Property laddering

Andy Hunt · Post by **Andy Hunt** » 07 Nov 2008, 16:47

OK so I am having a bit of a strange and wonderful idea at the minute.

I've spotted a house on the market which needs a lot of work doing to it, but has a lot of potential for an 'eco-renovation', much as I've done our house, but this other house is a bit bigger, a 3-bed semi, with a bigger garden.

It's absolutely ripe for it - even down to there being a big hole in the bottom of the chimney where a fire should be.

I could actually afford to buy this house which is on the market, and own it at the same time as living in the one we already have, as we don't have much of a mortgage due to one thing and another. So we could buy it, do it up at our leisure, and then move in and sell this one - which would hopefully be one of the more attractive properties on the market, being an eco-house and all that. Power cut proof etc . . . it wouldn't even matter too much if it took a while to sell.

Does this sound like a good idea folks?! Feedback appreciated!

skeptik · Post by **skeptik** » 07 Nov 2008, 17:35

What goes down can go back up. Don't be lulled by the currently low interest rates. Remember 1989!

RenewableCandy · Post by **RenewableCandy** » 07 Nov 2008, 19:24

If you have the time to spare, and the house is going at a knock-down price (but isn't actually a knock-down house

) then go for it.

energy-village · Post by **energy-village** » 07 Nov 2008, 20:19

It sounds to me like you've "done" your own house and are now itching for an interesting new project to work on!

I don't think house prices are near the bottom yet, so be careful. If it were me - and the new garden had serious food growing potential - I'd consider putting in a silly offer and see what happens; they can only say "no".

JohnB · Post by **JohnB** » 07 Nov 2008, 21:49

My last house needed a lot of work done to it, and I found living and working in it while trying to do it up was a nightmare. Some people can handle it, but I couldn't. I seriously thought of buying another house to live in at times, so I could turn the existing house into a building site rather than a home. Then I could have sold or let one of them when the work was done.

I'm open to buying a house in need of a serious eco-renovation now, because I could live in my van while I'm doing the work. It's a less risky situation than owning two houses at once in the current market, but either way makes the work a lot easier.

Andy Hunt · Post by **Andy Hunt** » 07 Nov 2008, 23:29

Thanks for the replies everyone!

energycity wrote:It sounds to me like you've "done" your own house and are now itching for an interesting new project to work on!

I think you've probably hit the nail on the head there . . . been chatting with my 'other half' about it and it's a possibility.

HOWEVER I forgot about one crucial factor - in my head I'd been living in the past, working on the assumption that we could just walk in there and get a 100% mortgage on the place. These days of course that's pretty much impossible, so we would have to find the best part of £10K by way of a deposit (assuming we would have to borrow at least £20K to renovate the place after buying it).

That being said, if we made them a stupidly low offer and it was accepted, it wouldn't really matter - if we could get a deposit together, which is unlikely.

We're going up to the house tomorrow just to have a look (I went up there today on my own), and see what my partner's gut feeling about it is.

The only thing about it is that the garden is North-facing - however, it's on an uphill slope so in fact a good chunk of it still gets the sun.

Hmmm . . . tricky one!!

Adam1 · Post by **Adam1** » 08 Nov 2008, 08:42

How about if you sold your current place, moved into rented accommodation and bought the new place outright? The upfront fees for new mortgages are now often (always?) so high (£2k) that borrowing small amounts is very expensive - it may be cheaper to get a normal, secured loan.

Renting a place, you wouldn't have all the resilience you've built into your current place but you'd be able to draw on all the experience you have in your second eco-renovation and you'd end up in a bigger, better place.

Andy Hunt · Post by **Andy Hunt** » 08 Nov 2008, 11:35

Adam1 wrote:How about if you sold your current place, moved into rented accommodation and bought the new place outright? The upfront fees for new mortgages are now often (always?) so high (£2k) that borrowing small amounts is very expensive - it may be cheaper to get a normal, secured loan.

Renting a place, you wouldn't have all the resilience you've built into your current place but you'd be able to draw on all the experience you have in your second eco-renovation and you'd end up in a bigger, better place.

Yes we could do it that way it's true . . . not sure if we will be able to bring ourselves to do it though TBH.

Safer to sit tight . . . might be the wisest course of action. Our mortgage will be paid off in 5 years then anyway.

Interesting to think about though - especially if interest rates are heading for zero.

Eternal Sunshine · Post by **Eternal Sunshine** » 08 Nov 2008, 12:33

Could you raise the deposit by increasing the mortgage on your current one? Especially if you put in a very low offer on the new one, so ending up with a small(ish) mortgage on that.

Think of the food growing potential in the garden of the new one. You might even be able to keep chickens!

However, you also need to consider, do you need such a large house? Maybe you should look around & see if there's something smaller that needs doing up?

Keela · Post by **Keela** » 08 Nov 2008, 13:57

Andy - Just one word of caution about a North facing sloped garden..... how sloped? how much sun will you loose? is this the right place or might it be worth waiting to find somewhere with more sun? We have aspects on our land facing both ways - it does make a difference.

Really only you can judge all the + and - points, but I would give this careful thought.

Other wise I'm excited for you ......

Good luck with some scary decisions!

skeptik · Post by **skeptik** » 08 Nov 2008, 14:57

Andy Hunt wrote:
Safer to sit tight . . . might be the wisest course of action. Our mortgage will be paid off in 5 years then anyway.

I would agree with that . La Merde is only just starting to hit le ventilateur... You will get a better deal in two years time. Now is the time for prudence. Minimise outgoings, maximise savings.

ndon · Post by **ndon** » 08 Nov 2008, 16:22

JohnB wrote:It's a less risky situation than owning two houses at once in the current market,

I would argue that there is nothing risky about owning houses in the current market, but rather the risk of being a slave to the bank who own the house that you believe to be yours.

snow hope · Post by **snow hope** » 08 Nov 2008, 18:04

My advice - hold fire. Prices are dropping and will continue to drop for some time! In my head this is a certainty - why would you buy now if you can wait and buy (much) cheaper in a year or two?!

Don't forget folks, we are entering times that we have not seen for a long time, maybe never before. Don't make the assumption that things will only change a little bit - I think we have to expect big changes......

Totally_Baffled · Post by **Totally_Baffled** » 08 Nov 2008, 21:42

I agree with the advice to hold off.

Just think we have at least two years of -10% price deflation, in the meantime interest rates are going to plummet (possibly to 1%-2%)

For the sake of timing, maybe once the line on this graph starts to rebound (as its a rolling 12 month figure of annual house price growth), then you know its time to step back into the market?

Mortgage availability might be getting back to normal in a couple of years too.

At the moment new mortgages are going to be expensive (relative to the future)

I am hinkering down, hoping for prices to really take a dive, then I might get that property with a large garden (my allotment is 1 mile away I would prefer if it was just out back

)

Andy Hunt · Post by **Andy Hunt** » 09 Nov 2008, 01:03

Well we didn't go and look at it this morning in the end, it's been a busy day with other things and it hasn't been mentioned - so maybe it's not the right time to do something like this.

We chatted about it a bit last night and agreed that we really do love where we are at the moment, we've done a lot of work on this house and we haven't really finished it yet. It's fun to go online and look at the possibilities on the estate agents' websites (even found one just down the road with a big garden and a garage with a SERVICE PIT in it. No bath though!!).

And Keela - in fact my partner expressed concern about the North-facing back garden, not that it would necessarily be bad, but more that it wouldn't be good enough to warrant moving there. As we don't actually need to move, we agreed that we would have to discover somewhere really special to really want to move at all.

So I suspect that we aren't going to go for it this time.

But the possibility will remain lurking in the background . . . good point Eternal Sunshine, we could maybe use the equity in our existing home to raise a deposit, it's a possibility.

I have a feeling this may well come up again at some stage - after all, there may be an increasing demand for eco-homes in the future, possibly bucking the general trend, as there are so few around the place. It all depends on our employment situation too of course - who knows what is around the corner on that front.

Thanks for the thoughts, it's a tricky one for sure. Very tempting!! Could even be one of those very few opportunities which actually arise as a direct result of hard times.