Would this be crazy???

nm123_2

Just musing really... I'm a FTB, already a MFW

Ideal home is a 3 bed semi with garden. But what if I buy a 2 bed flat for much cheaper, get a 5 year mortgage (not the usual 25) and have extortionate and just about affordable mortgage payments. Yes, it would mean 5 years of watching every penny, but could well be worth it in the long-term, no?

Madness? Possibly.

Has anyone done this?

qazitory

Couldn't you just get a mortgage where you can overpay without a penalty? As I know I can do that with my Northern Rock mortgage.

StuartGMC

Typically the margin between flats and houses has opened up with market rises but, the prices across all properties now mean you would likely benefit from getting in on a house if you can.

We were not able to buy in the late 1980s even as two graduates as the salary restrictions were still 3x joint, but following company closure in 1992 then a job, we bought in 1994 but as FTB went straight to the 4 bed detached. We are still in it (only 3 people in the household) and about to be mortgage-free after 15yrs (during which OH has worked part time for nearly 12yrs). I wish you well in your plans and hope you can get onto the ladder with a reasonable rate (high deposit) and that your job security is good.

chirpchirp

Trying to do it in 5 years is an excellent idea in theory. If I were you I'd be looking for a flexible mortgage which wouldn't tie me to a 5 year term. I'd want one which would allow me to make any overpayment I wanted to, without penalty, so that I could overpay and pay off the mortgage in 5 years. I'd want a flexible mortgage rather than a 5 year term incase something happened, such as a personal injury or job loss that made it difficult to repay within the 5 years. Some flexible mortgages allow you to borrow back your overpayments thus allowing you a payment holiday if there are months when things have gone terribly wrong.

Sorry, if the above sounds pessimistic but it's best to plan for all eventualities and setting yourself a 5 year target is a great idea but perhaps having it so rigid by only having a 5 year term is maybe not.

As for whether to get a flat or a house, I'd always prefer a house, but, if it's the only way to get onto the property ladder at the moment then a flat is better than nothing. However, remember it could work out more expensive when you come to move to your 3 bedroom house, which you aspire too. At that point you will have new mortgage fees, estate agent fees, removal fees etc so you may find it is better to hold off for a little bit longer, if it means you won't waste money by moving too frequently.

dimbo61

Consider an offset mortgage on what ever property you do buy and overpay and save into offset account.
Half my take home pay goes on the mortgage But we have managed by using Martin,s website for everything we have to spend money on and getting best value for our hard earned money! GOOD LUCK

nm123_2

So a flexible mortgage would be better then I guess... I was just thinking if it's fixed for 5 years then we'd know what we're paying each month for that time.

Babies will feature at some point so I guess a £3k mortgage on maternity pay is a bit unrealistic and then the flexibility will be a godsend.

Overpaying on a house probably wouldn't make that much of a dent, which is why I'd thought of a flat.

Thanks anyway, I appreciate the insight, it's not likely we'll do this for a while as I'm possibly going abroad for work for a year or two, but when we get back I'll be coming up for 31 and having seen my parents still with a mortgage as they hit 60, I'm keen to ensure that I don't have that problem. And if it means 5 years of being skint to have longer-term financial freedom, then so be it.

dimbo61

If you do go abroad for a year or two I hope its either somewhere nice like OZ or else a country where you can earn some serious money Dubai.
If you take on a big mortgage over 5 years when do the kids come into the picture ? 36/37 ??

baby_fuzz

I agree that a mortgage with no overpay limits is better idea - it's sensible to have a bit of cash floating about to cover things like boilers going pop, and other unexpected stuff.

nm123_2

dimbo61 wrote: »

If you do go abroad for a year or two I hope its either somewhere nice like OZ or else a country where you can earn some serious money Dubai.
If you take on a big mortgage over 5 years when do the kids come into the picture ? 36/37 ??

I expect they get more expensive as they get older so probably pop a couple out whilst we're scrimping and then by the time we're MF, they'll be starting school.

Dream world? Yes. But don't try, don't get, eh?

firesidemaid

the fewer times you purchase/move, the less you will pay - moving house/flat generally costs money, as do indemnities on bigger mortgages.

save as much as possible and get the worst house in the best street/area you want to be in.

don't be in a rush to buy, and make silly-ish offers until someone accepts.

needtopaymydebts

hiya

your plan in theory sounds good, just don't underestimate the cost of having a baby. It's not just the feeding them that costs but in the 9 months that you spend constantly growing bigger you have to keep yourself in clothes that fit, then gradually get smaller ones once your little one arrives. They also need a ton of equipment to go with them, which I admit, you can get on places like freecycle etc but they start off expensive then get even moreso!

I would think you might be best aiming high but going for something with alot more flexibility incase things just don't work out how you planned. We bought our first house thinking we could move straight in and live with the decor for a year before quickly doing it up and selling to move somewhere bigger. Within a couple of days the toilet began leaking through the kitchen ceiling and we realised that the kitchen cupboards were such a strange height that they couldn't fit a box of cereal, the 'brand new carpets throughout' were also covered in some very dubious stains! we have no idea how the guy living there actually managed but five years on we're in the same place, completely redecorated, new kitchen, bathroom etc but now in negative equity after paying out for a wedding and a baby. We're now able to massively overpay on the mortgage, as we'd originally planned but we've been here 3 years too long already and our dream house is still a long way in the future. Yes, we didn't do the maths properly when we bought but I just wouldn't want to see you struggling when there might be a less restrictive option open to you

xxx