Stretch ourselves (house) or easily afford (flat)?

Blue_Monkey

OH and I are expecting our first baby in December. We're currently living in Australia and moving back to the UK late August. We'll rent for the first 6 months and then hopefully buy.

When we get home, we'll have around £80k in savings, and would use max £65k of that on a deposit. I'll be on a salary of £45k + £5kpa car cash allowance. OH will be self-employed earning around £35kpa.

Decent 3 bed houses in our area in the UK are around £250-300k. Decent 2 bed flats are around £180k.

I know only we can really decide, but I'm just wondering what your thoughts are on whether we should go for a house or flat.

House would be great as it would hopefully mean not moving for years, but would take up a lot of our savings in terms of deposit, leaving not much left over for maternity leave, refurbs, emergencies.

Flat would be great as it would mean a smaller chunk of deposit, more savings as a safety net, but likely that we'd want to move in a year or so.

I'd prefer to just get in a house to be honest... But a smaller mortgage on a flat would mean being able to add to our savings, potentially rent out the flat and buy a house as well once I'm back at work properly, or just sell the flat to put towards the house.

What do you reck? Worth stretching ourselves sooner rather than later, or play it safer for a couple of years?

Thanks in advance!

womble12345

I say stretch yourself, house prices are low at present.
I think if you investigate your plan of renting the flat you buy in a few years time you will decide its a bad idea, you need at least 75% LTV on the BTL flat mortgage, will that leave enough deposit for the house you will live in?
Bear in mind that amove in a few years time willcost you about 10-20k in fees, stamp duty, etc.

Procrastinator333

Not sure you will have a choice. I'm not sure they will accept what your oh earnt in oz as proof of earnings for a mortgage in the uk. You might only be able to borrow against your salary. I would suggest talking to banks and mortgage brokers to find out...

Seanymph

House - you can sell it again.

If you buy a flat you have a baby and no garden - and when another comes along you have no space to move into.

You will then end up stuck there because other people would rather stretch themselves and buy a house.

Queen_of_the_Hive

House definately - best advice we were given was go for the max you can afford. Thats not to say go mad an put your self in a tough situation. We also recently realised that putting money in overpayments is much more effective than in a savings account. We recently made an overpayment of £2.5k and knocked 6 months off the mortgage.

We also plan to buy a flat as rental - but thats not going to happen in the near future!

KateLiana27

I would always advocate buying within your means and having enough of an emergency fund to spare. That said, a 3-bed house in a good area will, in most parts of the country, hold its value more reliably and be easier to sell than a 2-bed flat (all else being equal). Plus you will likely get more use out of it as you can stay there as your family grows.

Personally, I would go for the 3-bed house. If you don't have a comfortable emergency fund to spare on top of this right now, I'd rent and save up a year or two until you could afford it, rather than going for a 2-bed flat and bearing the costs and hassle of having to buy and sell it in an uncertain market. I wouldn't let the baby influence you into making a quick decision - babies are just as happy in rented accommodation!

Emmzi

house. difficult to build an extension on a flat.

Emmzi

ps if you are pricing from rightmove remember to knock off a bit -- not much is going for full asking price atm

Henry_P_Chester

womble12345 wrote: »

I say stretch yourself, house prices are low at present.
I think if you investigate your plan of renting the flat you buy in a few years time you will decide its a bad idea, you need at least 75% LTV on the BTL flat mortgage, will that leave enough deposit for the house you will live in?
Bear in mind that amove in a few years time willcost you about 10-20k in fees, stamp duty, etc.

Maybe in Nortern Ireland and by the look of the prices the OP quoted it's not NI. House prices are still very high and likely to fall more.

Saying that I can't see why the OP can't get a house on those incomes.

SailorSam

I'd always prefer to struggle a bit more and go for the house.
If you found it was to much it would be easier to sell than if you had a flat and found out you wanted to sell that 'cos you needed the extra space.

Blue_Monkey

Thank you everyone so far, this is really useful.

womble12345 wrote: »

I say stretch yourself, house prices are low at present.
I think if you investigate your plan of renting the flat you buy in a few years time you will decide its a bad idea, you need at least 75% LTV on the BTL flat mortgage, will that leave enough deposit for the house you will live in?
Bear in mind that amove in a few years time willcost you about 10-20k in fees, stamp duty, etc.

I hadn't thought about the selling costs down the line :cool:! So pretty much the difference we'd spent in deposit (ie approx £45k for a flat vs £65k for a house) would get eaten up in fees anyway!

Seanymph wrote: »

House - you can sell it again.

If you buy a flat you have a baby and no garden - and when another comes along you have no space to move into.

You will then end up stuck there because other people would rather stretch themselves and buy a house.

Yes, this bothers me a bit I have to say...

clarissa62 wrote: »

House definately - best advice we were given was go for the max you can afford. Thats not to say go mad an put your self in a tough situation. We also recently realised that putting money in overpayments is much more effective than in a savings account. We recently made an overpayment of £2.5k and knocked 6 months off the mortgage.

We also plan to buy a flat as rental - but thats not going to happen in the near future!

We can afford the house and the mortgage payments on that, it's just my maternity leave/pay will make things a little tight for 6 months or so. Saying that, we should still have circa £20k in savings, so I think this is a pretty good buffer.