Vicious circle...WWYD?

[mulranno]

Had a hideous year last year financially with both of our businesses - just about pulled through and back on track. But at the time I vowed that we should sell up and downsize to clear our mortgage (£160k) as I learnt that we were quite exposed financially and I could not face the stress again. I am terrified of rates rising as I am not sure that we could absorb the costs. However it will cost £50k to move - which seems like a mad price to pay to clear £160k (we have a lot of equity in the house). OTOH I cant see that things will get better in terms of income - but we are in an expensive area which is growing well - so do I hang on for as long as possible before downsizing?

Why will it cost you 50k to move? If it's a tie in on your mortgage then I would hang on in until it's finished. I don't think rates will rise for a while.

£50k???

My question too. How could it possibly £50k to move?!

selling for 1.1 and buying for 900,000 estimated 50k in estate agents and stamp duty

Can you move to a more flexible mortgage which will allow you to take payment holidays or even draw down on your equity if needed?

I understand, we have had the same and are in a similar situation. We've decided to stay put for now for a variety of reasons, but having any debt at all is really stressful in a situation where income can be so variable.

It's really frustrating as well to know that you are really 'rich' (in terms of the equity in your property) but that such a small % of the value can cause such a disproportionate level of stress.

Limited sympathy I am afraid. Sick up the hard times and stay put, I reckon there's probably a fair bit more economising to do than you possibly realise.

Ah. Buy for 850,000 and problem sorted.

We have been here a very long time (20 years increased the mortgage to extend 10 years ago). Not looking for sympathy just that both of our businesses have been hammered by the recession. Would like to stay put but cant see things getting much better in the medium term - our incomes are now stable (but significantly reduced) maybe we just need to deal with the inevitable and sell up and move on.

Yes, I think you probably do. Your £50k costs are, proportionally, equivalent to less than £5k costs for me, since my house is worth under £110k...

Since you only have a £160k mortgage - less than 15% of the house value - you have plently to play with and a lot of choice. You can simply downsize by that amount to pay off your mortgage, or you could downsize more - to £750k or even £500k - and still buy a beautiful house and bail out your businesses too...

Down size to a house that's valued at the amount you have after paying everything off with no mortgage. That'll save you a fortune.

Could you downsize and relocate? 500 would buy somewhere amazing where I am :)

It doesn't seem worth downsizing if the house you'd downsize to is only £200k less than your £1.1k house. Surely better to downsize to a much cheaper house, clearing your mortgage. Less stressful to do that now than to do it when you can't pay your mortgage. How many people live in your house? Just wondering how much space you really need.

Incorporate house move costs in your budget for new house

It is going to cost at least that much so rather than 900k you have 850k to spend

We were considering moving to go mortgage free but decided we loved house too much so stayed, question is do you love your house and not want to move or will it not make a difference

I think the planned downsize isn't worth it. It would be more realistic if you downsized significantly and used the equity to generate another stream of income - maybe a BTL. That way you become mortgage free, reduce living costs and get another income stream. I

If you need to stay in the area due to dc's then I would hang on until they are at an age when it it possible. I also think you're not quite ready (emotionally) to downsize but understand why you want to be mortgage free.

If you have other assets as well as the house (pension, shares, business assets) I'm sure a financial advisor would be beneficial as with over £1m in assets you will have lots of opportunities.

I'm suprised by some people's lack of sympathy - this person has worked hard for 20+ years, taken risks, set up businesses and brought their own home, which over many years has increased in value to £1.1m
Well done!

Now unfortunatly, OP is stressed by financial worries - surely everyone can relate to that. Whatever sums are involved, its obviously a worrying time.

Personally I dont think a £200k downsize makes much sense. Can you rent out a room or split part of the house to make an independent annex? Rent your garage, car parking space? Let any business offices go and work from home? Sell a car?

Thanks All - very helpful...and I was not looking for sympathy - just trying to continue to dig ourselves out of debt. A down size would be moving areas locally as the kids are all tied to good schools. We have 4 from 7-14yrs so tied in for some time yet and as we work full-time - we have an aupair which means we do need space. I think we could keep ticking on here for a few years - but I was so shocked by the position we found our selves in last year that I dont want to face that again. Given the transaction costs it would make sense to downsize once properly and invest equity in BTL to generate another revenue stream. Will look into that.