Is this a bad idea?

Amram1234

Hi all,

Sorry about the long post...

My husband and I are thinking about moving out of our flat into a 5 bed new build house nearer to his parents. We both earn around £50k each. The 5 bed is the last on a site of 150 homes and the builder (Bellway) is offering 20% off list and paying the stamp duty. Other houses (with bigger gardens) have gone for £600k, and we think we can get an offer of £480k + they pay our stamp duty (at the higher rate).

We currently own a flat and think we could convert the mortgage to be buy to let, then use our savings (£75k) to get a 15% LTV mortgage, the repayments on the new mortgage will be similar to the amount we pay at the moment..

From a positive perspective:
- the house is lovely,
- we currently live in a 2 bed flat with 2 toddlers,
- it feels like a good price based on what else has sold
- speaking to the neighbours who have been living there for some time the houses appear to be well built
- we would get a rental property.

From a negative
- the house has a small garden given it is 5 bed,
- it would increase my husbands commute from 45 mins to 90 mins,
- use up most of our savings,
- neither of us love the idea of living in a new build estate, but are happy to compromise.

I'm really flip-flopping between this decision and don't know if I'm missing something or making the wrong decision, what do you think?

Thanks in advance :j

haras_nosirrah

Are you sure they would pay the btl stamp duty rate rather than just what it would be if it were your only home. It is 14k vs 28,400 so quite a difference.

Also the 20% off. Is that a genuine discount or a help to buy scheme being offered?

Amram1234

haras_nosirrah wrote: »

Are you sure they would pay the btl stamp duty rate rather than just what it would be if it were your only home. It is 14k vs 28,400 so quite a difference.

Also the 20% off. Is that a genuine discount or a help to buy scheme being offered?

Hi,

It is the last property on the development and so they have been quite flexible for the Stamp Duty - which we don't have the cash for at the moment. In regards to the 20%, that is what the other identical properties have gone for - but this one has a smaller garden, so I suspect it is probably 10% due to garden, 10% due to discount.

Thanks

BoGoF

Thinking you can convert to BTL and the bank agreeing to it are 2 different things. How much is the mortgage? Expected rents?

Do you know anything about being a landlord? Tax implications?

Amram1234

BoGoF wrote: »

Thinking you can convert to BTL and the bank agreeing to it are 2 different things. How much is the mortgage? Expected rents?

Do you know anything about being a landlord? Tax implications?

Yes, agreed. I am due to have a call with the bank tomorrow, so I will see how that goes. My other half has a rental property. This one will have a rent of c. £1500 and outstanding mortgage of around £300k.

getmore4less

Check the sell through prices.

Last one not sold while the rest are being lived in means people looking at newbuild this size are buying elsewhere.

Is there anything else negative like the garden aspect parking location on estate?

What's the flat worth?
6% yield on mortgage is going to be less on value

SpiderLegs

Personally a 90 minute commute would kill the idea for me, especially with two young children.

[Deleted User]

I cant say if you are doing the right thing but if i was in your position i would be quite clear that you are not getting a 'discount' on the house. They wouldnt be offering money off if they could sell if for the price they wanted to.
All they are doing is reducing the price to a point someone will buy it. That price now becomes the house value.
So you are not getting a £600k house for £480k. you are getting a £480k house for £480k.

If you dont like the fact its a new build, and the fact its got a small garden what happens if you move? Will the property market in the area be increasing given the fact they had to take a 20% hit to sell it the first time. Sounds like the market is starting to slow for those houses. Is there a chance you dont like there but cant sell for the price needed and end up stuck.

I personally wouldnt do it for a couple of reasons:
1. A lot of money to spend on something that isnt perfect. Or at least the bits that arent perfect cant be changed here. At least if its internal stuff you can remodel. Cant get a bigger garden and cant move it out of estate location

2. 90 minute commute is brutal and with 2 young children this is a complete lifestyle change. Your husbands work/life balance is the most important thing here in my opinion. Is there a chance he will be miserable because he missed dinner time / bedtime stories with the kids etc etc.


Property is all about compromise. Just need to figure out which areas you are happy to comprimise on. Its a personal decision at the end of the day. Ive done the long commute and it was fine for a few months but it started to wear me down

AnotherJoe

Whats the rationale behind keeping the flat as a BTL?

Candyapple

Is the commute actually 90 mins, or is that just a Google estimate? Don't forget certain train lines are notorious for running late/being cancelled which if he needs to make other connections, can have a drastic knock on effect. 90 mins could easily turn into 2+ hours.

Are you also factoring in the time it takes door to door, or just the actual commute time?

If the garden is small for a 5 bed, then your future buyers will likely be put off by this too. This could become a sticking point for the future and you may end up having to heavily reduce your asking price. All factors worth thinking about.

If it was me, I would say no. The long commute with kids, plus the small garden would be a no-no as you can't change these once you have moved in.

Amram1234

Deleted_User wrote: »

I cant say if you are doing the right thing but if i was in your position i would be quite clear that you are not getting a 'discount' on the house. They wouldnt be offering money off if they could sell if for the price they wanted to.
All they are doing is reducing the price to a point someone will buy it. That price now becomes the house value.
So you are not getting a £600k house for £480k. you are getting a £480k house for £480k.

If you dont like the fact its a new build, and the fact its got a small garden what happens if you move? Will the property market in the area be increasing given the fact they had to take a 20% hit to sell it the first time. Sounds like the market is starting to slow for those houses. Is there a chance you dont like there but cant sell for the price needed and end up stuck.

I personally wouldnt do it for a couple of reasons:
1. A lot of money to spend on something that isnt perfect. Or at least the bits that arent perfect cant be changed here. At least if its internal stuff you can remodel. Cant get a bigger garden and cant move it out of estate location

2. 90 minute commute is brutal and with 2 young children this is a complete lifestyle change. Your husbands work/life balance is the most important thing here in my opinion. Is there a chance he will be miserable because he missed dinner time / bedtime stories with the kids etc etc.


Property is all about compromise. Just need to figure out which areas you are happy to comprimise on. Its a personal decision at the end of the day. Ive done the long commute and it was fine for a few months but it started to wear me down

AnotherJoe wrote: »

Whats the rationale behind keeping the flat as a BTL?

Candyapple wrote: »

Is the commute actually 90 mins, or is that just a Google estimate? Don't forget certain train lines are notorious for running late/being cancelled which if he needs to make other connections, can have a drastic knock on effect. 90 mins could easily turn into 2+ hours.

Are you also factoring in the time it takes door to door, or just the actual commute time?

If the garden is small for a 5 bed, then your future buyers will likely be put off by this too. This could become a sticking point for the future and you may end up having to heavily reduce your asking price. All factors worth thinking about.

If it was me, I would say no. The long commute with kids, plus the small garden would be a no-no as you can't change these once you have moved in.

Thanks for all the advice, I think the point about about the commute is a good one. My husband says he should be fine with it, but I'm not sure.

I also agree with the points on the discount - I think I was taken in by the word discount, but they are still getting the most they can for the property.

I think it all comes around compromise and given the price of other places in the area, this place is much cheaper and I think perfectly liveable.