Can someone put my mind at rest?

Lisa. · Posted: Thu Jun 17, 2004 10:19 pm Post subject: Can someone put my mind at rest?

Help please, we can't decide what to do?.

Our original plan was to go to New Zealand next year. We have a fixed rate mortgage which ends next year, it has a BIG redemption penalty on it, if it wasn't for this i think we'd emigrate sooner, but now i'm worried with all this talk of housing market crashes, interest rate rises etc etc, do we just pay the redemption (which could actually pay for a container to ship out our belongings) or do we hold tight in the hope the market doesn't crash, We could lose more if it does.

If anyone has any insight on this i'd be really grateful as the uncertainty is driving me nuts Nutcase

Lisa

Lee&Nicky · I Like It Here Joined: 15 May 2004 Posts: 70

Lisa,

Can't provide any specialist insight, but we are going through same issues. We have had our house valued and Estate Agents are chomping at the bit to get it on the market. We have a redemption penalty of circa £4.5k but doesn't expire until 2007, and there is no way we are waiting that long.

My view is that the housing market has to cool and cool soon, if it doesn't then the Bank of England will take action faster, more likely causing a "hard landing" (they never use the word crash if they can avoid it) rather than a gentle slow down. It also depends on where you live (and what you have to sell, ie does it appeal more to first time buyers?), we are SE England, in a reasonable location which probably means we will experience a slow down faster than the average. My wife and I have decided to bite the bullet and try get what we can for the house now and accept the redemption penatly as part of the cost of (hopefully) getting out of the housing market at the top of the cycle. Of course no guarantees, we could find next year the house is worth another £20k, but we take the view that some decisive action is needed and we are going to cash in now.

The trouble is supply, at the moment there are generally more buyers than sellers, but that situation could change quite quickly, as the impact of interest rate changes bites and people actually start to feel poorer. My view (and it is purely personal) is that the UK just cannot continue to sustain the method of growth in the short to medium term, something has to cool and there is no doubt that the UK property market is still hot at the moment.

Lee

karltsmith · Posted: Thu Jun 17, 2004 10:50 pm Post subject:

So many balls to juggle!

Housing market fluctuations, exchange rate movements, interest rates going up....who knows for sure! A FOREX broker in London last year gave me the jitters claiming the Kiwi dollar might get to 2.5=£1....it's nearer 2.9 now which is great news (but strengthening again). I think there is more to loose in terms of missed opportunities if you wait too long and not all of them financial. The housing market in AKL is cooling off because of a number of factors, not least reduced migration. But when this gets into full flow again...probably next year we will be off again. so don't get caught in the croos fire, it may become a double whammy! Truth is no matter what you do you can only minimise your losses /risk. It is unlikely that you will be able to get a good exchange rate, sell up in the UK at peak and buy into the NZ housing market without some sacfices along the way! You could rent your place out on a short term basis and use the income to pay the mortgage until your tie-in is over! If you need to liquidate your assets however then this is not an option. We sold in the UK, put the money off-shore to avoid tax and pay our NZ rental on the interest. When the exchange rate is right, NZ$3=£1 or there abouts, we shall exchage our money and invest it here on a call account paying about 6.00% which will more than cover our rent. We then have to wait until the NZ market cools further, about 2-3 months should see OK and buyinto a cooled off market......hopefully.

Hope that crystalises soem thoughts! Nice One

karltsmith · Posted: Thu Jun 17, 2004 10:54 pm Post subject:

Sorry about all those tipoes..oops I mean TYPO's...it's late and the wine bottle is nearly MT Clink

Moorf · Posted: Thu Jun 17, 2004 11:35 pm Post subject:

Well, for what it's worth, we took at £12.5K hit on the early redemption of our mortgage (yes, you read that right - the decimal point IS in the right place!).

BUT, I listened to hubby who has always been good at predicting markets etc, and we sold up and decided we would go to NZ despite the financial hit! We are sure we have made the right choice Yes

My point is, in 2 yrs time we could easily have been looking at less for the house anyway so we decided no time like the present - especially after my cancer scare last summer - at just 36 yrs old there's nothing like that sort of news to put a rocket up your arse and JUST DO IT !!!

Don't let other things stop you going, if you want to go now then go - you don't know what is round the corner!
Moorf

Lee&Nicky · I Like It Here Joined: 15 May 2004 Posts: 70

Hmmm, plenty to reflect on I think. The only thing that is stopping us from putting our house on the market right now is the fact that we have not yet spoken to our respective families about our plans to emigrate yet. Figured we should let them know what we are planning before putting house on the market, particularly as mother-in-law literally lives round the corner and is looking after our house whilst we are away next week. Have visions of her going in to feed the cat and finding an Estate Agent and client touring our house and m-i-l calling the police to have interlopers arrested! Plan is to put house on market as soon as we return from hols and at same time tell family our plans......gulp! Are we dreading that? You bet your shredded wheat we are.

Moorf · Posted: Fri Jun 18, 2004 12:11 am Post subject:

Oh Nicky - I don't envy you - nothing has got us stressed about the move except FAMILY! I even posted on here a while back - it seems parents are the same the world over!!

We found the best way round it was to say we are going for a "couple of years" rather than "we're off and never coming back".

I now keep my mum informed every step of the way (we used to keep it from her in case she upset herself) - it does help - for instance once flights were booked the other day I emailed her the flight details etc straight away - it's like a wedding - the more she feels involved the better!!

Something else we are planning is to put aside some "family holiday" funds - i.e. enough to fly out parents and brother/family once we are settled - gives them a holiday to look forward too and we shall pay the flights!

Yes

Moorf

Lisa. · Posted: Fri Jun 18, 2004 12:54 am Post subject:

Thankyou all so much for your replies. Nice One

It certainly gives us food for thought, we had recently decided to rent out, that was it final, until two nights ago some of the local yobs broke into the house over the road recently vacated by tenants, smashed a window and god knows what they did to the inside, we and several other neighbours called the police at about 3pm, they finally knocked on our door at 10.30pm!! I don't know much about renting out but it sounds like it could be more trouble than it's worth. Nutcase

So yes, maybe the best thing to do is to just sell, pay the redemption and go live out our dream, can't be bad

Just need to chew it over with Hubby when he gets home fingers crossed

Cheers Guys
Lisa

Moorf · Posted: Fri Jun 18, 2004 1:05 am Post subject:

Lisa - I am sure hubby will see the light!

Luckily we have a property (flat) to rent out whilst we are in NZ which does mean we still have a foot on the UK property ladder, even though it is quite a few rungs down the ladder from our main property which we sold!!

If hubby is not totally comfortable with jumping out of the UK housing market then perhaps consider purchasing a flat specifically to rent whilst away (do the sums first obviously) as I do believe that the rental market will be bouyant through the next few years of house ownership uncertainty. In the past I have managed my own tenants but the last 5 yrs I have handed it over to a management agency and it is NO hassle at all - I just get the money in my account each month and they sort out any probs / repairs etc. You do pay them a commission but it is well worth it!

Anyway - thats just my pennies-worth and some more food for thought!

Best wishes
Moorf
aka Helen!

Lisa. · Posted: Fri Jun 18, 2004 1:34 am Post subject:

Thanks for your advice.
Would you happen to know if damage/repairs are covered on any type of insurance if a property is rented out? perhaps it still is an option, the flat idea sounds good too as it would be nice to keep our foot in the door so to speak.
If confidence is what markets are all about then no one here seems to have much in the short term future of the housing market at least, i know we have been keeping a close eye, could do with a crystal ball, waffle, waffle. Confused

Thanks.
Lisa

Moorf · Posted: Fri Jun 18, 2004 2:14 am Post subject:

Lisa - firstly you will need to look at "buy to rent" mortgages if buying a flat to rent out - these often come with competitive insurances tailored to hazards of renting.

If you rent your current home then your mortgage company may charge you a fee (mine is £500 every 3 yrs) to allow you to rent out the property.

It is up to you to tell your contents/building insurance co that you are renting and they may or may not increase the premiums. However, please note that damage to property and/or contents caused by tenants will be paid for by the tenants - thus you need to ensure you have an eagle-eyed agent for when inventory time comes around! Agents also offer various insurances against "empty" periods, legal insurance etc etc - shop around!

Hope that helps

Helen

Lisa. · Posted: Fri Jun 18, 2004 2:49 am Post subject:

Thanks Helen.
I feel optimistic once again. Yes

Lisa.

Moorf · Posted: Fri Jun 18, 2004 2:53 am Post subject:

I should add that we don't have kids - it does make decisions easier!

Not sure how I would deal with it otherwise - probably be alot less "gun ho" !!

Lee&Nicky · I Like It Here Joined: 15 May 2004 Posts: 70

We do have kids, two of the little devils (aged 4 and 1). On the one hand I think kids, particularly younger ones, are more adaptable and robust than they are given credit for and will love the adventure etc etc. On the other hand I wake in the middle of the night thinking "What am I doing? Selling my children's home, their cocoon, their safe haven! Turning their lives upside down, dragging them to the other side of the world. Am I mad? Am I evil? Will the NSPCC come knocking on my door? (If they can find us of course, having sold the door)".

As for moving the children away from the grandparents...oh...my...god!

Moorf · Posted: Fri Jun 18, 2004 3:35 am Post subject:

Well, being the product of an RAF family I can honestly say that being moved around the world, indeed moving county/country every 3/4 years, gave me experiences that many of my non-Forces friends ever had.

I can't imagine a better place to take your kids than NZ - as you say they are young enough to adapt - it's the oldies in the family that have more problems getting to grips with it!!!

I am getting used to feeling "selfish" - I know that what I am doing with make me and hubby happy and surely, if we are happy, then our families should be too... (now, let's see if I can keep up this attitude when my mother comes to visit!!!) Eek

Helen