Alternative to selling house

[Phoenix]

OK so house prices are low, exchange rate is crap... is there a worst time to sell up and take your cash to OZ?

I've been doing a few sums and have a Plan B, not sure if its a great plan B, and it certainly wont suit everyone, but here goes

Situation
House worth £300K, but in current market would probably sell for £250
mortgage is £150K
exchange rate is 2
if sold now could expect AUD$200
if sold when markets were back to normal could expect AUD$375

Plan B
Re mortgage house with IF interest only offset mortgage at £210K, putting £60K in offset account, meaning you only pay interest on £150K, which is approx £850 PM, with mortgage being paid from offset account.

rent out house for £900PM, paying 15% agent fees, means you get £765 paid into the offset account... yeah this is less than the interest, but you are only out by £85 pm

Rent house for 3 years, budget for a loss of £4K, hope for economy to improve by then and sell house bringing money into OZ ($375), if everything improves before then, sellup and pay the penalty fees, it will still be better than you will get now.


If you need cash for OZ then take it out of the offset account, this will increase the interest you are paying, but note that you will be paying interest at UK rates not the higher OZ rates, note the IF account has 24 hour phone and internet banking, so you can manage it from Oz.


comments?

[Team 'W']

Hi Phoenix,

Your right about Uk house prices so heres our alternitive plan B.

Rent house out which will easily cover our interest only mortgage payments. Cashing in our endowments which will give us about $80k deposit for house in OZ. That way we have 2 properties gaining equity over the long term!

If we settle in Oz we can sell up in the UK once house prices are on the up again and move into bigger and better premises. Were leaving a slush fund in the bank to cover none rental months that way were not panicking if we arent renting (as long as its not too long).

Sounds too simple to be true?

[littlesarah]

I still want to sell my house. When I first bought a property in 1999, it was as a place to live, not as an investment. I put in £2300 & borrowed the rest. Even if we walk away with just £50k (which is unlikely), that's a significant return on the initial investment.

But I think it depends on so many factors. The house we're in now, we bought for less than the true market value at the time because the vendors were about to lose their dream home. Which gives us a bit of leeway. Also, we're in East Anglia, where property prices are a bit more stable.

But I gues we'll see what happens. I had been thinking about the option of switching to interest-only mortgage & letting, but I want to cut the ties & just go.