opinions please on whether this is do-able. Mortgage/house move/debt related

[alabasterangel]

Might be long but I really need to talk this through and make sense of it, and judge if what we are doing is sensible....

We NEED to move house. This next move will be to a long-term home and will be the last time we increase our mortgage lending as DH is 50 and I am 41 and we have 18 years left on our mortgage so we don't want to increase the term. We also need to move as my neighbours are making my life a misery, which is a whole other huge story. The facts are:

House is worth realistically 150,000. advised to market at 160k
mortgage is 98,000 currently
equity therefore is 52,000

We want to buy in the region of 200,000, increasing our mortgage to cover this.

DH earns 40k.
I earn 18k P/T.

I believe on this wage we would have little issue increasing our lending. I am not concerned about covering the increase on a monthly basis as our childcare costs cease in September when littlest DC starts school f/t which means from September onwards we are 550 a month better off anyway.

We want to move fast because there is a very real possibility that something could happen to my job in about June/July. I could be offered the chance to take voluntary redundancy, which would equate to me receiving a redundancy payment in the region of 20,000. I want to go into self-employed contracting work if that happens, which would pay me, f/t approx 60k a year. This is a certainty, not a possibility as I am headhunted regularly for this kind of work, but have said no so far as I wanted to get my redundancy as well, and (more importantly) knew we wanted to increase our mortgage and doing so when I'm self employed would be far harder?

However, the other thing is that going p/t was a financial sacrifice for us and only ever a short term luxury, and as a result between us we both have a 1k overdraft and 2k each on c/cards. We have 4k in savings, which I am loathed to touch as it's our 'extreme emergency' fund and I don't feel safe not having it.

What/how is the best thing to do? I don't know how we are supposed to provide the solicitors costs, stamp duty, and the seemingly exortionate estate agents fees. The valuation we had yesterday seemed to total that the moving costs alone would be about 8,000

So how/what is the best thing for us to do? Should we free up 12k in equity and pay off debts and costs? Stay put and be miserable? I don't know how else we are supposed to do it......

We are in a similar position though with different numbers. This is what we have decided:

We are paying down debts first.
Then saving to move.
We need to move re size but we are not overcrowded or anything so not desperate but lack of storage space gets to me.

I think you should pay off debts. You could be debt free and still have a borrowing facility to use in an emergency. It is false economy to have savings while paying interest on cards (unless you have them on 0%)

Then you need to save to pay for fees.
9k/500 = 18 months OR release equity. So it boils down to accepting you need to stay there longer or releasing equity will reduce your deposit available which in turn will restrict what houses you can offer on and/or mortgage products in term sof LTV.

BUT then if you were able to sell/buy now usng equity release get mortgage through etc on current employment contract then pay that back in when you get redundancy payment and higher income. This way is higher risk with IF's attached.

It is tough, every time I look at our finances i realise we only a tinier step nearer to moving. We only planned on being in this house for a few years. I have had accept I need to be patient and wait. Its torturous looking at houses.

So if you sold for £150,000 and bought for £200,000 your mortgage would be about £160,000?

If that's right the main questions are: 1. Will someone lend you this and 2. Can you afford the repayments both in the short term and the long term?

If the answer is yes to both of those then I think it sounds fine. The only thing to bear in mind is that your LTV goes down to 80%, which may effect what sort of mortgage rate you can get.

Thank you.

apple - yes. Those figures are right, thereabouts. Yes we can afford the repayments. ATM our mortgage is 550 a month, and our childcare 550 a month (so 1100 total). Remove the childcare which is going anyway in September, and even at the increased mortgage costs @ 850ish we are still better off. Plus by then, I'll either be contracting and earning more, with a lump sum in the bank from my redundancy. Or I'll be still here, employed, but my work will go back to f/t (so about 34k a year) so again we'll be massively better off in terms of the household income.

thinking - I agree in principal that is what we should do, but the trouble is that the environment we live in is not good and is causing me anxiety. Not sure I can keep doing it for another 2+ years!

Speak to the bank. You are seeking a £150k mortgage plus a bit to cover costs on a 58k joint salary. You need to know their lending multiples.

Go for it, knowing your are definitely £550 per month better off is a huge plus. Then if everything else happens it will all work even better.

e have lived next to annoying neighbours but not 'problem' ones as such. When we moved here we really appreciated looking at our inhertited purple feature wall knowing them buggers werent on the otherside of it.

It does affect you, maybe the pinch of the finances for a few months is easier to bare then the daily anxiety.

Best of luck - go speak to the bank and get a MIP in place

I think it Gould be ok. My mortgage provider were happy with me just stating that my childcare costs were decreasing due to DS turning 3. The most common multiplier appears to be 3 which would be ok for you.