Selling my home lost me £150k and now I’m locked out of the property market

Intro

Selling a home is often seen as a financial move to free up funds or pay off debt. However, for Annabelle and Simon Baugh, selling their home turned out to be a decision that cost them £150,000 and locked them out of the property market. The couple believed that selling their home 15 years ago would help them get out of debt, but they soon realized they were left worse off. Now, living in a rental property, they are worried that they won’t be able to buy again. This article explores their story and raises the question of whether renting before buying is a good idea.

The Financial Setback

Annabelle Baugh, now 45, admits that looking back, she wishes she had never sold their house. Selling their home seemed like a sensible decision at the time, as it would help them pay off debt and start fresh. However, over the years, they realized that they were around £150,000 worse off as a result. If Annabelle had kept the house, it would have built equity and been a valuable asset for them to fall back on.

An Optimistic Plan Gone Wrong

After selling their home, the Baughs planned to rent temporarily, hoping that property prices would fall while they saved up to buy again. They thought that the burst of the housing bubble in 2008 would lead to a continuous decline in prices. However, their optimism was misplaced. Instead of prices dropping, they actually increased just months after the financial crash. Over the past 15 years, house prices have risen by more than 50%. This has made it increasingly difficult for the Baughs to afford a mortgage and get back into the market.

Renting Woes

Renting has not been an easy solution for the Baughs. They have faced multiple moves due to landlords selling up, causing disruption and stress for their family. Their son had to change schools, adding an extra layer of difficulty. The constant fear of housing insecurity and the challenge of finding suitable rentals in their desired area and price range have been ongoing concerns. The Baughs long for the stability and security of homeownership.

Locked Out of the Property Market

One significant obstacle the Baughs face is the requirement of lenders for two incomes to afford a mortgage. Simon, Annabelle’s husband, suffers from a chronic illness and can no longer work full-time, making it difficult for them to meet this criterion. As a result, they are unable to secure a mortgage and enter the property market. Had they kept their first house, it would now be worth significantly more, and they would have built equity over the years.

Related Facts

– UK property prices fell by more than 16% in 2008 due to the financial crash.
– House prices have increased by over 50% in the past 15 years.
– The recent pandemic has fueled house-price momentum with cheap borrowing.
– Average mortgage rates are now higher than a year ago.
– The Baughs’ rental experience has been marred by multiple moves and uncertainty.

Key Takeaway

The story of the Baughs highlights the potential pitfalls of selling a home without considering the long-term consequences. It serves as a cautionary tale for those who see selling as a way to escape debt or financial difficulties. Renting as a temporary solution comes with its own challenges, including housing insecurity and the inability to enter the property market due to rising prices and stricter lending requirements.

Conclusion

Annabelle and Simon Baugh’s decision to sell their home 15 years ago turned out to be a costly mistake. Now, living in a rental property, they are unable to buy again due to rising house prices and stricter lending criteria. Their story serves as a reminder to carefully consider the long-term implications of selling a property and the potential challenges of renting as a temporary solution. It highlights the importance of maintaining a foothold in the property market and building equity over time. Ultimately, the Baughs’ experience underscores the significance of informed financial decisions and the potential consequences of not fully understanding the market dynamics.