Remortgage or sell up and rent. What would you do?
Discussion
I've got a real conundrum here, and can't make my mind up on the best way forward!
1. We have an extremely low rate 5yr fixed mortgage coming to an end in December. Whatever happens, repayments are going to rocket.
2. We intend to move West or North in 3-4 years from now anyway, so this is definitely not our forever home, but we definitely can't move before then without screwing the kids' education up as they're heading into exams.
Given that, I'm torn between whether we just suck up the extra cost of the mortgage and stay where we are until it's time for that final move, or would we be better off selling up now, investing the capital we take out of the house (the mortgage is around 30% of the value) and renting locally until we move?
I'm currently job hunting following redundancy, so this could all become moot if I don't find something, but even if I do, and the higher mortgage isn't a huge problem, it's making me wonder.
I suppose the key issue is what do we think will happen to house prices over the next 3 years?
If the South East rises or doesn't fall as fast relative to the rest of the country, then we potentially lose out on a big chunk of cash, but if the South East tanks compared to the South West or Midlands, then taking the equity out now and investing it could end up saving us several times the cost of renting a property until we're ready to move!
We'd also have the benefit of being the end of a chain when we sell rather than in the middle, plus we'd be cash buyers with nothing to sell when we go shopping for the forever home.
On the flipside, selling and moving into rented now would be a ballache.
HELP!?!?!
1. We have an extremely low rate 5yr fixed mortgage coming to an end in December. Whatever happens, repayments are going to rocket.
2. We intend to move West or North in 3-4 years from now anyway, so this is definitely not our forever home, but we definitely can't move before then without screwing the kids' education up as they're heading into exams.
Given that, I'm torn between whether we just suck up the extra cost of the mortgage and stay where we are until it's time for that final move, or would we be better off selling up now, investing the capital we take out of the house (the mortgage is around 30% of the value) and renting locally until we move?
I'm currently job hunting following redundancy, so this could all become moot if I don't find something, but even if I do, and the higher mortgage isn't a huge problem, it's making me wonder.
I suppose the key issue is what do we think will happen to house prices over the next 3 years?
If the South East rises or doesn't fall as fast relative to the rest of the country, then we potentially lose out on a big chunk of cash, but if the South East tanks compared to the South West or Midlands, then taking the equity out now and investing it could end up saving us several times the cost of renting a property until we're ready to move!
We'd also have the benefit of being the end of a chain when we sell rather than in the middle, plus we'd be cash buyers with nothing to sell when we go shopping for the forever home.
On the flipside, selling and moving into rented now would be a ballache.
HELP!?!?!
Random Account No6 said:
What does the math say when you take the cost to change and uncertainty into account. What would you have to ‘make’ to break even.
There's probably not much in it for the costs of changing. Two lots of removal vs one and two single legal transactions rather than one double buy/sell instruction.Beyond that, a 5% annual return on investing the capital would more or less cover the rental costs.
I think it really boils down to a simple - yet also staggeringly complex - question...
Will houses in the South East lose or gain significant value compared to those outside the area over the next 3 to 4 years?
On the one hand, logic might suggest that house prices here will suffer as people decide that in a post Covid world, they no longer need to live close to London.
On the other hand, it's equally logical to think that with interest rates rising and mortgage deals coming to an end, overextended homeowners a little closer into Central London may find themselves forced to move a bit further out, and prices where we are (30 minute direct train to Waterloo, but less than half the price of similar properties 15 minutes further in) might well go up!
It's a horrendously nervy coin toss at the moment!
Kermit power said:
I think it really boils down to a simple - yet also staggeringly complex - question...
Will houses in the South East lose or gain significant value compared to those outside the area over the next 3 to 4 years?
Or: is there actually anywhere acceptable to rent? And will there be for the period you need?Will houses in the South East lose or gain significant value compared to those outside the area over the next 3 to 4 years?
It all become academic if the rental market where you are is so thin (or will become thinner if landlords sell up) as to render it impossible to rent anywhere.
What’s the area in question?
Green area within a train of London that has schools that aren’t hellholes - my take is that you have made a lot of cash during Covid and I can’t see that trend continuing so much now many firms want people in 3+ days a week.
I could see traditional places like that (Surbiton type places) just growing as normal but you haven’t likely done ‘badly’ in recent years so I wouldn’t expect fireworks. Personally I’d imagine inner London houses to do more with people working in town much more.
Green area within a train of London that has schools that aren’t hellholes - my take is that you have made a lot of cash during Covid and I can’t see that trend continuing so much now many firms want people in 3+ days a week.
I could see traditional places like that (Surbiton type places) just growing as normal but you haven’t likely done ‘badly’ in recent years so I wouldn’t expect fireworks. Personally I’d imagine inner London houses to do more with people working in town much more.
okgo said:
What’s the area in question?
Green area within a train of London that has schools that aren’t hellholes - my take is that you have made a lot of cash during Covid and I can’t see that trend continuing so much now many firms want people in 3+ days a week.
I could see traditional places like that (Surbiton type places) just growing as normal but you haven’t likely done ‘badly’ in recent years so I wouldn’t expect fireworks. Personally I’d imagine inner London houses to do more with people working in town much more.
Epsom.Green area within a train of London that has schools that aren’t hellholes - my take is that you have made a lot of cash during Covid and I can’t see that trend continuing so much now many firms want people in 3+ days a week.
I could see traditional places like that (Surbiton type places) just growing as normal but you haven’t likely done ‘badly’ in recent years so I wouldn’t expect fireworks. Personally I’d imagine inner London houses to do more with people working in town much more.
As for being in the office, I don't know if it's specifically a tech thing, but all the vacancies I'm seeing at the moment are "a day or two a week would be nice, but we're fairly chilled about it". Then again, also sales, so ideally you want to be with customers 2-3 days a week at least rather than in the office anyway!
Kermit power said:
Epsom.
As for being in the office, I don't know if it's specifically a tech thing, but all the vacancies I'm seeing at the moment are "a day or two a week would be nice, but we're fairly chilled about it". Then again, also sales, so ideally you want to be with customers 2-3 days a week at least rather than in the office anyway!
I think tech is quite unique among the average group of people that may live in Epsom. Most will be working more traditional jobs I’d have thought. As for being in the office, I don't know if it's specifically a tech thing, but all the vacancies I'm seeing at the moment are "a day or two a week would be nice, but we're fairly chilled about it". Then again, also sales, so ideally you want to be with customers 2-3 days a week at least rather than in the office anyway!
I think Epsom, especially up near Woodcote etc probably has done well of late, nice lifestyle that wasn’t really great when you had to do 10 commutes a week. Now far better, so can imagine it’s profited. But can’t see that that sort of place is going to grow ahead or differently so any other over next few years, personally.
I may be wishfully thinking but a house like mine 5-10 min from two tube lines in Z2 and near to a vast array of schools/places to eat - that is something that has been static for the exact 3 years since I bought it, could see those sorts of things growing again but then again, credit availability seems to be putting a dampener on anything currently!
okgo said:
I think tech is quite unique among the average group of people that may live in Epsom. Most will be working more traditional jobs I’d have thought.
I think Epsom, especially up near Woodcote etc probably has done well of late, nice lifestyle that wasn’t really great when you had to do 10 commutes a week. Now far better, so can imagine it’s profited. But can’t see that that sort of place is going to grow ahead or differently so any other over next few years, personally.
I may be wishfully thinking but a house like mine 5-10 min from two tube lines in Z2 and near to a vast array of schools/places to eat - that is something that has been static for the exact 3 years since I bought it, could see those sorts of things growing again but then again, credit availability seems to be putting a dampener on anything currently!
We are pretty well situated. I think Epsom, especially up near Woodcote etc probably has done well of late, nice lifestyle that wasn’t really great when you had to do 10 commutes a week. Now far better, so can imagine it’s profited. But can’t see that that sort of place is going to grow ahead or differently so any other over next few years, personally.
I may be wishfully thinking but a house like mine 5-10 min from two tube lines in Z2 and near to a vast array of schools/places to eat - that is something that has been static for the exact 3 years since I bought it, could see those sorts of things growing again but then again, credit availability seems to be putting a dampener on anything currently!
In one direction, Waterloo, Victoria and London Bridge all direct in 40 minutes and any mainline terminus in under an hour with a daily Oyster cap of £14.90 compared to £8.10 if you just do Z2 to Z1.
In the other direction, Epsom Downs flowing out into the Surrey Hills right on the doorstep.
My concern is more if people start moving out to proper countryside! If most employers really are expecting people back in the office more often than not, we may well be best paying the increased mortgage...
Are the children's education a priority? Are they academic and will this impact their future career if you have the potential disruption of moving?
If the answer is yes then I would hold station as long as you believe you can find a job to afford the mortgage rises.
Moving houses and finding somewhere to rent is very stressful and disruptive. You would want calm and stability within the family household during exam time if possible.
Other than that, it is a bit of gamble either way. I would have thought prices south of London would be pretty resilient. It tends to be those inside London who are moving a little further out who make the first move and that keeps the area just outside London in a buoyant market.
If the answer is yes then I would hold station as long as you believe you can find a job to afford the mortgage rises.
Moving houses and finding somewhere to rent is very stressful and disruptive. You would want calm and stability within the family household during exam time if possible.
Other than that, it is a bit of gamble either way. I would have thought prices south of London would be pretty resilient. It tends to be those inside London who are moving a little further out who make the first move and that keeps the area just outside London in a buoyant market.
If the trend nationally is for a cooling off of house prices I can’t see somewhere fairly desirable like Epsom fairing worse than areas outside the South East, so I’d stay put personally. It is well located in terms of attracting a range of buyers who are moving further out due to more WFH/pressure on inner London prices and for traditional commuters into London so would think prices will stay robust. More so than the North/West (in general terms) would be my prediction.
You are asking an impossible question. No one has a crystal ball or can predict what will happen.
Do what is right for you and the family.
Is speculating with your primary principal residence (or the equity in it) the best thing to do?
Interestingly stats show that only 25% of the Uk housing market is funded by mortgages, and of course many are on 5 year deals fixed say 18 months ago at lower rates, therefore the impact on the market of higher rates on roll off, May be less than generally expected.
Do what is right for you and the family.
Is speculating with your primary principal residence (or the equity in it) the best thing to do?
Interestingly stats show that only 25% of the Uk housing market is funded by mortgages, and of course many are on 5 year deals fixed say 18 months ago at lower rates, therefore the impact on the market of higher rates on roll off, May be less than generally expected.
Mankers said:
You are asking an impossible question. No one has a crystal ball or can predict what will happen.
Do what is right for you and the family.
Is speculating with your primary principal residence (or the equity in it) the best thing to do?
Interestingly stats show that only 25% of the Uk housing market is funded by mortgages, and of course many are on 5 year deals fixed say 18 months ago at lower rates, therefore the impact on the market of higher rates on roll off, May be less than generally expected.
Whatever way you look at it, we're speculating, as we know we want to leave the area in somewhere from 3 to 7 years. Do what is right for you and the family.
Is speculating with your primary principal residence (or the equity in it) the best thing to do?
Interestingly stats show that only 25% of the Uk housing market is funded by mortgages, and of course many are on 5 year deals fixed say 18 months ago at lower rates, therefore the impact on the market of higher rates on roll off, May be less than generally expected.
The question is one of sticking by taking what we have now and putting it in low risk investments or twisting and hoping prices here don't crash...
Kermit power said:
selling up now, investing the capital we take out of the house (the mortgage is around 30% of the value) and renting locally until we move?
Just suck up the increased mortgage cost.Why? Because if you sell the house where are you going to invest the cash?
- Placed on deposit the interest you earn will be less than the rate of inflation so your money will be shrinking.
- That's made even worse by the tax on savings income (after the small tax free allowance).
- If you invest in anything else there's a risk that investment will fall in value leaving you worse off than when you started.
- If you keep the house any further increase in value is completely tax free.
We were in a similar position to you. Our rate was due to reset in Oct 23 from 1.9%. £150k remaining. 18 yrs left. Facing a jump from £800/m to £1100/m.
Living in a house and location that we didn't particularly like.
We didn't like the layout or look of the house, but renovation (for which we already had planning approval) was coming in at £150k of additional borrowing.
We decided to redecorate and sell it last summer, with an open mind to renting vs buying something else.
It went SSTC around new year, but then took 6 months to go through due to issues with the chain. It was a nightmare of constant hurdles to do with drainage, access rights, historic maintenance agreements with the house next door, etc. Very stressful.
With inflation being up and it being obvious that interest rates were going to raise rapidly, we decided to rent and not add anything further to the chain.
Luckily we found a house to rent through a friend of a friend. Rent is way below market rate and fixed for 2 yrs, though we are only tied in for 6 months initially.
The feeling of freedom is great. We could literally move anywhere that's still convenient for the kids' schools.
And seeing the money grow is great as it's all chipping off the mortgage that we might need next.
Hard to offer advice TBH. If you do decide to sell and rent just be aware that it's a really tricky process to get right. You can't sign for a rental until you're basically ready to exchange, which can take a really variable amount of time. So just because a rental is available when you put your house on the market, it's highly unlikely to still be around when you exchange. It's really just luck TBH.
And that's if you can sell for a price you're happy with. The market is pretty dead at the moment, with only the best priced and well looked after houses appearing to sell.
So if you're willing to list at prices as they are NOW, rather than sitting at peak prices, then you might be able to sell.
But if it's a house you're happy staying in for 5+ yrs and you can afford to ride it out then that's not really a bad option either, especially if you're holding out for peak prices, which nominally we're going to not see again for a long while.
Living in a house and location that we didn't particularly like.
We didn't like the layout or look of the house, but renovation (for which we already had planning approval) was coming in at £150k of additional borrowing.
We decided to redecorate and sell it last summer, with an open mind to renting vs buying something else.
It went SSTC around new year, but then took 6 months to go through due to issues with the chain. It was a nightmare of constant hurdles to do with drainage, access rights, historic maintenance agreements with the house next door, etc. Very stressful.
With inflation being up and it being obvious that interest rates were going to raise rapidly, we decided to rent and not add anything further to the chain.
Luckily we found a house to rent through a friend of a friend. Rent is way below market rate and fixed for 2 yrs, though we are only tied in for 6 months initially.
The feeling of freedom is great. We could literally move anywhere that's still convenient for the kids' schools.
And seeing the money grow is great as it's all chipping off the mortgage that we might need next.
Hard to offer advice TBH. If you do decide to sell and rent just be aware that it's a really tricky process to get right. You can't sign for a rental until you're basically ready to exchange, which can take a really variable amount of time. So just because a rental is available when you put your house on the market, it's highly unlikely to still be around when you exchange. It's really just luck TBH.
And that's if you can sell for a price you're happy with. The market is pretty dead at the moment, with only the best priced and well looked after houses appearing to sell.
So if you're willing to list at prices as they are NOW, rather than sitting at peak prices, then you might be able to sell.
But if it's a house you're happy staying in for 5+ yrs and you can afford to ride it out then that's not really a bad option either, especially if you're holding out for peak prices, which nominally we're going to not see again for a long while.
Kermit power said:
I think it really boils down to a simple - yet also staggeringly complex - question...
Will houses in the South East lose or gain significant value compared to those outside the area over the next 3 to 4 years?
On the one hand, logic might suggest that house prices here will suffer as people decide that in a post Covid world, they no longer need to live close to London.
On the other hand, it's equally logical to think that with interest rates rising and mortgage deals coming to an end, overextended homeowners a little closer into Central London may find themselves forced to move a bit further out, and prices where we are (30 minute direct train to Waterloo, but less than half the price of similar properties 15 minutes further in) might well go up!
It's a horrendously nervy coin toss at the moment!
There are even more variables than usual unfortunately.Will houses in the South East lose or gain significant value compared to those outside the area over the next 3 to 4 years?
On the one hand, logic might suggest that house prices here will suffer as people decide that in a post Covid world, they no longer need to live close to London.
On the other hand, it's equally logical to think that with interest rates rising and mortgage deals coming to an end, overextended homeowners a little closer into Central London may find themselves forced to move a bit further out, and prices where we are (30 minute direct train to Waterloo, but less than half the price of similar properties 15 minutes further in) might well go up!
It's a horrendously nervy coin toss at the moment!
Logically, Epsom should be pretty well placed. As you say, it's one of the places that equity-rich 30-somethings have always moved out of London to when they want to have children. COVID and the resulting WFH trend just seemed to prompt people to make the same move a few years earlier.
I don't know Epsom well, but certainly prices in other commuter towns like Sevenoaks and Guildford seem to be at a completely different level compared to pre-COVID.
Now the trend seems to be away from WFH and towards 2-3 days hybrid for a lot of companies, Epsom could still represent a good compromise for a lot of people. It's more the rurall idylll-type places where prices have surged because people moved there thinking that they wouldn't have to go into a City office again that will be likely to fall back to close to pre-COVID pricing.
The other issue is how much credit tightening will have an effect on the market as a whole. With people now having to renew mortgages with rates above 6%, you'd expect downward pressure, but the Government could do something in response.
Good luck with making a decision, it's certainly a tough one.
My personal take as someone who would feasibly have been a buyer in Epsom - young family, live further in, wife wants bigger garden, fewer kids doing balloons, don’t need to be at work much -however, Kermit is right to be wary, I’d leapfrog the area completely as it is just suburban sprawl in the main (albeit nice in parts) and go further out. The train isn’t exactly quick either. I think whatever you’ve made since covid is likely the best of it and it’ll plod along now.
IMO of course.
IMO of course.
okgo said:
My personal take as someone who would feasibly have been a buyer in Epsom - young family, live further in, wife wants bigger garden, fewer kids doing balloons, don’t need to be at work much -however, Kermit is right to be wary, I’d leapfrog the area completely as it is just suburban sprawl in the main (albeit nice in parts) and go further out. The train isn’t exactly quick either. I think whatever you’ve made since covid is likely the best of it and it’ll plod along now.
IMO of course.
True, but the relative prices will be driven by the net movements in and out. Some of the people that moved there during COVID and now have to be in London 2/3 days a week might be a bit more reticent to make the next move further out. Similarly. others looking to make a move out of London now might be less confident about going too far if current or future roles are likely to be more office-based.IMO of course.
The train from Epsom might not be that fast, but it has the advantage of being on Southern as well as SWR. The SWR service through Surbiton has been absolutely butchered since COVID. It was easy for them to cut services as peak passenger numbers fell, but I bet they'll find it more difficult to build them back in now!
It's the same with the suburban aspect. It is a suburban town, but has very easy access to nice stretches of countryside very nearby. Some may prefer a different balance, but I reckon that would still suit quite a lot of families.
okgo said:
My personal take as someone who would feasibly have been a buyer in Epsom - young family, live further in, wife wants bigger garden, fewer kids doing balloons, don’t need to be at work much -however, Kermit is right to be wary, I’d leapfrog the area completely as it is just suburban sprawl in the main (albeit nice in parts) and go further out. The train isn’t exactly quick either. I think whatever you’ve made since covid is likely the best of it and it’ll plod along now.
IMO of course.
I think it's a question of balance.IMO of course.
Given the choice now, I'd prefer Dorking to Epsom, but you're nearly doubling the train journey to about an hour each way, and adding an extra tenner onto the return fare.
If you're in the office 3 days per week for let's say 40 weeks to make the sums easier, that's an extra £1,200 out of taxed income and the equivalent of an extra 15 work days sat on the train.
There are places further out with express trains, of course, but then the price really climbs.
Mystic Meg says…
Chances are you won’t make a load, or lose a load.
Chances are you won’t make a huge advantage being a cash buyer, or lose out a lot not being a cash buyer, when moving.
Timing/positioning is key. With kids and jobs tying your decision making it’s increasingly unlikely you’ll make the most of any potential advantage you think you can make.
Rolling a dice is likely to yield just as fruitful an outcome, and leave you just as happy or unhappy (in hindsight), than a decision made by any other means.
Chances are you won’t make a load, or lose a load.
Chances are you won’t make a huge advantage being a cash buyer, or lose out a lot not being a cash buyer, when moving.
Timing/positioning is key. With kids and jobs tying your decision making it’s increasingly unlikely you’ll make the most of any potential advantage you think you can make.
Rolling a dice is likely to yield just as fruitful an outcome, and leave you just as happy or unhappy (in hindsight), than a decision made by any other means.
Depends on the price bracket you’re in for much of this. There comes a point where I suspect people stop caring so much about the cost of rail if it’s quick. But it’s certainly a factor in a more affordable family home setting.
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