unique situation of owning/buying/selling?

krazyhorse

Hi there!

First off, must apologize if something like this has already been posted...

I think I'm in a kind of unique situation... not necessarily a good or bad one though, but slightly different... maybe after some feedback I'll find out I'm not!

I inherited and own a 2 bed ground floor flat. No mortgage left to pay on it. I have a wife and 2 kids, 2yr old boy, 4month old girl. The flat is quite small and I would like to get a 2 or preferably 3 bed house (so the kids dont have to share). If I were to get a 2 bed house, I would want to get one where the loft can be converted to a 3rd room later down the years, as the son and daughter will eventually want thier own rooms.

I am also with a debt charity, so am refused loans or mortgages straight away.

My flat last summer when I had it evaluated, is worth upto £200k, realistically looking at offers of £185k though...

2/3 bed houses that I've been looking at, in and around that price of £185k are in... let's say, not so sought after areas... shall i say "ex council". I have been to view some of these houses though, and although they are all terraced and ex council looking, the quality of the homes at these prices actually look decent. But... for a first time buyer/seller like myself, what could I look at doing...?

3 bed houses in a nice family area are £250k minimum. I'm not too keen on putting my current property as collaterol to get a mortgage, especially when I have to clear my debts...

And what are the "hang ups" / opinions / stigmas about ex council houses and the surrounding "communities" / type of people... As everytime I've visited these areas, sure they are no chelsea and kensington but there are schools, hospitals, local shops around. It just doesnt "look nice" and I'm not sure how to tell if it is an up and coming investible area...

There's my 2 pennies, sorry to ramble on, thanks for any feedback... !

ValHaller

Other thread with background https://forums.moneysavingexpert.com/discussion/3906299. Unfortunately, you did not mention the debt problems in your earlier thread, otherwise you might have been asked some more about it. I can see you had debts of £20,000 in 2008 and you were going to post a Statement of Affairs.

How bad are the debts now? Because a lot hinges on your debt situation.

AlexMac

I'm probably not totally unbiased on this; although we're lucky enough to now live in a detached house in a good area, I was brought up on Council estates, and didn't even know that people owned houses until I was in my late teens. Our kids 1st house was ex Council in a street which is still predominantly public rented beacuse that was the only 3-bedder with a garden which they could afford. And I, they and the grandchildren are fine- none have been transformed into feral chavs by our environments!

So I'd say there's nothing wrong with a mixed area as long as you follow your instincts, visit many times, at all hours (days, evening, weekends, late...), check out local schools, shops, transport, commutability, crime-map data and even chat to locals and shop-keepers and others as you would always do when moving to a new area. You wouldn't buy a car without a test-drive or a holiday without looking at independent reviews on Tripadvisor...? There are massive differences between areas and you just need to find a good one (although that will probably also be reflected in house prices). So if space and numbers of rooms are a priority - go for it.

It would obviously be great to trade up if you could get a loan, and that sounds affordable... but until you sort your problem about getting a mortgage is it worth considering renting? If you let your house out and rented a bigger one, the space problem would be solved and you could choose your area subject to the rent . The downside would be that it wouldn't be totally tax-efficient (in that you have no mortgage interest to offset against rent), you might struggle if your place was void with no income, and you'd have no long-term security on a series of 6-month or 1 year Assured Shorthold tenancies. But you'd still have your place as a fall back?

agrinnall

Surely your first priority has to be to sell the flat so that you can pay off your debts? Once you've done that you'll know how much you have left and you'll be in a better position to start rebuilding your credit rating so that at some point in the future you can be considered for a mortgage. If the money you have once you are debt free isn't enough to buy then you should have enough to allow you to rent somewhere that is suitable for your needs.

krazyhorse

ValHaller wrote: »

Other thread with background . Unfortunately, you did not mention the debt problems in your earlier thread, otherwise you might have been asked some more about it. I can see you had debts of £20,000 in 2008 and you were going to post a Statement of Affairs.

How bad are the debts now? Because a lot hinges on your debt situation.

Hi

£17k in debt

krazyhorse

agrinnall wrote: »

Surely your first priority has to be to sell the flat so that you can pay off your debts? Once you've done that you'll know how much you have left and you'll be in a better position to start rebuilding your credit rating so that at some point in the future you can be considered for a mortgage. If the money you have once you are debt free isn't enough to buy then you should have enough to allow you to rent somewhere that is suitable for your needs.

Hi

If I were to sell the flat and pay off my debts, i'd have to find a property worth £160k or so... which would be impossible unless I moved quite far out which would mean change jobs, and start a new life.... not ready to take such a dramatic change...

BitterAndTwisted

If you sell it for £185k and buy another for the same price where are you going to find the £1k for the survey, another £1k in conveyancing fees, the stamp-duty plus all the other costs associated with moving with SEVENTEEN GRAND OF DEBTS while on a debt-management plan?

It's a hard place to be in, but from what I can see not do-able at present. I think you should get yourselves out of debt first, even if that means selling up and renting for a bit until your credit-record has improved.

Your second child is only four months old, so you will have no need for an extra bedroom for quite while yet, if ever. Plenty of time to get out of debt first.

krazyhorse

AlexMac wrote: »

I'm probably not totally unbiased on this; although we're lucky enough to now live in a detached house in a good area, I was brought up on Council estates, and didn't even know that people owned houses until I was in my late teens. Our kids 1st house was ex Council in a street which is still predominantly public rented beacuse that was the only 3-bedder with a garden which they could afford. And I, they and the grandchildren are fine- none have been transformed into feral chavs by our environments!

So I'd say there's nothing wrong with a mixed area as long as you follow your instincts, visit many times, at all hours (days, evening, weekends, late...), check out local schools, shops, transport, commutability, crime-map data and even chat to locals and shop-keepers and others as you would always do when moving to a new area. You wouldn't buy a car without a test-drive or a holiday without looking at independent reviews on Tripadvisor...? There are massive differences between areas and you just need to find a good one (although that will probably also be reflected in house prices). So if space and numbers of rooms are a priority - go for it.

It would obviously be great to trade up if you could get a loan, and that sounds affordable... but until you sort your problem about getting a mortgage is it worth considering renting? If you let your house out and rented a bigger one, the space problem would be solved and you could choose your area subject to the rent . The downside would be that it wouldn't be totally tax-efficient (in that you have no mortgage interest to offset against rent), you might struggle if your place was void with no income, and you'd have no long-term security on a series of 6-month or 1 year Assured Shorthold tenancies. But you'd still have your place as a fall back?

i think your idea is good, however the thought of moving into rented accomodation, then looking for another place and moving again - with 2 kids, would be quite stressful... also now that I own my own place, going back to renting would make me feel vulnerable, as I feel some what secure now.

But i definitely need to move as with flats, leasehold, the years drop and the propety value drops. At moment I have over 100 years on the lease, so I want to sell next year, to keep sale price of my flat good.

thanks for the feedback about council "stigma". I've grown up around these colourful parts, and although I can handle myself, and I know the people, its different when you're a dad for some reason, just want best for my kids... know what I mean?

JimmyTheWig

krazyhorse wrote: »

i think your idea is good, however the thought of moving into rented accomodation, then looking for another place and moving again - with 2 kids, would be quite stressful... also now that I own my own place, going back to renting would make me feel vulnerable, as I feel some what secure now.

But i definitely need to move as with flats, leasehold, the years drop and the propety value drops. At moment I have over 100 years on the lease, so I want to sell next year, to keep sale price of my flat good.

Ok, you need to make a choice.
It doesn't look like you can afford a house in your current locality. Even if you can buy one for the same price that you sell at there are all sorts of costs, as BitterAndTwisted points out.
So you either need to stay where you are or move into rented. If you move into rented you have the option of letting your flat out or selling it.

krazyhorse

BitterAndTwisted wrote: »

If you sell it for £185k and buy another for the same price where are you going to find the £1k for the survey, another £1k in conveyancing fees, the stamp-duty plus all the other costs associated with moving with SEVENTEEN GRAND OF DEBTS while on a debt-management plan?

It's a hard place to be in, but from what I can see not do-able at present. I think you should get yourselves out of debt first, even if that means selling up and renting for a bit until your credit-record has improved.

Your second child is only four months old, so you will have no need for an extra bedroom for quite while yet, if ever. Plenty of time to get out of debt first.

I have £8k in savings, to pay:

estate agent
surveyors
solicitors
stamp duty

should I choose to buy a 3 bed house... for e.g. £185k

BitterAndTwisted

No, I think it's an absolute outrage that you've got £8k in savings when you're on a debt-management plan with £17k of debts. And now, you've got yet another kid to raise. This doesn't necessarily indicate that you're the smartest money-manager in the world, or you wouldn't be on a DMP in the first place.