Max out mortgage, or go for a cheaper property?

justpassingthrough24

I’m in the process of buying my first property to live in. I’ve left it late and circumstances changed so I’ll be buying on my own.  I’m in a position where I can get a decent flat to live in with a LTV of 50%. With this LTV of course it would mean a smaller place than what I could potentially afford, a 1-2 bed and not somewhere I would want to stay long term. Probably around 2-3 years max. I wouldn’t want to sell at this point (with the volatile market and house prices likely to plummet) so wanted to look at options to rent it out at that stage while looking for another property.

I wondered if anyone knew more about consenting to lease on a residential mortgage, rather than switching a residential mortgage to a buy-to-let? I have heard that BTL is pretty hard to achieve right now and will be worse in a few years?

Alternatively, I can get a larger mortgage from the get go with a higher LTV and go straight for a larger house with the view to stay more long term. I’ve been told informally by some friends that this may be the best move for investment reasons, can extend, house prices going up more than flats etc. But of course this would come with much higher monthly payments. I’m just not sure what the best option is.

I have spoken to a financial advisor but it has left me more confused! I know it’s so hard to predict what will happen in the next few years but any advice or personal experience would be greatly appreciated, because I have no idea what to do. Thanks!

MFWannabe

Personally I’d go for the house and not the potential of having to move again in a few years time 
renting out a property isnt as easy as people think and you’ll have moving costs etc to pay for 

MultiFuelBurner

House every time

RelievedSheff

Another vote for house.

Buying and selling property is an expensive business. If the flat is only intended for a couple of years it just doesn't seem worth the hassle. 

SadieO

Another vote for going straight for the house. Seems a bit daft to buy a flat if you already think you'll want somewhere else in a couple of years. That will go really quickly and you'll then have the hassle of selling and buying. I think keeping it and renting it out would be a bad idea. Being a landlord isn't easy. You'll have to sort out maintenance, insurance etc, pay tax on it, hope that you don't get any void periods, that you find a decent tenant and hope that the amount of rent you can command makes it worth it. Have you looked at how much you could rent that kind of property out for, compared to how much it'll cost you in maintainance, your mortgage payments etc? All the while paying for these things on your new house too? 

Another thing to consider is if you are a first time buyer you get stamp duty relief, makes sense to maximise the benefit of this on a bigger house rather than "using it up" on a small flat. 

Sunsaru

I would always go for a long term solution over a short term fix.

House for me.

housebuyer143

It depends on so much but age and future earning potential. If you are young then the opportunity to increase your earning is easier and so I would always so push to get the biggest/best you can afford now with the view to staying put. 
It's better than having to move again in a few years. If your salary increases etc then you will eventually find repayments are less of a stretch. 

justpassingthrough24

Thanks everyone for the helpful replies. Going straight for a house would've been a no brainer but now with the mortgage rates being what they are, it will leave me with significantly higher monthly outgoings, means I'll save less, have to be more careful with money etc.

I think deep down the hope is in a few years, I'd be able to buy a bigger, better place than what I could afford now, with a partner and kids etc. The houses I could afford now wouldn't be ideal for kids (smaller/no garden, busier streets, poorer locations - I live in London). But again, these are more ifs and  buts along with the volatile housing market. I wish there was a crystal ball to tell me what's going to happen 

SensibleSarah

It is a tough choice. I'd always go for a house over a flat personally, but that's just a personal thing. Moving is a massive pain and stress, so the fewer time you have to do it in life, the better! Don't base your future plans on a partner and child that aren't 'real' yet - do what is right for you in the short and medium term. 

You don't say what the difference is in terms of monthly costs for house vs flat - but if it's a significant difference then going for the flat and overpaying the mortage as much as you comfortably can for a few years might not be the worst idea in the world. 

If it were me though, I'd probably go for the house now rather than have to go through a move again in a couple of years. 

TBagpuss

MFWannabe said:

Personally I’d go for the house and not the potential of having to move again in a few years time 
renting out a property isn't as easy as people think and you’ll have moving costs etc to pay for 

Same here. If you can afford the house it will be a lot less hassle. 

Also. if you went with the flat then if you couldn't sell it when you were ready to move, you'd have no deposit for a bigger place. None of us can say for sure what house prices will be like or how easy it may be to get the lender's consent to let or indeed to find a tenant,. in 2-3 years time, you could easily find that you had to stay put .

I'd go for the larger property, and if you are interested i becoming a landlord, save u with a view to buying a property specifically to let out, in the future . (if you buy the house, you could of course look at the possibility of letting a room to a lodger if you feel squeezed on outgoings)

If you have enough savings for a 50% deposit on a fault you would presumably still have a decent sized deposit if you go for a house instead, so should still be able to get a reasonable mortgage deal. If you are worried about  the monthly payments, maybe look at alonger mortgage term and then plan to over pay if/when you can. 

tealady

House every time. Having spent 6 months living above a champion door slammer I would NEVER live in a flat again.
I live in a well insulated terraced house, most days the only way I know my neighbours are home are if Ibsee cars on their drives.