Should I sell or rent?

TheresaReeve

My husband and I have a 2 bedroom flat. We purchased it 5 years ago for 150k and have a 141k mortgage. It has been valued at 160k. We have a son and I'm pregnant again so are desperate for more space. My husband earns 45k and I earn only 5k. We don't have any savings. We are thinking of selling the flat and making ourselves first time buyers. Then, we might qualify for a home buy direct scheme. It would probably mean us having to move out of the area we currently live as it seems that those schemes are not available near to where we live. Are these schemes any good?
Or, should we rent our flat out and rent a house in the hope that things will eventually change? We are both so scared of making the wrong decision. I've approached some financial advisors but no one seems interested in helping us? I guess there isn't any real money to be made from us so they don't want to waste their time! Can anyone on here offer any?

Fire_Fox

Welcome to MSE!

Selling your existing property does not make you first time buyers, as you will not be buying for the first time! It does put you in a chain-free position. If you wish to let your flat you will need the consent of the lender, and possibly the consent of the freeholder as well. There is a lot of legislation to comply with and you will need to consider the impact of income tax and capital gains tax. Also consider how you will pay the mortgage in the periods between lets, or if you have a tenant who does not pay and needs to be evicted. Consider too who will manage the property as you have jobs and children keeping you busy.

£50K is a good combined income and I am guessing you have child benefit etc. on top of that? Do you know where all your income goes down to the last fiver? Completing one of these is usually very enlightening:
http://www.makesenseofcards.com/soacalc.html

When_is_the_reset?

The kids can share surely? Two bedrooms between you all sounds quite good to me.

Taking on more debt and part-equity schemes sounds like a recipe for disaster. It also props up house prices with taxpayer money.

Sorry to be so blunt.

TheresaReeve

We do have enough spare cash each month to pay a decent size mortgage. However, we need around 70k deposit to get a decent mortgage on a 250k mortgage which is what we'd need for a decent size house.

The flat really isn't big enough for us, we're living on top of each other and cannot take it anymore!

BitterAndTwisted

Sorry to be so blunt but if you have enough spare cash each month to pay a decent-sized mortgage why do you have no savings now?

TheresaReeve

Because we had debts which we've now cleared.