aboredworker

Hi SN’rs,

I currently own a house with my partner/ex partner now and I need to get things sorted financially between us, I’m undecided as to whether I should try to keep the property in my name as I’m technically on the ladder and have something to live in, I couldn’t bear going to live back with the parents. Either me or dad will kill one another after a week so that’s a no go option.

I own a dog too and would like to keep him if I don’t want to go travelling so renting isn’t going to be an easy option with a pet. For some reason, property has gone right down hill recently in my town. My house is worth approximately £140k, 3 bed semi with garage etc in a nice area. It’ll cost me £100k for a 1 bed flat in the middle of town or anything from £130k upwards for anything like I have at the minute. So logically I may aswell try to hold onto my current property.

Now I can probably take over the current mortgage myself but the PITA thing is I need to find approx 20k to buy my partner out and I can only keep my current mortgage if the mortgage company says so, plus paying to change the deeds etc. So since I don’t have the 20k I need for her I thought about re-mortgaging completely in my name only but Im going to have to take a £120k mortgage, maybe even £125k on my own wage, after the struggle of finding someone to lend me that amount a repayment mortgage will be a bit too much of a tight hold on me I think, so an interest only mortgage would set me back a nice affordable amount.

But the problem with this is I don’t want to be stuck in 25 years time with paying of the interest only mortgage and still having to find £125k to buy my house, it seems stupid. Although in 25 years time I also don’t have a clue about what the house will be worth so is it a gamble. Cause lets face it, in 25 years Im going to be no spring chicken.

Any advice would be greatly appriciated



Thanks

Editted just for Gene

DCI Gene Hunt

P-a-r-a-g-r-a-p-h-s

**** that BLOCK of letters hurts my eyes......


Dont you breathe???????

aboredworker

No advise then? Apart from Breathe

Suresh

The amount you have borrowed will not grow, whereas your salary and the value of the property will (hopefully) do so. The inflation of the amount borrowed is included in the monthly interest payment that you make.

If your wage inflation averages 4% p.a. for the next 25 years, a 30grand a year wage will become 80 grand a year in the period.
On the house price side, 4% inflation will give a projected value of 370grand in 25 years for a house worth 140k now.

In that context, 125k will not be a daunting amount to repay in 25 years. Go for the interest only mortgage - but take a fixed rate for 5 years or so to avoid surprises if your budget is tight.

Good luck!

aboredworker

Thanks. That was my thinking but with the housing market not being very stable Im unsure how things will pan out, because I intend to live there or maybe even rent it out in the future Im not worried about its immidiate value or its value in say 5 years time but in 25 years who is to say the property market is at an all time low. Think its the sensible option though. I can always sell the house say next year and take my equity back out of it presuming theres still some left so I dont have much to lose on that scale. Just scary knowing when Im in my 50's I'll still have £120-5k to pay off.

Definately looking at a 5 year fixed though, Im no mug...ha ha.

Only real problem is borrowing £125k mortgage on a 25k a year wage

hail-hail

You will not be allowed to a take and interest only mortgage without running an endowment policy (or some other investment fund) alongside it to cover the amount required to cover the original value lent.

Double check this with your morgage lender but I am sure you MUST invest this way if you have a Interest only mortgage. The actual amount you will have to pay monthly will not be that different.

1. Repayment (Interest and Captial) £500
2 Interset Only: £300, Investment to cover Capital £150 = £450 plus the risk that your investment will not cover the Capital at the end of the mortgae against the possability that it might over perform leaving you a nice profit.

All guestimate figures but the logic is sound.

Suresh

The end payment on my mortgage is scheduled to be three times that amount and I'm not in the slightest bit worried.

ScooBStu

Why not take on a lodger - They can pay the extra to cover the repayment mortgage.

Some people dont like this thought but if you properly vet the person there is actually a lot of decent people out there looking to rent a room. Just be careful though cos there is also a lot of weirdo's!!!!

PeteBrant

Take an interest only for a couple of years, and then re-evaluate where you are at that point. Circumstances change, things happen.

Just make sure you get a mortage that has no redemption penalty after 2 years - then you can remortage and perhaps go repayment then.

And finally, and most importantly, speak to an IFA - there are loads about and they will tell you exactly what your options are.

DCI Gene Hunt

Wait a minute...... 'Breathe' is the best advice you'll ever get on SN

aboredworker

Thanks for the suggestions so far people

OK so I'll carry on breathing then

Pete, re-evaluate in a couple of years, well I'll re-evaluate whenever circumstances change. Whether it be in a years time or 10. no point thinking that far ahead (even though Im thinking 25years ahead...ha ha)

Thought about the lodger, not sure if Im keen on that idea, what if I want to walk around my house naked? plus they'd have to put up with my mad as a hatter dog.

OK I do think the property may well be valued alot higher than its current value in 25 years, just scared it might not be. Afterall I cant see houses rising in price for a long time now. The market is pretty stale with lots of people suggesting drops (as they have been doing for the last 5 years )

hail, Im pretty sure you can have an investment without the need for an endowment???

Only other thing would be to stretch it over say 30 or 35 years if thats allowed, should make life a little more comfortable. Were talking £500 a month on an interest mortgage and £750 a month on a repayment.