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What would you do in this financial position?

(17 Posts)
LegoAllTheTime Sun 26-Jul-20 11:46:56

Driving myself nuts thinking about this and could use some outside perspective.

We own a 2 bed flat in London which we bought for 345k in 2015. I fell pregnant with DD in late 2015 which was completely unplanned and unexpected (I didn't think I could have children). She is now 4, starts school in September and we have completely outgrown the flat. It's got no garden and the second bedroom is a single. It went on the market at 375k (lowest of 4 valuations I received) just before lockdown and we had a lot of viewings which now have completely dropped off. We now average maybe one viewing at week at most and the feedback is mostly that the second bedroom is too small and there is no garden, which I can obviously do nothing about. Price has been dropped to 365k to no effect and we are preparing to drop it again to 350k next week but from a look at rightmove it seems that flats without gardens in my area just aren't shifting no matter what price they are. #

We are desparate to move (just outside of London to be near my sister who is seriously ill). We have 260k left on the mortgage. We also have 40k of savings. In this situation (assuming it doesn't sell any time soon) would you:

1) Hang around in the flat for as long as it takes to sell it
2) Get a buy to let interest only flat on the mortgage and let out the flat (I'm well aware of all the associated costs of being a landlord!) while also renting another property in the area we want to live in. If we did this we would aim to overpay the mortgage on the flat.
3) As above, but buy another property in the area we want to live in. This would be significantly smaller than what we would want as we would only have 40k to play with and would need to pay stamp duty as it would be an additional home, but we would at least be able to get a garden and probably also a third bedroom. But it would make me nervous as would wipe out all our savings.

Obviously my preferred option is to sell the flat ASAP and move but that just isn't happening.

I should mention that DH and I are both in well paid, secure jobs.

WWYD?!

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LegoAllTheTime Sun 26-Jul-20 11:48:13

mortgage on the FLAT obviously, not flat on the mortgage!!!

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ShandlersWig Sun 26-Jul-20 11:55:54

I'm really surprised to hear a flat in London has increased in value by so little in 5 years.
Can you try a different estate agent?
If not I'd look to rent yours out and either vuy or rent elsewhere, depending on how much it would cost to rent what you want / buy what you can afford with 40k deposit. Also look to remortgage to the max on existing flat to increase deposit.
Also some lenders will combine the equity over two properties and calculate their risk on both, but youd have to move the flats mortgage to them in order to do it.
Probably one for a broker to explore your option. Ive used L&C for my last 3 remortages and they are great. I dont work for them.

LegoAllTheTime Sun 26-Jul-20 12:04:52

It isn't our agent, flats in the area under any agent aren't selling.

I think we overpaid for it ourselves to be honest but there isn't much to be done about that.

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LegoAllTheTime Sun 26-Jul-20 12:27:43

I should add that I'm very financially cautious so all this makes me really uneasy

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MynameisJune Sun 26-Jul-20 12:30:13

I imagine that thanks to lockdown everyone has realised how important outdoor space can be. In your position I’d rent it out and either rent or buy where you want to be.

LegoAllTheTime Sun 26-Jul-20 12:45:07

I so worry if renting it out that it would get trashed

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newphoneswhodis Sun 26-Jul-20 12:50:57

I think you'll struggle to sell somewhere with no garden. People have realised how important one is since lockdown. Exactly why loads of viewings before none now.
I'd get buy to let and buy somewhere. No point sinking money into renting in your new area. You can always upgrade later.

Babymamaroon Sun 26-Jul-20 12:57:18

I would release as much equity as you can, rent the flat out and buy a new home elsewhere with your savings and equity release.

Chances are in 20 years time your flat will be worth an amount that dwarfs the mortgage and will be a great investment for you.

Rayn Sun 26-Jul-20 13:00:55

We rented out our house when we couldn't sell and rented where we wanted to be.
A lot can change in a short space of time. As long as you let out through an agent and have adequate insurance you will be fine.

FinallyHere Sun 26-Jul-20 13:11:06

What is the rental market like in the area?

If you can get good tenants, then I'd rent it out and buy elsewhere until memories of lockdown without a garden have faded a bit.

It doesn't take long, for a year or two after the floors here you couldn't sell anything near the river.

Now, river frontage is at a premium again.

If there is an oversupply of rental properties, so tenants are likely to be sketchy at best, I'd suck it up for a few years and try again in time to move into secondary school.

LegoAllTheTime Sun 26-Jul-20 13:28:42

DH is super reluctant to let it out

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LegoAllTheTime Sun 26-Jul-20 13:30:32

Also it isnt like we have loads of equity so I just dont see how we could release it

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LegoAllTheTime Sun 26-Jul-20 14:20:46

I just go over it in my head constantly. I cannot make a decision.

I do not want to stay here. Every time I'm at home I hate it.

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user1494050295 Sun 26-Jul-20 14:27:49

Rent it out through an estate agent

breadcakebiscuits Sun 26-Jul-20 14:40:51

Sell it and get on with your life. Whatever you’ve paid in stamp duty and mortgage costs is probably the same or less as you’d have paid in rent for that five year period, so it’s not like you’re looking a huge net loss.

If you’ve been on the market for months without offers, rent it out through an agent. Tenants rarely trash flats by the way, unless they’re turds to start with. Deposits are four figures these days, and you need references from an employer and your previous landlord to stand a chance of living somewhere that isn’t a squat.

LegoAllTheTime Sun 26-Jul-20 15:59:33

We will see if dropping it into the next price bracket helps. We've agreed if it hasn't sold by the end of September we will put it up for rent.

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