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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

AIBU to sell my house?

66 replies

coffeelover39 · 01/08/2019 09:48

DH and I took out a 25 year mortgage to buy our flat in London three years ago and have two years left on the current fixed term.

When we reach the end of the term in 2021, assuming the value of the flat is the same as when we bought it, we would make approximately £200k if we were to sell it and rent.

I know there are a lot of benefits to owning your own home and there's no way DH would let us do this anyway - but AIBU to fantasise about selling up and banking the £200k?

I can't help thinking of all the lovely holidays and treats we could have that we can't afford at the moment.

We both earn a decent wage and can cover the mortgage payments, but we can't afford big holidays or a car.

Downsizing isn't an option as we're at the lower end of the market as it is - and we don't want to leave London. Increasing the mortgage term isn't possible either due to our ages.

Any thoughts?

OP posts:
PooWillyBumBum · 01/08/2019 09:54

You have to do the maths yourself and figure out what's worth it. If you're at the lower end of the market are you sure that you've made £200k in three years? The London market seems to be softening, if anything.

There are sometimes good reasons to release equity like that. Buying isn't always better than renting, contrary to the bullshit we're often fed, especially if you're only knocking off a few hundred in equity every month and spending more than that in repairs, and if rent payments are comparable.

That said I wouldn't release 200k for holidays and cars - I'd be dropping it into retirement funds and S&S ISAs and watching it grow.

PooWillyBumBum · 01/08/2019 09:56

*repairs and upgrades I meant to say. I think a lot of us pour way too much money and effort into residential properties, then don't see most of it back when you account for inflation and what that money could've been doing invested in an a decent index fund.

Bunglefromrainbow · 01/08/2019 10:00

On the face of it it's easy to see why you'd fantasize about this, about changing the dynamic of your lives and living for now. But it would come at the expense of future security so personally I'd side with your husband and say that it's a bad idea.

I don't think you're being unreasonable to fantasise but I can see the pitfalls too. Unless you want our future, including possibly where you live to be decided by a government that is yet to be determined it's maybe best to own your own place.

Fi1982 · 01/08/2019 10:07

Where do you live that you’ve made £200k on a lower-end flat in 2/3 years?

I bought mine in 2014 and have gained about £70k in equity, and that’s in a relatively nice London borough 🤔

Fi1982 · 01/08/2019 10:08

Sorry, in 3-5 years, not 2/3. But still, same timeframe as mine, and nearly triple the equity??

PettyContractor · 01/08/2019 10:08

If you're assuming the value is unchanged, you haven't "made" 200K, you had some of it at the start and the rest you've saved.

YABU to want to spend your savings on treats.

It's very unlikely your mortgage costs more than renting, so effectively what you are saying is you want to temporarily have a higher standard of living by blowing all your savings.

A cheap interest-only mortgage, if there is such a thing, would be the best way of cutting current housing outgoings. Having said that, the fact you think the way you do shows you're not good with money, and people who aren't good with money are precisely the people who shouldn't have interest-only mortgages, they need the discipline of a repayment mortgage.

BeingATwatItsABingThing · 01/08/2019 10:12

Another one who is confused on how you’ve ‘made’ 200k. Hmm

YippeeKayakOtherBuckets · 01/08/2019 10:12

‘Assuming the value of the flat is the same’

Do you mean you will have paid off £200k in 5 years? So your mortgage is £3,333 a month?

For a flat?

I know you don’t want to leave London but a travel season ticket would only cost you two months current mortgage payment for the whole year and you could have a house AND holidays AND car.

PettyContractor · 01/08/2019 10:13

An interest-only mortgage would also only make sense if you were counting on moving somewhere cheaper when you stopped working, as from the sound of it you wouldn't be saving elsewhere to pay it off.

Grumpyunleashed · 01/08/2019 10:14

When you say banking the £200k do you mean after you have paid off the remaining mortgage.
If not then how does this work? A mortgage is to my understanding a bloody great loan to buy a home secured on the home which the lender has first charge on until it is paid off.
If you’ve made a paper profit of £200k after 3 years then congrats.

ComtesseDeSpair · 01/08/2019 10:19

I presume when she says “made”, OP is just using it as shorthand to refer to what they’d have in terms of the original deposit plus more equity gained through paying off the mortgage over the years?

OP, I can see why it’s tempting, but I wouldn’t do it. Renting an equivalent home will be far more expensive than your mortgage payments and you won’t be creating equity. If you genuinely can’t downsize (you probably could, you just presumably won’t compromise on area or type of flat - if you would then I’ve got something I could sell you 😁) then it really is worth shopping around for mortgage deals. There are some out there hovering below 1.5% (I just took one out, so genuine) which could save you enough each month for a holiday unless your current rate is very low.

longearedbat · 01/08/2019 10:19

If you have made so much, which doesn't sound right, but never mind, it is very poor financial planning to aim to get your hands on the dosh and spend it all on 'treats'. What would you do once the cash is gone? So yes, you abu. Think of your future, not short term pleasure.

MummyShah369 · 01/08/2019 10:21

200k at 5 to 10percent would give you 10 to 20k a year would that cover rental costs in your area?

Original poster
coffeelover39 · 01/08/2019 10:23

Sorry, I should have clarified - we made about £160k on the first property we bought prior to this one and put that money into the new place. So £160k plus the £40k we'll have paid off the mortgage in five years = £200k.

OP posts:
LadyMacbethWasMisunderstood · 01/08/2019 10:24

None of your maths really makes sense. How have you ‘made’ £200k if the value of the flat remains the same?

bernietaupinspen · 01/08/2019 10:26

You think it makes financial sense to sell a propert worth £200k which has no mortgage on it, to go and rent Confused

Original poster
coffeelover39 · 01/08/2019 10:27

200k at 5 to 10percent would give you 10 to 20k a year would that cover rental costs in your area?

If you know a savings account that pays out 10% a year then please share the details! Grin

We'd obviously still be working, so our wages would cover the rent - but we'd also have £200k in the bank for holidays and treats.

Like I say, it's just a silly fantasy as I know it's not the sensible thing to do - plus like I say, DH would never agree.

OP posts:
Original poster
coffeelover39 · 01/08/2019 10:28

@LadyMacbethWasMisunderstood see my second post explaining!

OP posts:
LadyMacbethWasMisunderstood · 01/08/2019 10:29

Sorry cross post. The further £40k is not money you have ‘made’ though. How old are you. Think about how many years you would potentially have to ‘stretch’ the £200k over. The idea of entering old age with no equity in a house and your savings gone is not attractive (I appreciate that will be the reality for many people but it’s not a situation I’d actually orchestrate). Unless either or both of you have really good pensions - providing a lump sum and a decent income - I’d say it’s more of a bad dream than a fantasy!

Original poster
coffeelover39 · 01/08/2019 10:30

You think it makes financial sense to sell a propert worth £200k which has no mortgage on it, to go and rent confused**

No, I don't think it makes financial sense. But I do think that life is for living so why spend it tied to a property?

OP posts:
Sammy867 · 01/08/2019 10:32

To be honest I’d probably sell and rent then put away around £100,000 into investments. I’d improve my short term lifestyle with the difference and still have the £100,000 gathering interest to use to retire somewhere cheaper when the time calls for it (north that £100,000 with interest could buy a lovely quiet retirement property)

Honeyroar · 01/08/2019 10:33

Why are people getting so fixated over her "having made" £200k?? Just read it as "when the mortgage is paid off we will have £200k if we sell it".

Yes it's a lovely thought, having £200k cash to spend on holidays and cars etc, but it would be pretty reckless to fritter it all. Surely when you finish paying the mortgage off you will be better off each month because your payments have finished, so you will have more to spend on holidays etc...?

Honeyroar · 01/08/2019 10:34

Plus if anything ever goes wrong job wise, you've always got a roof over your head. No having to afford rent.

bernietaupinspen · 01/08/2019 10:34

No, I don't think it makes financial sense. But I do think that life is for living so why spend it tied to a property?

Because one of the easiest ways to live is to have that property. Particularly bought and paid for. Not much point 'living' if you are on the edge of being hit with an eviction notice at any time.

bernietaupinspen · 01/08/2019 10:36

We'd obviously still be working, so our wages would cover the rent - but we'd also have £200k in the bank for holidays and treats.

Baffled Confused

If you are both working and not paying rent or mortgage the money you save is that you use for holidays and treats.

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