Potential changes in circumstances - what to do with flat?

MiseryChastain

Hello

I wondered if anyone had any advice for a potential change in circumstances. I bought a flat a couple of years ago when I was firmly single as I was sick of renting in London. I put in a 10% deposit, traditional mortgage plus Help To Buy loan.

A few months after I completed the purchase I began a relationship which has now become long term. Ultimately we both want to live together and probably in the next year or two. However it would not be possible for my boyfriend to live with me as there isn’t enough space plus we work in different areas. What exactly are my options? I see them as:

- try and sell the flat entirely. I don’t know what it would sell for today but I suspect I would make a loss on it given it was a new build and probably depcreciated.
- pay off the help to buy and convert the mortgage to a buy to let mortgage - would this be possible and would I then be able to get a traditional mortgage with my partner on a second property subject to having the deposit?
- pay off the help to buy and rent out the property, and move into rented accommodation with my partner.

Apologies for the lack of knowledge, I just feel as though my circumstances have changed and I feel locked into this flat especially with the help to buy loan outstanding. To be honest I would not really want to consider selling for less than the original purchase price so is there not much I can really do if the value has dipped since purchase? Background is that it’s a zone 2 London new build.

Thanks

MC

Pixie5740

MiseryChastain wrote: »

Hello

I wondered if anyone had any advice for a potential change in circumstances. I bought a flat a couple of years ago when I was firmly single as I was sick of renting in London. I put in a 10% deposit, traditional mortgage plus Help To Buy loan.

A few months after I completed the purchase I began a relationship which has now become long term. Ultimately we both want to live together and probably in the next year or two. However it would not be possible for my boyfriend to live with me as there isn’t enough space plus we work in different areas. What exactly are my options? I see them as:

- try and sell the flat entirely. I don’t know what it would sell for today but I suspect I would make a loss on it given it was a new build and probably depcreciated.
- pay off the help to buy and convert the mortgage to a buy to let mortgage - would this be possible and would I then be able to get a traditional mortgage with my partner on a second property subject to having the deposit?
- pay off the help to buy and rent out the property, and move into rented accommodation with my partner.

Apologies for the lack of knowledge, I just feel as though my circumstances have changed and I feel locked into this flat especially with the help to buy loan outstanding. To be honest I would not really want to consider selling for less than the original purchase price so is there not much I can really do if the value has dipped since purchase? Background is that it’s a zone 2 London new build.

Thanks

MC

1) Is certainly a possibility.

2) Who knows based on the limited information you have provided? Can you afford to pay off the HTB loan? I presume you can or you wouldn't be considering it as an option. Once the HTB loan is paid off you could apply for Consent to Let. Alternatively you could apply for a BTL mortgage but your choice of lenders will be limited since you will no longer be a home owner. If you can meet affordability for a second mortgage then there is no reason why you couldn't jointly buy somewhere with your partner but any purchase will be subject to the higher rate of SDLT.

3) See above although points about second mortgage and SDLT not relevant.

AdrianC

It's not "new build". It was when you bought it a couple of years ago...

Let's take your second/third option (they're the same one, really) first... How much equity do you have in the property now? If you were going to convert to a BtL mortgage, you're really going to need at least 25%. Unless you've been massively overpaying your mortgage, you're nowhere near that. Do you even want to run a residential letting business? Do you understand your legal obligations? Do you have enough capital on one side for that day when your tenants do a runner the day of the court hearing for possession after months of unpaid rent, leaving you with a smoking mess of an ex-flat?


Yes, you might get less than you paid for the flat if you sell it. But how much would you have paid in rent over that two years?

jonnygee2

I just feel as though my circumstances have changed and I feel locked into this flat especially with the help to buy loan outstanding.

Well yes, you are slightly, given you are the owner!

Still, you have a year. Why not just put it on the market now at the price you paid for it and wait? You never know. If it hasn't sold this time next year look at other options.

Honestly unlikely in these market conditions that a one bed that isn't eligible for HTB will sell for that much. But better than not trying, there are still a good few foreign investors out there attracted by the weak £ value.

Your other options don't look viable unless you have a huge amount of cash lying around. You'd need to pay off the 40% loan and end up owning around 20%+ equity in the whole thing for that to be viable. Right now you probably own about 8% (that's a guess but can't be far off?), making you short about 60k.

sal_III

Sounds like you haven't actually lived together under one roof with your partner. In this situation I would suggest you first rent somewhere for a year or so, before jumping into buying property together. This board is full of post from people who rushed into it and are now stuck jointly owning a property with their ex, who doesn't want to move out and/or sell.

A cheeky option is to get a lodger in your current flat and actually live with your partner for a while.

jonnygee2

A cheeky option is to get a lodger in your current flat and actually live with your partner for a while.

That would be a tenant, not a lodger.

If you have help to buy loan, no consent to let and you are potentially in negative equity and already feel 'trapped' then giving somone else tenancy rights to this flat is not well advised!

Pixie5740

Indeed a lodger shares their home with a resident landlord which is a bit difficult if the landlord isn't resident. Plus the OP has a 1-bedroom flat which makes the lodger scenario even less believable.