Selling a house to buy a flat

Pablito_

Hi forum,

Just looking for a bit of validation on my plan really.

I have a property (a house) that I paid £147,500 for in 2018. I'm coming to the end of the 5 years and would like to move. It's going on the market for £197,500. But if I can get £190k I'd be content.

I'm looking at buying a flat in the city. Is this a terrible idea investment wise? The flat will be about £160-180k, and I can afford more on a mortgage, as such I'm thinking I can put about 3/4s of my equity (£60k) in the flat and keep £20k a side for an ISA. With the long-term stratergy of if my circumstances change then I can look at buying a house and look at renting out the flat/using it as an air bnb.

Thoughts, advice or guidance would be appreciated.

UnderOffer

Personally, I’d never move from a house to a flat, unless I desperately needed to downsize or reduce my financial burden. It doesn’t sound like you are moving because of spiralling costs, as you mention you can obtain more on a mortgage?

Also, consider the freehold, ground rent, lease costs, close proximity to multiple neighbours, and realistically if the other flats are also rented/air bnb, with continuing changing tenants would you like to live next door to that set up in the long term?

There is also substantial costs involved with buying selling, solicitors fees and moving fees. You suggest then doing this all again to re obtain a house. 

Why are you considering this? 

silvercar

Long term strategy only works if you can move the mortgage on the flat to a BTL mortgage and get a residential mortgage on your new house. You need to be able to afford the maintenance of both properties. If you did this where would you get the deposit on the new house from?

I'm curious as to why you want a flat, having lived in a house? Location? Less maintenance?

MultiFuelBurner

Lacking detail really to advise

Will come back once all the information has been gained from the OP

Stubod

..as above, would never change from a house to a flat unless it was to do with havig to do with work / re-location.

Double no no if the sole reason for doing so is for "investment" purposes??

steve866

A lot of missing factors for people to give you accurate advice. However it sounds like you’d like to move to the city (where you can only afford a flat) for lifestyle reasons and want to ensure it isn’t a really bad financial move?

I would say you only live once and if you think you’ll be happier in the city then go for it, but try and minimise downside by ideally getting long lease / share of freehold, low service charge, not in a high rise etc 

SDLT_Geek

Pablito_ said:

Hi forum,

Just looking for a bit of validation on my plan really.

I have a property (a house) that I paid £147,500 for in 2018. I'm coming to the end of the 5 years and would like to move. It's going on the market for £197,500. But if I can get £190k I'd be content.

I'm looking at buying a flat in the city. Is this a terrible idea investment wise? The flat will be about £160-180k, and I can afford more on a mortgage, as such I'm thinking I can put about 3/4s of my equity (£60k) in the flat and keep £20k a side for an ISA. With the long-term stratergy of if my circumstances change then I can look at buying a house and look at renting out the flat/using it as an air bnb.

Thoughts, advice or guidance would be appreciated.

A note on your longer term strategy, to keep the flat to let out and to buy a house to live in.  

On present rules that would incur higher rate stamp duty.  If buying the house in England, it would be an extra 3% SDLT.

Brie

Why put money in an ISA when interest rates are so high?  I'd put as much as possible against any purchase.  And I'd only be moving, as others say, if I needed to for lifestyle or if I'd suddenly acquired nightmare neighbours.   

Mildreds_Earrings

Before you purchase, make sure you (or the Buyer) purchases a completed LPE1 form from the Buyer or from the Freeholder/Landlord,, so that you know about annual service charges and if any S20 Consultation major works are planned within the next 5 years and the anticipated cost per leaseholder.

All the best.

TripleH

A lot has changed in 5 years in the world as a whole (may also for the Op)  so it might make sense to move from a house far out of town to a flat in town particularly if age is a factor.

Have you lived in a flat before?

You also know you can just remortgage your current home when your fixed rate deal ends?

arthurdick

We are  midway through doing that. have sold our house, paid mortgage off,  cash in bank earning interest, living in my mums flat rent free( my mum passed away last July) ,we are waiting to buy a flat as cash buyers.   The only reason we are doing it is because of location, we had 27 years down in Kent but missed London so much, kids left home, we had a 3 bed terraced house, rooms wasted( cat had it's own double bedroom, spoilt thing). We had always lived in a house, Would never ever have  thought we would give up a freehold house to buy a flat but life is too short, we wanted to be back home, no stress of mortgage, feel much happier, for us, it was the right thing to do. Happiness v freehold house and not happy, for life reasons, we thought happiness wins. I would not advise anybody to do it unless it worked out to be a better life by doing it.  Not in anyway would we have done it for an investment.