Put *ALL* of my savings into buying a second property, to become a main home? HELP!!

housebuyer143

ProDave said:

diystarter7 said:

movilogo said:

Nothing unusual in this. Many people sleep on floor for few months after buying houses because they had no money left to buy furniture. So very much doable and not a reckless decision. 

No offence intended whatsoever. I strongly disagree with you.  what if they lost their job, became ill, especially with covid around and gas/elec shot up by another 100% and food is shooting up and boiler needed replacing

People need at least 10k in cash/bank not shares etc when buying a property for rainy day

NB: if you are saying have the money for the rainy day like i said but put off buying furniture etc that is different and something I agree with but you did not say that may have meant that

Have a nice day and again, no offence.

If I had waited until I had £10K spare I would never have managed to buy my first house and who knows when if ever I would have been able to do that.  Sometimes you have to take risks.  I did buy an insurance policy that was supposed to pay the mortgage in the event of redundancy but never needed to claim on it.

Agreed. I bought my first home and had enough money for a fridge. I slept on a blow up bed and had camp chairs for months. 

Nothing bad happened 🤷‍♀️ and we quickly saved more. You do what you need to and go without for a while. I only had a £16k deposit, so no chance I was going to have £10k free just in case the worst happened. 

SensibleSarah

I used every penny on my first house purchase - a fixer-upper that still hasn't been fixed up nearly 12 years later, because it was the only way to get out of rented. With just a single income coming in, any savings I started to build up since that were always wiped out by maintenance and life things, like a broken boiler, a pipework leak, a car that needing fixing, big vet bill etc. Thankfully nothing happened that I really couldn't afford to cover, even if it meant a few months of beans on toast afterwards. I moved in with the furniture I had from my rented property (much of it second hand then) and still have it - same sofa, fridge, washing machine, bed etc, plus a few bits my Mum kindly bought for me. It's only recently that I've been able to start saving enough to actually have a proper emergency fund (which is a hell of a lot less than £40k), let alone save for the other things I want. 

This means that the house still needs the same rewiring, new doors and windows, new flooring, new kitchen and new bathroom and full redecoration that it did 12 years ago, but that's what living payday to payday does when you're not earning enough to save. It's very likely that these things will all be left to the next buyer to do, if I'm honest. 

OP, if you're earning enough to replenish those savings fairly quickly - just do it! Sometimes risks are worth taking and this looks like the best way for you to move forward from the flat situation. 

wine_night

Are you putting your flat on a buy to let mortgage? If you can, do it on interest only. It will improve your cash flow and make your accounting and self assessment easier. 

Rental properties are really in demand in most places so the good news is you should be able to get a reasonable return and tenants are less likely to move at present which saves turnover fees. 

The cladding crisis really has a lot to answer for. Hope it gets sorted soon. 

MEM62

Slithery said:

kapitan said:

I currently cannot sell the flat that I own, because of the cladding crisis.

Yes you can, you just need to find a cash buyer.

I can't imagine why the OP didn't think of that.  Problem solved then.  

Bendy_House

kapitan said:

Dear all,

I am fast approaching the point of no return. I currently cannot sell the flat that I own, because of the cladding crisis. This ties up equity and increases stamp duty for additional purchases. Thankfully, I have been fortunate enough to be on high income (in what some would describe a risky job), so I have managed to get a mortgage offer for a second house. After a long period of trying and failing, I have finally found the right house to move my new family (wife+tiny baby). Offer has been accepted and we are well down the way approaching exchange of contracts in the next four weeks.

It all sounds great, right? ... except that, in order to complete that purchase, I would need to deploy effectively 95+% of my savings (currently in cash, formerly in shares+cash). This would leave me with no savings of my own - but two properties (yay?).  All we would have left is some savings in my wife's ISA (~£40k). I would be able to rent out the flat and thus cover the mortgage service + other costs, however I have no clue when I may be able to sell it.

So, I am in desperate need of some impartial advice. I understand fully that this sounds like a privileged position to be in, and it really is - I realise I am more fortunate than most. However I still humbly need advice. I am used to having savings for rainy days and thankfully I've never had any such days. But with a baby on board now, a global crisis looming (and everything associated with it - house price crashes, job losses), and with not very much left in the bank...I wonder if I have bitten off more than I can chew?

Thank you for your kindness in advance!

Hi Kapitan.

As said before by others, spreadsheet it all to the best of your abilities. And then consider the worst case scenarios.

Weird thing - I cannot really see any worrying ones. Your flat is one affected by the cladding issue? Provided this doesn't put anyone off actually renting it, then I understand that is an issue that WILL be resolved, according to Gove? In which case, that 'crisis' will pass. Even after it does, good chance you'll prefer to keep on renting it out as the steady income might be preferable to a CGT whallop?

What will happen to the property market? Who the heck knows - it's completely defied everything I imagined over the past 5 years. Ultimately, prices return to previous levels (and exceed them), and you will always have the rental income until then.

So, what will happen with rentals? Again, some uncertainty, but it's hard to see demand falling off significantly for any reason - unless house prices 'completely' crash so that everyone can suddenly afford a house?! Are there circumstances in which this could happen? Haven't a clue!

So, do your sums, and then perhaps a page of "What ifs?" - absolute worst case scenarios. I suspect you'll find you can ride all but the most extreme.

I can personally only suggest 'go for it' if you can. Like many on here, I've been there, broken ice in the kitchen sink to wash up - all good fun (tho' I didn't have a bairn or partner to worry about then.. )

Good luck :-)