Advice welcomed on a house buy

BlueDog333

Hi All
I've always been a bit of a financial ignoramus, so would welcome any advice or insight on a potential house purchase we are considering. A long post .. sorry!

The question is this:
We currently own a house worth around £220K (based on others in near vicinity) and we have a £90K mortgage left on it. We have been here 10 years and my salary (as well as house value) has gone up quite a bit since we bought it back then.
This is an old Victorian terrace house that needs about £15K to £20K spending on it to get kitchen up to scratch, re-pointing outside etc.

We have just seen a near-finished house (part of a new development) near us that we really love.. more space for the family, no repairs needed (!) it is detached, has great views across some hills etc.
We have 'first shout' on it when it is released and it will be on for around £300K. (developer still confirming).

With equity in current house and our salaries (wife works part time) , we can afford to get the new house BUT will be max-ed out on monthly mortgage based on our budget calculations. Houses in our area are still increasing in value.

Final point, we plan to move back down south for family reasons in 6 years and our daughter is about to start Uni in Coventry (we will still have other kids in the house though).

Question: do we stay in house we have, do it up and retain sizeable equity
OR do we stay hereand use ‘surplus’ budget / equity to buy a small house in Coventry for student B-T-L for 3 years OR do we 'trade-up' to new house that suits us better but will be a stretch (but do-able) based on current salary / monthly budget ??

thanks for reading.

lynzpower

I suspect you are suggesting that your place will either need the 10-15k spending on it before you sell, or your home will sell at 10-15k less than others in your area?
Either which way, Im guessing that your home will fetch ( at a complete guess here) around 205k. Unless the other properties near you need that same value of work done Im guessing.

Will this overstratch you more buying the 300k place or have you taken this into account?

BlueDog333

I should have been clearer, sorry. I think we would need to spend that much to get it to sell for average value in area for a house like this.. so , as you say it will be around £205K .. Anything higher than that would be good but we can still meet the mortgage on the bigger £300K property, though would be a stretch.
We are in a dilemma on whether to stay (and possibly get 2nd small BTL in Coventry) and move up to bigger place and max up the mortgage.

lynzpower

If I was in your shoes ( and I am cautious now after overstretching myself in my current property) Id stay where you are.

Having a BTL to students is a whole other kettle of fish, which others will be able to advise you on.

BlueDog333

Thanks for your view based on experience lynzpower - much appreciated !

Doozergirl

In your position, I'd make the necessary repairs and changes to the existing house and see how I felt then. It's easy to fall back in love with a house when it's fresh with a new kitchen and a lick of paint.

You've got a daughter potentially leaving home for good soon, so I can't personally see the point of upsizing if you will have a bit more room in the existing house. A BTL for her to live in and effectively manage for you would really help her out through some financially tight years and possibly bring you a little added income.

BlueDog333

you are probably right about the falling in love .. some new kitchen units may well do it ;-)
so, more food for thought and a good point about the BTL for our daughter - thanks Doozergirl.

Tassotti

If you do go ahead with the Student BTL, you will have to look at the HMO rules and regulations

http://www.odpm.gov.uk/index.asp?id=1151996

WiseInvestor_2

Personally I wouldn't opt for the BTL option. Your daughter will have enough on her plate without having to be a live-in landlord. She will end up being resented either by her friends/housemates for nagging or her parents for failing to look after the property. By all means, get a BTL but let your daughter get a place of her own - use the rental income to pay hers if necessary.

Good luck

lynzpower

Good point indeed wise investor.

One of my mates had the dubious honour of having thier folks BTL and in year three, she couldnt find anyone to live there. This was about eerrr 6 years ago when I was at uni. Theres an interesting paradox with not wanting the landlord anywhere near the premises but wanting them on hand immiediately to fix a drippy tap.

BlueDog333

It is a good point WiseInvestor.. hadn't thought of it like that.
Oh lordy, lots of thinking to be done and thanks for all your points.