General Advice - Let-to-Buy to fund New House - Thoughts needed

Albermarle

Logan99 said:

Thankyou so far everyone for your comments and for taking the time to advise. It is much appreciated. Again I'm the first to admit  when it comes to money and numbers in general I have a mind of fog, so appreciate your patience.

I think our first move will be to seek a third party financial adviser to help us plan properly and guide us both on what is would be an acceptable level risk and what isn't and ways to budget long term to steady the ship.

Finding one for general advice and planning is not as easy as it seems, the first few were not keen to proceed after they realised our (lack of) means.   I've found the banks/BS will advise on "products" but not the genuine affordability.

Again, many thanks for your time.

The main role of financial advisors, for the general public, is to advise you what do with your savings, investments and pensions. They are not to help you with budgeting, or to advise you on how risky your house buying plans may be. 
So as you have sort of worked out for yourself, you will struggle to find anybody.
In any case financial advisors do not come cheap. so how would you pay them ?

When I read this in your OP - My partner is desperate to get a bigger house.

A Rolling Stones song came to mind  - You can't always get what you want '

Logan99

"If mortgage was £100k in 2018, and remains £100k  7+ years later, suggests this is an interest only mortgage so no additional equity being created via capital repayment"

Valid question - Just to  add - We did extend upwards and put in a fourth bedroom with bathroom in the loft for 35k and we are back down to that previous level - so have added some value to the property that way. (id say roughly 20k over the cost according to the valuation) and in the meantime, of course,  we have the extra living space.  

EssexHebridean

Logan99 said:

Thankyou so far everyone for your comments and for taking the time to advise. It is much appreciated. Again I'm the first to admit  when it comes to money and numbers in general I have a mind of fog, so appreciate your patience.

I think our first move will be to seek a third party financial adviser to help us plan properly and guide us both on what is would be an acceptable level risk and what isn't and ways to budget long term to steady the ship.

Finding one for general advice and planning is not as easy as it seems, the first few were not keen to proceed after they realised our (lack of) means.   I've found the banks/BS will advise on "products" but not the genuine affordability.

Again, many thanks for your time.

Honestly, this isn't something you need an IFA for. Why not pick up that SOA (link in my signature) and sit down this evening once the kids are asleep and look at completing it - it's the first step to clearing that fog, I promise you! 

The situation you are in now - it's a problem only the two of you can sort, and there is precisely no point in paying someone else to deal with it for you! 

Logan99

"Why not pick up that SOA (link in my signature) and sit down this evening once the kids are asleep and look at completing it - it's the first step to clearing that fog, I promise you! "

I felt that perhaps an impartial third party would help the differences in our opinions without any emotional responses form either of us -  if that makes sense - but re the SOA, it is a very sensible idea and I will look at that this evening. On my honour.  Many thanks.

Again, I come at this prepped to hear harsh truths so again - I genuinely appreciate the time and advice.

saajan_12

poseidon1 said:

HelenNoreen said:

Logan99 said:

Would appreciate any advice thoughts on the below.

We have a house 10 yrs left on Mortgage (100K on 280k Property)

• 22k in debt

• Zero savings

• Joint income 82k

• 2 children

Both of us it's fair say have been terrible with money and are trying to learn.

My partner is desperate to get a bigger house and suggests we:

• Re-mortgage our existing house on a let to buy

• Use some of the equity on that to pay off the debts

• Use remaining equity to buy a 500k house on the longest mortgage we are allowed to minimise monthly payments

• Use the existing house rental income as second income to offset some of raised mortgage costs

It's fair to say I'm risk averse (and for full disclosure happy enough with the existing house) and for me this sounds like paying off debt by getting into even more debt and fear the figures wont stack up.

My partner (who has been keen for some years to move on to bigger house and a new start) says it’s a way out of debt to a brighter future and means we will have another asset and income stream.

I'd like to believe it, and want to make the positive choice and make them happy - but I am unsure.
I think we should hunker down and pay off debts - but my partner says that will take too long and we've waited too long already to move. 

I'm not saying either of our approaches is better - as we're both poor with money and just have different idea - but I am keen to make the right decision so we can both be happy yet secure.

Any thoughts if this strategy could work and any thoughts in general?

I'd suggest going back and re-reading the thread from 8 years ago, when you were considering buying a 500K property then..  

So from what I can see of the 2018 thread, OP's financial position is unchanged or worsen (?) since then -

https://forums.moneysavingexpert.com/discussion/5888255/partner-wants-much-bigger-house#latest

If mortgage was £100k in 2018, and remains £100k  7+ years later, suggests this is an interest only mortgage so no additional equity being created via capital repayments.
.

Could be, though interest only mortgages are rare with residentials and considering its a low LTV, that seems likely it is / was repayment at some stage. Could also be a remortgage to consolidate other debts and/or pay for works. 

Logan99 said:

"Why not pick up that SOA (link in my signature) and sit down this evening once the kids are asleep and look at completing it - it's the first step to clearing that fog, I promise you! "

I felt that perhaps an impartial third party would help the differences in our opinions without any emotional responses form either of us -  if that makes sense - but re the SOA, it is a very sensible idea and I will look at that this evening. On my honour.  Many thanks.

Again, I come at this prepped to hear harsh truths so again - I genuinely appreciate the time and advice.

We're just trying to save you an unnecessary cost - IFAs typically help with the most profitable and efficient from a list of possible options whereas there isnt' a possible option here based on the numbers I laid out - simply put, you won't get approved for a mortgage of the right size. You can find that out for free from doing hte same sums or applying for a mortgage in principle. 

You might jsut be able to swing a bigger house if you SELL this one, but keeping it at a BTL and the price point you're looking for is a non starter. 

Albermarle

Logan99 said:

"If mortgage was £100k in 2018, and remains £100k  7+ years later, suggests this is an interest only mortgage so no additional equity being created via capital repayment"

Valid question - Just to  add - We did extend upwards and put in a fourth bedroom with bathroom in the loft for 35k and we are back down to that previous level - so have added some value to the property that way. (id say roughly 20k over the cost according to the valuation) and in the meantime, of course,  we have the extra living space.  

To digress a little.
We get a lot of posters having problems buying/selling houses with loft conversions, where they have not been done properly and there is no Building Control certificate.
Hopefully that is not an issue here, just that £35K looks rather low for a loft conversion, although building costs have shot up since Covid, so maybe it was before 2020?
We have a loft conversion, and it cost about £30K , 17 years ago, although it is quite a large one.

EssexHebridean

The OP was talking about the loft extension in 2018 - so it may well have been pre covid. 

saajan_12 said:

poseidon1 said:

HelenNoreen said:

Logan99 said:

Would appreciate any advice thoughts on the below.

We have a house 10 yrs left on Mortgage (100K on 280k Property)

• 22k in debt

• Zero savings

• Joint income 82k

• 2 children

Both of us it's fair say have been terrible with money and are trying to learn.

My partner is desperate to get a bigger house and suggests we:

• Re-mortgage our existing house on a let to buy

• Use some of the equity on that to pay off the debts

• Use remaining equity to buy a 500k house on the longest mortgage we are allowed to minimise monthly payments

• Use the existing house rental income as second income to offset some of raised mortgage costs

It's fair to say I'm risk averse (and for full disclosure happy enough with the existing house) and for me this sounds like paying off debt by getting into even more debt and fear the figures wont stack up.

My partner (who has been keen for some years to move on to bigger house and a new start) says it’s a way out of debt to a brighter future and means we will have another asset and income stream.

I'd like to believe it, and want to make the positive choice and make them happy - but I am unsure.
I think we should hunker down and pay off debts - but my partner says that will take too long and we've waited too long already to move. 

I'm not saying either of our approaches is better - as we're both poor with money and just have different idea - but I am keen to make the right decision so we can both be happy yet secure.

Any thoughts if this strategy could work and any thoughts in general?

I'd suggest going back and re-reading the thread from 8 years ago, when you were considering buying a 500K property then..  

So from what I can see of the 2018 thread, OP's financial position is unchanged or worsen (?) since then -

https://forums.moneysavingexpert.com/discussion/5888255/partner-wants-much-bigger-house#latest

If mortgage was £100k in 2018, and remains £100k  7+ years later, suggests this is an interest only mortgage so no additional equity being created via capital repayments.
.

Could be, though interest only mortgages are rare with residentials and considering its a low LTV, that seems likely it is / was repayment at some stage. Could also be a remortgage to consolidate other debts and/or pay for works. 

Logan99 said:

"Why not pick up that SOA (link in my signature) and sit down this evening once the kids are asleep and look at completing it - it's the first step to clearing that fog, I promise you! "

I felt that perhaps an impartial third party would help the differences in our opinions without any emotional responses form either of us -  if that makes sense - but re the SOA, it is a very sensible idea and I will look at that this evening. On my honour.  Many thanks.

Again, I come at this prepped to hear harsh truths so again - I genuinely appreciate the time and advice.

We're just trying to save you an unnecessary cost - IFAs typically help with the most profitable and efficient from a list of possible options whereas there isnt' a possible option here based on the numbers I laid out - simply put, you won't get approved for a mortgage of the right size. You can find that out for free from doing hte same sums or applying for a mortgage in principle. 

You might jsut be able to swing a bigger house if you SELL this one, but keeping it at a BTL and the price point you're looking for is a non starter. 

Allowing that the buy to let option is a non starter anyway, my suggestion would be when doing the SOA, start to work through the same planning process that was suggested last time - ie, working out how you would go about the additional costs involved in a move. This time round you will also have to factor in paying off the debts as well of course. 

With luck, your OH will realise once they see the figures in black & white that it's not that you (individual) don't want to move, it's that you (couple) simply can't afford to. 

knote_bro

Just to add a slightly different (but practical) perspective to what’s already been said — and I agree with the core advice here.

For situations like this, the real constraint usually isn’t product choice but affordability maths. No adviser, broker or lender can change that, and paying for advice won’t unlock options that the numbers themselves don’t support.

A few points that may help cut through the fog:

• Budget clarity comes before borrowing conversations
  Completing a full SOA is genuinely the most powerful step here. It replaces opinion, emotion and “what ifs” with hard numbers. Once those numbers are clear, most decisions make themselves.

• Mortgage affordability is binary
  Either the income supports the loan size after stress testing, or it doesn’t. Lenders don’t assess this subjectively, and advisers can’t negotiate around it.

• Keeping the current property while upsizing is usually the blocker
  On paper, many households look like they could afford a larger home — until you model the reality of holding two properties, higher rates, tax, maintenance and voids. That’s where plans often fall apart.

• Third-party advice can help emotionally, but not financially
  An impartial voice can be useful for relationship alignment, but it doesn’t change lending rules. Sometimes seeing the figures written down together achieves the same outcome at zero cost.

From a purely money-saving standpoint, the SOA route suggested above is the right next step. Once the numbers are clear, it becomes much easier to separate desire from feasibility — and that usually reduces tension rather than increasing it.

Hope that helps, and good luck to the OP — these are tough conversations, but working through them properly now saves a lot of stress later.

Logan99

Thanks for the latest commented also - I'm working through the SOA now thoroughly and being as granular as possible. I will report back .