Help! My house price is falling

Editor Edmund Greaves ponders his falling house price and what to do now he wants to move with his young family.

There’s nothing quite like watching the value of the home you bought slowly drift downwards.

That has been the story of the property we bought in 2022 when rates were great. In three years it has progressively lost £14,000 in value – at least according to the monthly automatic valuations I get from Zoopla.

Now, I’m aware of the limitations of this service and the data that feeds it.

As it would happen a house on our row (of identical 1930’s terrace houses) just went on sale. It went on sale for £25,000 less than we paid for ours. However, given we have a garage and the neighbour doesn’t, this makes Zoopla’s price probably about right (if perhaps slightly pessimistic).

Here’s the rub though: we’re not just going to sit and wait like most people would. We want to move house.

I won’t go into the reasons why in this column –  please have a listen to this week’s podcast for more on that. But suffice to say we’re not in a huge rush, but we would like to go in the next year.

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Mortgage rules

This is where things start to get complicated. We were first-time buyers so have no real experience of moving with a mortgage. Its more complicated than I might have thought at first.

My first job was to find out what our mortgage rules were. The good news is we are allowed to ‘port’ the mortgage. This means we can seamlessly transfer the loan to a new house without having to remortgage. We’ve still got a pre-cost-of-living-crisis rate running to 2027 so this was excellent news.

But the bad news was that the mortgage provider only offers an additional £5,000 in lending on our current terms. Anything over and above this and we’d need to apply for an additional loan on top of the existing one. We don’t really want to do this.

My ultimate priority here is being mortgage free. I don’t really want to do anything that adds years onto the debt. As it stands, I will be 58 years old when I come mortgage free – just after my current pension freedom age. This feels like a solid plan I want to stick with.

So here’s the problem – if I don’t want to borrow more then we will only be able to afford a new home to the value of whatever we are able to sell our current house for (plus £5,000).

Considering we want to move to an area where property prices are a little higher, this presents an issue for us because it is hampering our choices.

The good news is that the area we’re moving to is also experiencing falling prices. This means we might get a relative bargain (if a £350,000 house falls 5% that’s a £17,500 saving – a 5% fall in ours is around £14,000).

We’re also fortunate to have had a low-rate mortgage which has meant we’ve been able to clear a reasonable amount of mortgage in just three years (about £30,000 at the time of writing).

The corollary to all of this is we’re only really able to do what we’re doing because I happened to make a good choice in 2022 – taking a 2.99% mortgage for five years.

I haven’t even begun to think about the remortgage in 2027 – that’s for Future Ed to worry about. Hopefully he’ll be dealing with it from his nice new home.

In the meantime – I’m getting down to B&Q to buy cans of paints. Three years of living in a house is noticeable. Time to make it pretty enough to sell!

Photo credits: Pexels