Sell flat, Move in with parents & then buy house

cse4921

Hi all, I apologise in advanced for the long winded story!

Hoping that anyone who has done something similar in the past could offer advice both financial and personal.

Myself, my partner and our 3 year old daughter are currently living in a 2 bedroom flat and we are desperate to move into our forever home. 

Our stumbling block into moving into a house is we are currently paying an extortionate amount of money on nursery fees which is preventing us from getting a mortgage big enough to afford a house (too much going out vs what's coming in!). We will be entitled to 30 hours funded childcare as of Jan 2025 (For context we live in Scotland, I know the rules are slightly different in England)

What we are planning on doing is moving into my partners parents house for a while, then putting the flat on the market and then once the flat has sold, we will look to purchase a house as soon as possible. We get on really well with them, they are very supportive and easy going and they understand our situation so I don't see any issues with moving in with them for a prolonged period of time. I also understand it means 2x solicitors fees however I am willing to swallow that if it means a less stressful experience overall. 

My thought process behind this is it will make the overall process smoother and less stressful as we will not be forced/rushed into buying a house which deep down we don't want as it will clash with move in dates etc... This would also make us cash buyers when it comes to purchasing so more leverage to negotiate on price as we are chain free.

I understand that we will have to change address when we move as this can affect a new mortgage application.

We are also on a fixed term mortgage and will have to pay an ERC of 2% of our outstanding mortgage balance to exit early. (Pain in the backside but haven't got a choice but to pay this.)

I guess my question is did anyone have any problems I have not thought about doing it this way which they did not think off until it was too late and wheels were in motion?

Do we have to wait until maybe March/April 2025 to move into a house as the banks will need to see proof of no childcare payments coming out of our account? If this is the case would it be worth paying the remaining childcare payments off early? as I am in a situation where I could do this. 

Also what did did people do with the equity they received from selling? Are there any tax implications in Scotland with holding a large sum of money from selling your resident property? If you are selling to then move instantly then you never see this money, however as we are not doing this then the money will be given to us from the solicitors (after fees etc. all taken off). I have seen on previous discussions that people put there money into NS&I Premium bonds I don't know if that would be the easiest/safest option.

Any advice help would be greatly appreciated. This is our first time moving and its all a bit Daunting/intimidating!  

mebu60

It won't be 2x solicitor's fees as you are still only selling once and buying once so you will pay for conveyancing twice but a lesser amount each time than if you were selling and buying at the same time. Should prove less stressful overall having an interim period at the in-laws. 

How much equity will you have post-sale? There is a temporary high balance protection for amounts in excess of the FSCS £85k but it is not absolutely guaranteed which is why NS&I is popular in these situations as deposits are fully backed by HMG. Their Direct Saver currently pays 4% but is taxable should you exceed your personal allowance(s) (you can split the funds between you to double that), Premium Bond returns are variable around that mark on average but tax free.

cse4921

mebu60 said:

It won't be 2x solicitor's fees as you are still only selling once and buying once so you will pay for conveyancing twice but a lesser amount each time than if you were selling and buying at the same time. Should prove less stressful overall having an interim period at the in-laws. 

How much equity will you have post-sale? There is a temporary high balance protection for amounts in excess of the FSCS £85k but it is not absolutely guaranteed which is why NS&I is popular in these situations as deposits are fully backed by HMG. Their Direct Saver currently pays 4% but is taxable should you exceed your personal allowance(s) (you can split the funds between you to double that), Premium Bond returns are variable around that mark on average but tax free.

Thanks mebu60. Makes sense what you are saying on the solicitor fees 

Our equity will be less than 85k so no issues there. I would priorities safety over any ROI on the equity which is why NS&I Premium bonds appeal to me. 

ian1246

Consideration needs to be given to School catchment for little one - if your at the parents & still there when it comes time to apply for little one's School, will you be happy with that catchment.

cse4921

ian1246 said:

Consideration needs to be given to School catchment for little one - if your at the parents & still there when it comes time to apply for little one's School, will you be happy with that catchment.

Thank you Ian1246.

That's a very valid point that I have not considered. Thank you 👍

Albermarle

cse4921 said:

mebu60 said:

It won't be 2x solicitor's fees as you are still only selling once and buying once so you will pay for conveyancing twice but a lesser amount each time than if you were selling and buying at the same time. Should prove less stressful overall having an interim period at the in-laws. 

How much equity will you have post-sale? There is a temporary high balance protection for amounts in excess of the FSCS £85k but it is not absolutely guaranteed which is why NS&I is popular in these situations as deposits are fully backed by HMG. Their Direct Saver currently pays 4% but is taxable should you exceed your personal allowance(s) (you can split the funds between you to double that), Premium Bond returns are variable around that mark on average but tax free.

Thanks mebu60. Makes sense what you are saying on the solicitor fees 

Our equity will be less than 85k so no issues there. I would priorities safety over any ROI on the equity which is why NS&I Premium bonds appeal to me. 

If you are looking at less than £85K , then all regulated savings accounts are safe, as they are protected by the FSCS £85K compensation scheme. So no need to put it in an NS&I account, which do not pay the best interest and their website/customer service can be problematic.
So put it in a normal easy access account paying a good interest rate.
Depending on how long it is there, you might well end up paying some tax on the interest.
Ways to mitigate this, are to split the money between you,  and at the same time both open an easy access cash Isa with £20k each.
Have a read of this.
Savings - All Guides - MoneySavingExpert
Any savings provider mentioned is covered whether you have heard of them or not. Smaller less well known ones normally pay the best rates.
There is also a MSE savings forum, where you can ask questions.
Savings & investments — MoneySavingExpert Forum

cse4921

Thank you Albermarle. I will look into both links 👍

jennifernil

As you will need a mortgage, you will not be cash buyers.  You will however be able to offer flexibility on entry date, which may well count for something.

We do not really do chains in Scotland like they do in England,  but being able to offer an earlier entry date may well make your offer more attractive to a vendor, particularly if they need a sale by a particular date.   So even if your offer is not the highest, it might get accepted.

Have you factored in the cost of storage for furniture, if you will need that?

cse4921

jennifernil said:

As you will need a mortgage, you will not be cash buyers.  You will however be able to offer flexibility on entry date, which may well count for something.

We do not really do chains in Scotland like they do in England,  but being able to offer an earlier entry date may well make your offer more attractive to a vendor, particularly if they need a sale by a particular date.   So even if your offer is not the highest, it might get accepted.

Have you factored in the cost of storage for furniture, if you will need that?

Hi Jenneifernil.

Thank you for your reply. No we wont be cash buyers per say. I simply meant that our deposit for the house would not be dependant on waiting for our property to be sold.

Yes although our chains in Scotland do differ (legally binding from offer accepted) their are still potential pitfalls such as the sellers change in circumstances etc.. which I would like to avoid.

Yes I have already factored in storage. One of the first things I looked into!.

Thanks again  

jennifernil

Actually, not legally binding until missives are agreed by both solicitors.

SarahB16

cse4921 said:

Hi all, I apologise in advanced for the long winded story!

Hoping that anyone who has done something similar in the past could offer advice both financial and personal.

Myself, my partner and our 3 year old daughter are currently living in a 2 bedroom flat and we are desperate to move into our forever home. 

Our stumbling block into moving into a house is we are currently paying an extortionate amount of money on nursery fees which is preventing us from getting a mortgage big enough to afford a house (too much going out vs what's coming in!). We will be entitled to 30 hours funded childcare as of Jan 2025 (For context we live in Scotland, I know the rules are slightly different in England)

What we are planning on doing is moving into my partners parents house for a while, then putting the flat on the market and then once the flat has sold, we will look to purchase a house as soon as possible. We get on really well with them, they are very supportive and easy going and they understand our situation so I don't see any issues with moving in with them for a prolonged period of time. I also understand it means 2x solicitors fees however I am willing to swallow that if it means a less stressful experience overall. 

My thought process behind this is it will make the overall process smoother and less stressful as we will not be forced/rushed into buying a house which deep down we don't want as it will clash with move in dates etc... This would also make us cash buyers when it comes to purchasing so more leverage to negotiate on price as we are chain free.

I understand that we will have to change address when we move as this can affect a new mortgage application.

We are also on a fixed term mortgage and will have to pay an ERC of 2% of our outstanding mortgage balance to exit early. (Pain in the backside but haven't got a choice but to pay this.)

I guess my question is did anyone have any problems I have not thought about doing it this way which they did not think off until it was too late and wheels were in motion?

Do we have to wait until maybe March/April 2025 to move into a house as the banks will need to see proof of no childcare payments coming out of our account? If this is the case would it be worth paying the remaining childcare payments off early? as I am in a situation where I could do this. 

Also what did did people do with the equity they received from selling? Are there any tax implications in Scotland with holding a large sum of money from selling your resident property? If you are selling to then move instantly then you never see this money, however as we are not doing this then the money will be given to us from the solicitors (after fees etc. all taken off). I have seen on previous discussions that people put there money into NS&I Premium bonds I don't know if that would be the easiest/safest option.

Any advice help would be greatly appreciated. This is our first time moving and its all a bit Daunting/intimidating!  

Apologies if I've missed this as only glanced at the other replies.  Are you intending on leaving your flat vacant whilst you move into your partner's parents' house? Have you checked your insurance covers you being away for more than 60 days?  Maybe it's different as you are in a flat and your building insurance is included in your service charges.