Do I sell my flat and get a house?

Rian

A difficult decision to make. I still owe 128k on my mortgage and my flat is worth around 190k. I pay £640 a month for the mortgage, service charge and ground rent are about £1600 a year together. 

I keep looking at houses, it probably means I'll have to take a 200k mortgage and the repayments might look like around £950 a month over 25 years or £720 over 35 (not a fan of the longer term)

Now with a house there will be bigger bills, council tax, electricity ect. However no service charge. On the flip side I can only see the service charge and ground rent increasing with inflation at minimum, probably more. It's a hard decision for me, anyone have any experience or good advice?

Jonboy_1984

What length is left on your lease? Approaching 85 or less and you will need to factor extending into any plans.

theartfullodger

IMHO interest rates will go up so advise you factor that it.

Under Thatcher's government in November 1979 BoE base rate hit 17%.  I was lucky (big mortgage for then) my building society only increased to 15%.

diystarter7

Difficult one, only you can decide.
New house and things to consider:
Location, nuce area, mid-area or rubbish, neighbours, transport, shops, schools.
Repairs to roof, gutters, wiring, CH,
2/4 bedrooms, 3 often sells more easily
Parking OSP etc.

As another said look at the remaining lease, when will you have to renew - you will pay it off before your house - do you like the flat/community,etc

Megaross

It depends really, are you prepared to have a little less spending money each month for a more desirable home and arguably overall better long term investment?

I sold and bought a house and one of the reasons was because I really didn't like the idea of the ground rent and service charges continually rising - eroding my spending power and the property value. Felt like I should be better off the longer I owned it - not worse. If I could go back to being a young naive buyer I wouldn't have bought that place at all.

user1977

Rian said:

On the flip side I can only see the service charge and ground rent increasing with inflation at minimum, probably more. 

Ground rent is only going to increase (if at all) in accordance with whatever the lease currently says - so what does it say? Freeholders don't have the ability to just think up a new figure.

What do you think is likely to happen to the costs of maintaining a house?

AFF8879

You’ve listed financial implications but said nothing about your lifestyle - I.e. are you happy / comfortable living in your flat (therefore considering this primarily from a financial perspective), or longing for more space, a garden etc? Because ultimately that will also somehow need to be factored into your calculations.

With that said, I wouldn’t worry too much about extending the length of the mortgage if you can afford to overpay. Most allow you to overpay 10% of the annual starting balance each year without penalty, meaning you can effectively shorten the length this way while being able to reduce your payment down to the contractual minimum should circumstances require.

Rian

Megaross said:

It depends really, are you prepared to have a little less spending money each month for a more desirable home and arguably overall better long term investment?

I sold and bought a house and one of the reasons was because I really didn't like the idea of the ground rent and service charges continually rising - eroding my spending power and the property value. Felt like I should be better off the longer I owned it - not worse. If I could go back to being a young naive buyer I wouldn't have bought that place at all.

Thanks it's great to have a view from someone who has the t shirt. Currently there's 115 years on the lease, it's not a problem. Ground rent increases with RPI which will be high this year. Service charge will increase as the building gets older, it's 10 years old and things are starting to come up like they just replaced all the communial doors and updated the fire alarms to meet newer regulations.

I can't help but think I have paid £13000 over the last 10 years for very little in the way of benefit to myself in service charge.

Getting a bigger mortgage does scare me slightly but at least the option is there to fix that cost for say 10 years and have some comfort knowing what the payments will be.

The reason I want to move is a recent leak from a top floor flat came into mine, I got the management company to claim off their buildings cover 5 months ago. Loss adjuster agreed to put everything back right as it's covered but 5 months on the management company refuse to pay the excess and say the top floor flat needs to pay it, which the top floor owner refuses to. Just seems like I'm stuck on that front. But can't be dealing with the drama of it all if it were to happen again. I could pay the £300 myself have a new kitchen and sell you see.....

HRH_MUngo

Freehold v leasehold any time for me.

penners324

Given the issues around leasehold flats at the moment which appears to be getting worse, sell up and buy a freehold house