any financial whizzkids out there - advice needed

[midnightexpress]

We would like to move house, to something a little bit bigger, so looking at something a bit more expensive than where we are at the moment. Here's our dilemma: DP is convinced that the housing market is about to collapse, so he thinks we should sell now, bank the money and rent for a while, then buy when the market falls. I am not so sure abut stepping off the ladder for a bit. Not to mention the hassle of moving twice instead of once.

Anyone got any thoughts on this?

[kslatts]

My sister considered this when she moved 18 months ago as her dh thought the market was going to crash. As it turns out house prices have continued to rise and her house is now worth about £50k more than what she paid for it so they are glad the bought when they did.

I couldn't do it, but mainly because dh and I would be tempted to spend the money in the bank.

[oranges]

I don't think it's worth doing that with a family home as the market could very well go up and you end up unable to afford somewhere. It also depends where you are. Even if the housing market crashes, a lot of buy-to-let flats will fall in value but good houses with gardens in good areas may well hold their value or continue to rise.

[midnightexpress]

Thanks kslatts. I know what you mean about the temptation, though I guess it would be possible to 'lock' it up somewhere to remove the temptation.

[Cappuccino]

I know someone who got badly burned doing this

house prices went up even tho they were sure they would do the opposite

plus you spend hundreds or thousands in rent

cannot see the point

seems a bit suicidal to me unless you are some kind of market expert

[midnightexpress]

I think you're probably right - it's a risk, though I suppose in six months or so prices wouldn't increase that much - we're in Scotland, btw. Renting, to me, always seems a bit like pouring money down the toilet, if you're in a position to buy. And good point about the type of houses that might fall in value, oranges. Thanks for your thoughts.

[swanseadaddy]

general feeling in marketplace that at worse we will see prices stagnate rather than fall, although in area's where the recent rises have beem meteoric these could fall back to where they were previous to rise

in other words

Personally i'd stay on the ladder

[GooseyLoosey]

Mmm, I work with some institutional investors and have not noticed them divesting themselves of their property portfolios. That said, a rise in interest rates is predicted which would force people out of the market so who knows... (this may just lead to a market slow down which would be more normal).

My DH suggested this when we last moved for the same reasons - 2 years on no crash. Fortunately I told him no chance.

You need to balance your risks - is the speculative chance that you might make some money worth the chance that the market might move in such a way that you cannot afford what you can afford now?

[BigGitDad]

It is all relative, if you want to move to a bigger house and prices fall, then so will the prices of all the other houses. What is inportant is can you afford the new mortgage.
To rent for a while can be risky because if prices do not fall the you will be left having to raise a bigger mortgage if house prices continue to increase.
More importantly if you rent you are delaying the repayment of your mortgage, (think of the extra interest payments you would have made, eg six month mortgage payments could be £6000? Depends on your mortgage size), plus you would have paid rent, so where is the saving there?
I think you are better off moving now.

[noddyholder]

It is not such a big risk as it was as prices have topped in a lot of areas and now inflation is ott and they are going to raise rates probably at least twice this year.We are going to do this although we were planning to rent for aq while for other reasons too but are hoping prices will stabilise or fall in teh meantime.I have been renovating houses since about 98 and I know a lot of agents and they think for the first time in yrs that things may be about to change.Good luck!

[BigGitDad]

But when you take into account the extra mortgage payments and the cost of the rent how much will you have saved?

[midnightexpress]

Think you're probably right BGD - whilst obviously it's nice to make money out of your property, we're really looking for a home for our family, with a view to staying there for some time. And since we are not spring chickens, I'm keen to keep paying off the mortgage, in fact, I'd like to try to reduce the term if possible next time we buy (having been shown some terrifying figures by a financial adviser about how much extra an additional 5 years of mortgage costs).

[BigGitDad]

Midnight Express, people do not realise how much they would save just by over paying £100 month on their mortgage, when you show them the figures they are amazed. Overpay by £100 on a £100,000 Mortgage over 25 years and you would cut five years off your mortgage.