House or flat? Advice please!

cottonhead

I would go for the house option. We live in an expensive area as well and currently live in a flat witn our child. We are hoping to move to a house soon though. The reason being - with a flat you risk having noisy neighbours and obviously noise is more apparent in a flat. You have to pay a service charge - we have to pay £70 a month for nothing. Feels that way anyway. we are supposed to have to ask permission to keep a cat etc etc and the changes we can make to the property are minimal. Also parking - people might steal your space. How would you manage getting kids / shopping etc into a flat ? The shorter the lease the less you may be able to sell it on for.A freehold house is probably a more attractive buy. Kids like to have a garden and with a house its likely to be bigger. What if you want pets ? a house is better for that too. So basically a house ! Even a 2 bed house would be better than a 3 bed flat in my view. Good luck.

JimmyTheWig

hazyjo wrote: »

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...

I agree with this.
I think getting a mortgage based on your current salary, in full knowledge that it is due to drop, is unwise at best. It may also be against their terms and conditions and/or be illegal, but I don't know.
So that rules out buying a house for the next 12 months.

Am I right in thinking that you are in a flat right now?
If you're in a rented house then I'd say stay put, carry on saving where possible and put down a decent deposit on a house next March.
But assuming you are in a rented flat, it's really just a case of which is going to be cheaper for the next year or so. [I'm assuming that in a few years time you will want to be in a house.]

You need to consider...
* Mortgage will be cheaper than rent.
* Interest on savings will be reduced as you have used some to buy and renovate the flat.
* Cost of renovations vs increase in value. If you do the right things this should even out.
* Increase / decrease in value due to market forces. In today's climate I'd say this would even out.
* Service charge / ground rent on bought flat.
* Owner's responsibilities, e.g. boiler maintenance, etc.
* Cost of moving. This is the biggie - include solicitors fees (and searches, etc) to buy and sell, estate agents fees for selling, removal costs, stamp duty on buying, mortgage arrangement fees / product fees / exit fees. Total all this up and split it across the number of months you plan to be there. I bet that this (especially if you also include other costs mentioned such as service charges) will more than account for the difference between rent and mortgage.

Blue_Monkey

Slinky wrote: »

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.

Well, we've always had some savings as a cushion so we wouldn't want to spend it all on a deposit. Plus I guess my thinking was that if we only tied up some of it in a flat, we could put the majority of the rest in a fixed savings account for a year and earn a little bit of interest (it's currently earning next to nothing).

hazyjo wrote: »

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

We're in a flat now, so the neighbours thing doesn't bother me so much as we already contend with that. Would maintenance charges apply to a victorian house conversion/flat?

I don't know what will happen come next March with work... As I say, I may change down to 3 days a week contractually at that point, in which case, there's no way we'll be able to get a mortgage for what we'd want. So we'd still be stuck renting a flat.

I suppose I've kind of got it in my head that if we use a small amount of savings to get a flat now, as the mortgage payments will be a bit lower, we'll be able to save more each month and then look at getting a house later with a view to potentially keep the flat on as an investment, or selling at a (smallish) profit.

The dead money of renting is doing my head in.

Panda78

I've been saving for a year longer than i needed to (i could have bought a flat earlier) in order to afford a house. I've rented a flat for 10 years, but the benefits of the freehold have put me off buying a flat.

It's tough as i can only afford a small 2 bed terraced and it's at the top end of my bugdet, where as i know my money could buy me a good sized 3 bed flat.

If i was you i would buy a house, put more towards your deposit and then your monthly repayments will be less. I'm sure you will feel happier for longer, perhaps forever, in this house and the upheavel of moving again with a family if you bought a flat would not appeal to me.

breadlinebetty

Blue_Monkey wrote: »

Well, we've always had some savings as a cushion so we wouldn't want to spend it all on a deposit. Plus I guess my thinking was that if we only tied up some of it in a flat, we could put the majority of the rest in a fixed savings account for a year and earn a little bit of interest (it's currently earning next to nothing).



We're in a flat now, so the neighbours thing doesn't bother me so much as we already contend with that. Would maintenance charges apply to a victorian house conversion/flat?

I don't know what will happen come next March with work... As I say, I may change down to 3 days a week contractually at that point, in which case, there's no way we'll be able to get a mortgage for what we'd want. So we'd still be stuck renting a flat.

I suppose I've kind of got it in my head that if we use a small amount of savings to get a flat now, as the mortgage payments will be a bit lower, we'll be able to save more each month and then look at getting a house later with a view to potentially keep the flat on as an investment, or selling at a (smallish) profit.

The dead money of renting is doing my head in.

If you found a Victorian/Edwardian conversion you would probably find it's freehold (or share of freehold)

There are so many different types of flats, so it's difficult to answer what would be better to buy between a flat or house. You can get fantastic flats and terrible houses - and vice versa.

If you found a freehold flat, especially a Victorian conversion with all the original features, that would be very sellable in the future - and also very rentable. A lot of young married couples buy a flat when starting out and then rent it out when they upsize - if you play your cards right you can make a very good investment for the future.

I agree that rent is dead money, so if you bought now you'll be on the first rung of the ladder and depending on your type of mortgage you won't be paying 'dead rent'

As far as neighbours are concerned, you can get bad/noisy neighbours living in the house next door or across the road, so it's a bit of a myth that people in flats are all bad neighbours! lol

You get a lot of professionals in flats who are certainly not 'rough' or loud.

If I was buying a flat with a yong child I'd look for a ground floor conversion with private garden and private parking in the driveway or side of house. Some of these Victorian conversions are in grand old mansion style houses, so in some ways you're actually living in possibly a £1M plus mansion - albeit one part of it! These converted flats sell very well becasue people love all the original features etc, and they're solidly built. Regarding noise aspect from above, most conversions will have a leas drawn out between the freeholders (one of whom would be YOU) stipulating that carpets/underlay etc must be laid on all upstairs rooms.

Ultimately, a house would be your ideal further down the line, but some of these beautiful share-of-freehold Victorian coversions are highly sought after. The rooms are usually very large and solid too - much bigger than a tiny box-like house at the same price.

FTBFun

I live in London, and only considering a house severely limits your options. However, in your case you can clearly afford to buy a house so I'd go with that.

clw1

Go for a house and maybe look for a 3 bed that could be extended in the future if needed.

Also you talk about wanting to keep a cushion of savings / renovation maney so I would suggest you look at an offset mortgage as then your savings reduce your monthly interest charges (or do as we have and keep paying as if there was no reduction so it's paid off faster).

phoebe1989seb

Agree with various aspects of what previous posters have said......a house in most cases would be infinitely preferable to a flat, but if in a city such as London and in a Victorian etc conversion possiby with share of freehold a flat is perfectly accepable as a first buy. Our DS (22) has just bought such a flat in Colliers Wood....2 bed garden flat with SOF and he and hs GF intend to do what a previous poster said and let it out further down the line when they are ready for a house - they don't have a mortgage so wouldn't require consent to let btw......

I would definitely be inclined to use more of your savings as the deposit and go for a house though, although the point about informing your prospective lender about your imminent drop in income would be bothering me somewhat.....

JimmyTheWig

Blue_Monkey wrote: »

Well, we've always had some savings as a cushion so we wouldn't want to spend it all on a deposit. Plus I guess my thinking was that if we only tied up some of it in a flat, we could put the majority of the rest in a fixed savings account for a year and earn a little bit of interest (it's currently earning next to nothing).

Not totally logical. If it's tied up in a fixed savings account then it's not much of a cushion. You're unlikely to earn more even in a fixed account than you'd save with it coming off the mortgage.
But it doesn't make that much difference, at the end of the day. Definitely worth using enough of a deposit to get your mortgage into the best loan-to-value bracket that you can, though.

I don't know what will happen come next March with work... As I say, I may change down to 3 days a week contractually at that point, in which case, there's no way we'll be able to get a mortgage for what we'd want. So we'd still be stuck renting a flat.

I would have thought being stuck renting a flat would be better than stuck with a mortgage on a house that you can't afford.

I suppose I've kind of got it in my head that if we use a small amount of savings to get a flat now, as the mortgage payments will be a bit lower, we'll be able to save more each month and then look at getting a house later with a view to potentially keep the flat on as an investment

Nice idea, but you may well still struggle to get a second mortgage.

or selling at a (smallish) profit.

Good plan, but don't forget to factor in the cost of buying and selling. What do you think property prices are going to do over the next few years? Over the last few years they've remained pretty stable - so even discounting your costs there's as much chance of making a profit as there is of making a loss.

The dead money of renting is doing my head in.

Would the dead money of solicitors fees, stamp duty, estate agent fees, mortgage fees, mortgage interest not also do your head in?


Personally, I wouldn't ever want to buy a place that I wasn't happy to potentially live in for 5 years. The costs, and risks of prices falling, just don't make it worth it.
I don't think you want to be in a flat in 5 years time, so I wouldn't buy a flat now if I were you.
But I think you might have already set your mind on it!

JimmyTheWig

phoebe1989seb wrote: »

Our DS (22) has just bought such a flat in Colliers Wood
...
they don't have a mortgage

Wow! Generous parents?