny interest rate (though we feel more security in the current climate by going for a fixed rate for 5 yrs). We plan on taking the same approach again with our new mortgage (jumped back up to 92k , we are still early 30's though so it is manageable. We are good savers as we enjoy being quite frugal so that helps too.

My point is not to gloat (we were simply lucky to receive excellent advice, we wouldn't have had a clue about any of this) - but to say that really house prices aren't to blame here, it is bad advice that you have got regarding your mortgage and I guess to an extent your choice of being a SAHM etc. Which by the way, I would urge you to have no regrets over because you can never get that time with the children back!

Get yourself off to an expert who can point you back in the right direction, you will get back on track somehow and sometime - at least you are starting to look at taking action. Good luck

aliceinwanderland · 02/06/2017 15:05

Tbh all this speculation about what mortgage conditions the op has is not that helpful. Mortgage terms were much more flexible pre crash. It is possible that op is able to let without an interest penalty and tracks Base rate.

chilipepper20 · 02/06/2017 15:19

Just wonder if it will ever increase in value, and if we will ever be able to afford a bigger house or will be forever renting.

Stable house prices are good thing. And rising prices are bad for people who want to trade up.

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