Financial advice - sell or rent out first home?

A

avonmore

Guest
We are in our 3-bed semi for the last 8 years. We have a 9 month old and there’s another on the way. Anyway we are really bursting out of our house and are very eager to move for more space. Some facts:
Current situation:
•Mortgage is about €230K over 30 years (tracker mortgage with AIB).
•Personal loans
-Car loan of €2,500 (car worth about 13k)
-Credit Card €1,500 (now closed and we are clearing pretty quickly)
-Tend to dip into overdraft pretty much every month (I know I know)
•Combined income is about 110K - both permanent.
•Hubby is a professional and main earner. Feel his job is secure (if there is such a thing these days).
•No indications that mine isn’t secure but if either of us are on shakey ground it’s me.
•Neither of us have secure pensions.

•If we sell don’t think we’ll cover the mortgage - could also take forever
•Even if we do clear mortgage, won’t make enough to cover deposit and stamp on next house
•Estimate: need 28-30K deposit
•If we buy second hand we’d need stamp of 20K plus depending on the house (we have pretty much ruled this out).
•Savings of only 10K. Might be able to scrape some more together to get deposit (how depressing to be saving a deposit 10 years after doing it the first time – I know we are not alone but it makes me mad…).
Plan
•Considering renting out our current property. In very good location in the town we live and in good nick. I do think it’s pretty rentable and that the rent would cover the mortgage, but just about.
•Looking at new builds and are estimating a purchase price of about 325 (absolute max) giving us a mortgage of 299 on the new property.
Questions
•Is this plan crazy given the current climate?
•Which banks are best to approach re mortgages at the moment?
•How big a factor is our personal debt situation?
 
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You have a combined income of 110K and an average mortgage of 230K. Your income is approx 3 times higher than some struggling couples with a similar sized mortgage.

What are you spending your income on???

Maybe you should go to the money makeover section so posters can have a clearer view of your position.
 
Our current combined, before-tax income is 110.

It was not always that. We've build it up (very) slowly over last few years. We also went through a period where one of us was still qualifying - so there was only one earner and college fees to pay which we managed to get through without incurring debt. I've also just come through unpaid (except for state benefit) maternity leave so actually our income this year will be less than that - my error.

Not for a moment suggesting we are struggling. Just a young family interested in advice.
 
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Avonmore, i'm not sure if renting your current property and buying a new one is going to be an option for you I'm afraid. How much is current property worth?

The banks will allow you to take on a new mortgage provided that your current mortgage covers about 75% of your current homes value and then the deposit and stamp on the new. The mortgage on your current property would then convert to a "buy to let", and it will lose its tracker rate.
 
I'd be interested in a more clear financial picture which can be gained by posting on the money makeover forum.

I am wondering if you are happy living where you are? if so is there a possibility of you extending your current property. This would also eliminate the paying of stamp duty which you estimate to be at 20k - which could go a considerable way to extending.
Perhaps up into the attic or out the side. Have you a garage you could convert and build up over.
 
Ash21 - Was afraid you might say. Figures are tight aren’t they? But I don’t think selling is an easy option either. How much is house worth? Who knows. I reckon 230 leaving us little or nothing after clearing mortgage.

Interesting what you say about losing our tracker. I hadn’t realized that. That makes things worse. If we got our mortgage with another lender would lender on first house still be able to change the terms of our mortgage with them?
 
niceoneted - will look at money makeover forum. Wasn't sure how much detail I'd have to go into. Will check it out again.

Yes we are relatively happy where we are except for space. But we really don't have option to extend. I have really looked into and it just wouldn't work. Our house is more town house than a true 3 bed-semi - so no space at the sides and tight garden.

Interestingly we did some work on the house last year including on the attic (not full conversion as it wasn't suitable but improved access, storage, basic lighting etc). We used savings for that work and while it has given us much improved storage in the short term, in part we regret it and wonder if those savings may have been better directed towards a move... who knows...
 
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