Benefits of "starter" home?

Thank you for your responses so far.

katebl wrote: »

With a low deposit, are you planning on staying there long enough to ride out (or overpay your way out of) negative equity? It could become a real possibility for people buying now (I'm also a potential FTB).

I hope you have a HTB ISA by the way - if not well worth getting!

Negative equity - something I hadn't considered because until recently I was assuming I'd have a 20% deposit! I guess two points there: I'd be looking at massively overpaying this mortgage, especially because the interest rate would be awful. Quick sums show me I'd still have £1,000 disposable income per month (after everything including money to go out to restaurants). Say I put half of that into the house and half into overpaying, I'd be overpaying £6k per year, just in the first year. Second point is that I wouldn't need to move; I'd like to use this as a stepping stone to the ideal house but there's no strict timeline on that.

HtB ISA yes I've got a decent chunk in there, and I'm now reconsidering my LISA plan!

Good luck with your FTB journey - it can be so tough

phillw wrote: »

I personally wouldn't buy a flat as you could struggle to sell it in 5 years time & neighbours can be a pain. I know someone who has been trying to shift their flat for the last couple of years now. The valuation of the flat now is much lower than what they paid for it and they'll probably have to drop further to sell it.

If you do buy a flat then look at what the service charge is and how it can be raised, one of the reasons they are having trouble shifting the flat is the £5k a year service charge.

Asking for a raise at work if you haven't had one in a while, get another job, overtime etc & stretch yourself really thin to get the house you're planning on staying in is a much better idea.

I agree that there's a liquidity issue compared to the original plan of just having cash + mortgage. I also swore blind I'd never buy anything leasehold. However, I'd only go through with this plan if I could find a long enough lease (preferably 250 years + remaining) and it's more maisonettes than purpose built flats I'm looking at anyway so very minimal service charge.

I've done all the things you've suggested recently, and it is working. It's just so demoralising when I'm living so stingily but I'm still a good 4 years away assuming I can continue to live like this!