House or flat? Advice please!

Blue_Monkey

I'm hoping you helpful folk can help me work through my thoughts on buying a house vs a flat given our current circumstances....

OH and I have managed to save the best part of £100k and have recently been looking to buy a house. Nothing much is coming up and what has been is going very quickly and going for the asking price (or over in some cases in bidding wars!).

In an ideal world, we'd get something for £275k, spend £55k on a deposit, £10k on fees and have some left over for a rainy day / renovations etc. The mortgage on this would be approx £1150pm. However, in our area £300k would give us a much better pick of the bunch but we can't stretch to that.....

I'm currently receiving maternity pay (on 100% until end of March) and OH is self-employed with less than 1 year of accounts. We've got a decision in principle to borrow £230k max based on my salary only, though we'd need to apply before I get my April payslip (issued at the end of the month) as my money starts to go down then. If we don't find something before the end of April, we'll need to put buying on hold until I'm back at work and have 3 months payslips which will be next March! At the moment I'm planning to go back to work full time, but use my accrued annual leave (approx 50 days!) to only actually work 3 days a week initially. Not sure what will happen when I've used up this annual leave (ie whether I'll need to go back full time or whether I'll have a contractual change to 3 days and therefore 60% of my current salary - £44k). I suspect we'll want to think about another baby in 18ish months.

We currently rent, paying £950pm.

Until today we'd only been looking at 3 bed houses, but now I'm wondering if we should consider a flat instead?

I've seen a bit of a doer-upper for £150k (2 bed ground floor flat, with garden) so I'm using this as an example to my thinking... If we put down a 20% deposit, the mortgage on £120k is approx £600pm which is obviously lower than what we pay now in rent. Not sure how much the renovation work would be (new kitchen and bathroom at least) but we'd obviously need to recoup that if/when we moved on.

So here's my thoughts on pros and cons - am I missing anything? Any other advice for us?


Pros:

• Cheaper, more affordable mortgage
• Somewhere we own, ie not "dead money" on rent
• Potential to rent it out after we move out?
• Use less of our savings
• Lower stamp duty
• May make money upon selling

Cons:

• Not as much space as a house
• May need work / renovation a hassle (specially with a small baby around)
• Risk of not recouping renovation costs
• Selling costs
• Might get "stuck" in flat if not able to sell later, not ideal if family grows!
• Might need additional storage for our junk

What should we do? I guess I'm sick of renting and paying off someone else's mortgage... If we're going to be "stuck" in a flat for the next year at least, we may as well be in one that we own surely? Plus we'd actually have more money to play with on a monthly basis - £350 is not to be sniffed at!!

Thanks v much in advance, BM x

Simon_gloster

House.

AIP for £230k and soon to be one person working with insufficient accounts.....are you sure the info the lender has keyed is correct? Who is the lender?

Running_Horse

Always a house if you have a choice.

There is a world of difference between freehold and leasehold.

Slinky

If you've saved £100K why are you putting down much less as a deposit? Surely you'll be paying more on the mortgage to borrow what you have in your savings?

I'd agree with freehold over leasehold definitely. We had a leasehold flat for a short time - never again.

Wobblydeb

The costs associated with buying don't really make it financially sensible for short periods of time, so no I wouldn't go for a flat in the interim. Plus what everyone else said - I would avoid anything leasehold unless I was really stuck for somewhere to live.

Neverland

I've owned flats and houses and I would choose a house over a flat every time

Privacy, leasehold costs, leasehold issues, space, its a very long list

C_Mababejive

Do not buy a flat.

ognum

buy a house if you can!

hazyjo

Definitely a house. So many reasons why, most listed above. Do you really want neighbours up and/or down as well as probably to the sides? With kids/babies? Do you want to pay a service charge?

You will soon accrue more money on good salaries. I would definitely be using more of your current savings. How many rainy days do you think there'll be?! I wouldn't particularly want to be renovating anything.

If you say spending £300k will get you what you want, why not spend it? £80k from savings and a mortgage for £220k. I don't see the problem with that... I wouldn't really want to be spending £275k with the SD level at £250k. The value could soon be sucked down towards it if the market dips/continues to fall (not sure where you are).

If you know your income's going to be reduced, you really should be telling the mortgage provider anyway. Any change in circumstances should be disclosed. You might actually be better off waiting until next March...

Jx

vax2002

One you will own the property, it is yours = House
One you own a bit of paper allowing you to live in it with permission of the real owner = Flat/ lease

zzzLazyDaisy

House every time.

I've owned a flat once, when I really couldn't afford anything else. The maintenance charge went from £36 a month to £56 in the first year - plus I had a problem with a noisy neighbour directly below us playing music until all hours, and problems with people parking in my space in the communal car park. The maintenance charge alone would stop me from doing it again - that money is better put towards a mortgage.

Then you have the fact that a flat has a restricted pool of buyers which restricts the price you can get, and is normally a stepping stone to a bigger place. And moving house is expensive, with EA & Solicitor's fees, stamp duty etc. So unless you have no option, by far the best thing to do is to skip as many steps as possible and go for something that you are going to be happy living in for some years to come, if at all possible.