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Buying a property that's worth less than ours

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  • Buying a property that's worth less than ours

    Hello all!

    2 years ago my girlfriend & I purchased a 3 bed property for £135,000. We're young working parents with two very young children – so life's pretty manic right now!

    I've recently come to the conclusion that the property we own is probably a little too large! There's a big garden which I never get time to maintain & I want to redecorate each room (which I also never get time to do!) I'm considering downsizing (for ~5 years) for the following reasons:

    - Want a property that's easier to keep on top of.
    - Want a more cosy property. Would really like a cottage.
    - Want to move back to my home town to be closer to family (babysitters!)

    There are some ideal properties on the market & are around the £115,000 to £120,000 mark. So that's some 10K less than the value of ours.

    I have a few questions:

    - I don't have a cash deposit - so how does buying a second home work with regards to a deposit for a new property? Does this come out of the equity of my current house?

    - Possibly a hard one to answer, but is downsizing likely to reduce monthly mortgage payments?

    - Has anyone here downsized a regretted it!?


    Thanks!

  • #2
    Re: Buying a property that's worth less than ours

    Hi

    It's probably worth you having your current house valued first before you do anything else just in case it's worth less now than when you bought it.

    You don't want to buy something smaller for the same price as the one you've got unless it's in a better location.

    Also, you may think your 3 bed is too big now but what about when your 2 children are bigger and need more room?

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    • #3
      Re: Buying a property that's worth less than ours

      Hi there,

      As Kaz has mentioned it is worthwhile getting a professional opinion on the value of your property before you get too involved in working out figures. If you don't have any savings then the deposit for your new property will come from the equity in your current home assuming that it is worth more than your mortgage.

      Don't forget to factor in costs for moving, with estate agent fees, solicitors, survey and removal fees you could spend £5,000 or more in the process so the slightly cheaper house isn't necessarily going to reduce your mortgage balance / costs.

      Also, as Kaz has rightly mentioned, you might want to go through the whole process again in a few years time, ending up back in a house of similar size to what you own now but having spent £10,000+ on 2 moves in the meantime.

      Also keep in mind that property may start to increase in value over the next few years, so stepping back up the ladder may require a bigger jump in price than the downward move you are considering now in the current market.

      Weigh up the pros & cons, only you can decide if it's right for your circumstances.
      ____________________________________________
      Property for sale in Torquay

      www.thomasdobner.co.uk

      Comment


      • #4
        Re: Buying a property that's worth less than ours

        Yeah I agree, moving is expensive (and stressful!!) probably better to invest that in your current home and maybe pay a decorator to do a couple of rooms?

        Comment


        • #5
          Re: Buying a property that's worth less than ours

          Also remember that mortgage rates are currently very favourable, so over-paying your existing mortgage on a cheap rate now will put you in good stead for paying far less interest in future, and mean you have more equity for deposit issues if you do wish to move.

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