buying tiny place with small mortgage

korvin

Hi people!
I can see a lot of people trying to pay off their mortgage. My husband and I are thinking in a different direction, maybe completely crazy.
We have £40 thousand saved for the deposit, but we were thinking about buying just a 1-bed apartment for £80-100k so that we can repay it as soon as possible.
We have a pre-school son, and we are aware it will be a challenge to live in such a small space, but wouldn't it be worth it? Achieving freedom early on? and not buying something that we actually can't afford? I never understood why people in the UK buy 3-bed houses when they have no kids or one kid. Is there really so much need for space? I guess people in other countries live in much smaller places.

bigisi

korvin wrote: »

I never understood why people in the UK buy 3-bed houses when they have no kids or one kid

Because they can and they want to. Who are you to judge them for their choices?

korvin wrote: »

I guess people in other countries live in much smaller places.

So what if they do? People in the UK live in small places too, it all depends on their personal situations as well as their wants/needs.

Bigisi (proud owner of a 3 bed. semi. because that's what I wanted)

danlewi2

another wind up thread surely!

Finchy2018

what if you work from home and need an office space? We aren't planning on having kids, but that doesn't mean I plan living in a 1 bed house forever. I want to fulfil my dream of having a home library....

lisyloo

I never understood why people in the UK buy 3-bed houses when they have no kids or one kid. Is there really so much need for space?

Well I have a 5-bed so perhaps I'm well qualifed to contribute an answer :-)
We didn't particularly want 5 bedrooms but we did want a large kitchen with space to cook and entertain.


Is there a need? no
Is it nice to have space for all your stuff, guests and have a big kitchen to cook in (or whatever you like) yes it's nice.


We consider residential property as a good home for some of our money (as PART of a balanced and diversified potfolio) because

a) It's CGT free
b) whilst you have a mortgage it's geared - by that I mean you'd get the gain on your £80K-£100K house rather than putting only £40K in stocks and shares and yours is very modest amount of equity, in many cases it's a much larger amount that's gaining (over the long term).
c) you can enjoy a spare room, conservatory etc. more than a share certificate
d) it's diversification from equities and cash as PART of a balanced and diversified portfolio.

I guess people in other countries live in much smaller places.

Some smaller but some larger.


But if small suits you then go for it. You don't need to compare yourself with anyone else if it suits you.

The only thing I would say is do compare with the alternatives i.e. where else your money will go.


Do bear in mind that with apartments there are ground rent, service charges and issues that you don't get with your own property (like for example a massive bill for new cladding as a topical example).


I don't understand why people need to spend a lot on a new car (well I do).

Mine is 20 years old and cost me £200 but it's all down to personal choice and perceived value.
I think most people woul dunderstand enjoying living space with their family more than a share certificate !!

Niv

I do not understand why someone would choose buy a 1 bed place when they already have a kid (unless of course they cannot afford bigger). In a couple of years time your child will not thank you for you all living in a crowded little flat - and nor i suspect will you.

bouicca21

I'm single and can't imagine how anyone survives in a 1 bed place. My 3 bed flat is just about OK, but another room would be even better.

hazyjo

If you don't have a lot of 'stuff', don't have many friends or family round, all watch the same telly programmes (or don't watch it at all), don't make loads of noise, and all live happily in one room and bedroom, go for it. Personally, it's my idea of hell. Plus I have a hell of a lot of 'stuff'.


My friend and her husband have been living in a one bed flat with their now 20-odd year son. It's challenging lol. I imagine it would be even harder when your son wants to play whatever console is in favour in the future, or have mates round to stay, or GFs in the long term future.


I'm now in my late-40s and have a very small mortgage and a 3 bed house. More than happy with that. I don't see people struggling to clear their mortgages, but I do see a lot of people getting towards the end of their mortgage, or being in long term houses where their salaries increase and they can afford to pay down their mortgages as there are no major moves planned for the foreseeable.


Also, mine will hopefully provide me with a chunk of equity should I wish to move further out in the future.

korvin

thank you for your answers. I just guess we have a different lifestyle. I don't want to have a mortgage for next 25 years, maybe that is my fear.

AnotherJoe

korvin wrote: »

Hi people!
I can see a lot of people trying to pay off their mortgage. My husband and I are thinking in a different direction, maybe completely crazy.
We have £40 thousand saved for the deposit, but we were thinking about buying just a 1-bed apartment for £80-100k so that we can repay it as soon as possible.
We have a pre-school son, and we are aware it will be a challenge to live in such a small space, but wouldn't it be worth it? Achieving freedom early on? and not buying something that we actually can't afford? I never understood why people in the UK buy 3-bed houses when they have no kids or one kid. Is there really so much need for space? I guess people in other countries live in much smaller places.

If by that that you mean overpaying and making extreme attempts so to do, That can be regarded as equally crazy, in the long term pensions/investments and their associated tax breaks, and using inflation to help you pay off your mortgage, will almost certainly be a much better financial proposition than paying off a mortage too early.
As regards how much space, generally if you'd like a large space to live in, that comes with a large space upstairs, eg more bedrooms, so the extra bedrooms may just be what you get as a byproduct of more living space.
People may also decide they will need/want more space when they have kids and it's cheaper to go direct to a three bed than start with a one bed.
I also wouldn't want to live in a one bed flat just so I could have "freedom". Freedom from what? Not from lack of privacy. Not from noisy neighbours above below and to the side. Not from leasehold fees, not from deciding how much to spend and when to maintain my accommodation, not from poor management maintaining the building. Not freedom from needing a job to afford everything else you needed anyway.
If I wanted to live on the cheap and have "freedom" I'd get a canal boat though that's not especially conducive to having kids indeed once you have children "freedom" takes a backseat anyway.
And historically, by buying a bigger place earlier you have more time to gain from house price appreciation which means later on you can downsize and have more freedom to choose where to live.
I think to simply regard not paying a mortgage as meaning you have "freedom" is to fall for the mantra of the mortgage free wannabe crowd, and is overall very naive. (Nothing personal meant)

PasturesNew

I am single, I have a 2-up-2-down.

I'd "like" a little "study" where "all the junk and spare stuff" could go. There's loads of stuff you need to have in a house, especially over time. If I had a little spare 6'x'7' room then all that "spare stuff" could go in it. Of course, a lot COULD go in a shed, but sheds tend to not be entirely water/rat tight over time and can get damp....

Stuff grows... important stuff... stuff kept "in case", spares, extras. Xmas stuff (tree, wrapping paper, baubles, stockings, little santas, tinsel), cleaning stuff, airers, ironing board, iron, spare kitchen stuff you barely use, old curtains kept "in case", small bits of furniture you're not using right now, decorating stuff, hobby stuff, camping stuff, spare duvet etc in case somebody comes, spare linens, new towels bought and not used yet .... stuff ... it's everywhere... tools (it starts with a screwdriver, then you want a little/cheap cordless screwdriver, then a little/cheap cordless drill, then bits for the drill... and another screwdriver, and a hammer and a rubber mallet) ... "handy buckets" for those outdoor jobs or cleaning ... just "things". And, too, I've a raft of "bits and bobs/not of value" I've got from when my parents passed... just "their cr4p" really

Never underestimate the importance of space for "stuff".... because stuff just grows....