Best strategy for downsizing to a bungalow that needs a lot of work?

LeonKompowsky

Hi everyone

I’m looking for basic advice as I am ridiculously stupid when it comes to matters of finance.

Myself and my partner are both over 60 and own our home outright. We’ve not had it valued but I estimate it’s currently worth around £300k.

We are now at a stage in our lives where we are thinking of decluttering and downsizing, and there is a bungalow we’d love to buy (approx value £220k). However, there is a snag: in its current condition, it would need a lot of work – we’ve been given a ballpark figure of around £80k.

We both work (myself full-time and my partner part-time). Our joint income is circa £42k and we have around £250k in savings.

If we put down a hefty deposit (£150k), I’m hoping we could get a mortgage (despite our age) to cover the difference. That would leave us free to use our remaining savings to fund the building work. Once that’s completed, we would move, sell our current house, pay off the new mortgage and reinstate our savings (it all sound so easy, doesn't it?).

Does that strategy make sense or am I missing something obvious?

One friend has suggested that we sell up first and move into rented accommodation while the bungalow is renovated, but I don't think that's a realistic option. Plus I tend to err on the side of caution so my thinking is that this approach would leave our current home untouched (we wouldn't be borrowing against it so it wouldn’t be at risk). If things went wrong (and I tend to assume that everything will always go wrong) we’d still have somewhere to live. In the worst case scenario, we would “only” have invested our savings in a bricks-and-mortar bungalow which we could (in theory) sell.

I appreciate that this is almost a textbook definition of a first world problem: “I’m mortgage-free, have lots of savings and want to buy a nicer house…”

Thanks!