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WWYD? Need to start over again when we move house, and looking to the future...

(34 Posts)
theborrower Sat 07-Jul-12 13:03:11

What would you do? Everyone I talk to comes up with suggestions, but they've all been scuppered.

We bought our first flat (a small one-bed) in 2007. Since then we've had a baby (nearly 2 now) and need to look at moving because she will need her own bedroom at some point. She's still in a cot (she's quite petite) but when she outgrows it we don't have room for a bed in our bedroom. A sofa-bed in our living room is NOT a good option as we have a small kitchen / living room (this has already been suggested!).

We bought our flat with a 95% mortgage and therefore small deposit. If we sell we'll be lucky to get our original deposit back (judging by the sales of similar properties in our area), so in order to move we need to raise another deposit, only this time at least 10% because there are no 95% mortgages.

Also, when we move we need to completely remortgage because our lender (Bank of Ireland) has lost its licence to lend and has told us that they can't lend us any more money. This means we will be going up to much higher rates (already had this confirmed by our mortgage advisor) which means much bigger mortgage repayments :-(

People have suggested we rent our place out and rent ourselves a bigger place - we can't do this as we're not allowed to rent it out (mortgage advisor says we don't have the equity to switch to a buy-to-let mortgage). And besides, the cost of renting a two-bed place is more expensive than our current mortgage (which is low because we're now on the bank's SRV).

We have been saving hard and should be able to scrape together a deposit for a 2 bed flat (since they've fallen in value now, and cost the same as what we bought our one-bed for) with our savings, hopefully a few thousand from the sale, and parents have offered to make up the shortfall. But it'll be tight, and our payments every month will be huge, so a two-bed is all we can manage.

Someone I work with said that we should be really thinking of getting a 3 bed, because if we're wanting to have another baby down the line (we would - but this will have to wait as we can't afford 2 nursery fees!) then we'll just have to move again, and if house prices rise in this time we'll be priced out. When I said we can't afford a 3 bed, she said we'll just have to consider moving somewhere else, which means a commuter town nearby or a not-very-nice part of town.

The only way we could afford a 3 bed house or flat (which will still be very tight money wise, remember) is if we move out of the city to a town a few miles down the coast. I really don't want to move there because a) there is nothing to do there and I'll feel really isolated because b) it's far away from friends and family and c) we don't have a car, and can't afford a car (I don't even drive) which will mean a long commute on the bus for my husband, although not quite so bad for me and DD going to nursery. It will not be cheaper for us to move far out - we'll just have more space for our money.

I would rather sacrifice size for good location - we absolutely love where we are because it is close to work for both of us, family is near by, we have swim centre, soft play, shops, library etc all close by and there is a good school close by. We are also happy to get the bus everywhere or walk which we can do, as the buses are excellent where we are.

So, what am I asking??

Firstly, I guess, am I missing any tricks on the mortgage front?

Secondly - am I being a snob or pessimistic on the location thing? Are we being shortsighted by not looking to get a 3 bed that will do us forever, instead of a good two-bed (with a garden) which we can afford now (ish) and will still do us for a good few years? After all, who's to say that when the time comes we'll be able to have another?

Oh, the (very) occasional ex-council 3 bed flat comes up in our area which would be great if we could swoop in and get. Should that be our preferred option?

theborrower Sat 07-Jul-12 13:03:57

Blimey - sorry for the essay! Didn't realise I had written so much. Thanks for getting this far...!

MousyMouse Sat 07-Jul-12 13:06:03

sell and rent. sorry, not ideal but more flexible and less stressful.

maybenow Sat 07-Jul-12 13:08:09

move to a two bed with either a large second bedroom suitable for sharing or potential for an extention or loft conversion or garage conversion, or a dining room that could at a push become a third bedroom.

you haven't even ttc your second child so even if you did straight away you'd have about two years before the second child goes into the bedroom, they can easily share a room regardless of gender for another four years after that (till older child is 7 or 8).

theborrower Sat 07-Jul-12 13:12:17

@mouseymouse - renting is comparable in price to new mortgage payments :-( which makes me think, at least a new place is ours.

CogitoErgoSometimes Sat 07-Jul-12 13:17:18

I would (and have) relocated to a cheaper place in the past in search of space. Be selective, obviously. No point moving to a dump with terrible schools etc. Go for 2-beds with scope for expansion and use the money saved to learn to drive so that you can keep up with old friends and activities. A car and a licence also increases your options for work. IMHO What kills families is being on top of each other in cramped, overpriced locations where every penny is eaten up in housing costs. At least if you have a little space, you can relax.

tribpot Sat 07-Jul-12 13:25:10

Renting is cheaper than buying in ways that aren't always immediately obvious - like the cost of repairs which you don't have to fork out for as a tenant. It's more flexible as Mouse says - keeps your options open for whatever may come, which may include another drop in prices. Certainly rents have been driven down over the last few years so you may find it easier over time to get more for the same dosh than you can in a place you own. Plus rents fluctuate less than interest rates. It's not that they can't go up over time, they can, but generally speaking the rental market finds its own level because tenants have the ability to move on at the drop of a hat if a better deal opens up. Oftentimes you can find rents driven down by the creation of a newer, shinier set of apartments next door to a perfectly adequate, just slightly less shiny one next door. There's a premium for the newest but that quickly wears off.

There are clearly strong reasons to stay in the area you are, that aren't snobbish ones but practical and 'long commute by bus' is not music to anyone's ears.

I agree with maybenow, you're a long way off needing that third bedroom. Buy it when you do, a 'forever house' sounds out of reach for the moment, I'm afraid.

Even if you could swing it with the bank, I would definitely not rent out your current place and buy another. You would be massively overstretched if you had even a month or two of void (when you have no tenants) - and this is increasingly common, along with rent drops as I mentioned above. And that's without mentioning all the hassle involved in having a rental place to look after.

CogitoErgoSometimes Sat 07-Jul-12 14:32:46

"'long commute by bus' is not music to anyone's ears."

Until recently I worked in a location that would have taken me 1 hour to reach by bus because the routes were not a straight A to B. In the car it took 15 minutes. If the OP frees up enough cash to learn to drive the kind of places that are in reach will suddenly increase. They won't be tied to living in a city centre for mobility reasons at least.

tribpot Sat 07-Jul-12 16:05:41

Agreed but a car is another unpredictable expense. The selling points of the OP's current location are the great local facilities, so everything is in walking distance or short bus journey, including family, plus great school. And unless they timed everything spectacularly, one of them would still have a bus commute whilst the other had the car.

MousyMouse Sat 07-Jul-12 16:26:38

more financial points for selling/renting
- you would (hopefully) have some equity to put away to use as a deposit/rainy day fund in the future
- no stamp duty, just the deposit
- even if rent is similar to the mortgage rate, if you add all the maintainance, buying surveys, solicitor fees... renting comes up cheaper unless you get a very good deal and are in the house/flat for a long time

startlife Sat 07-Jul-12 18:16:08

Not sure where you live but can you give a guide to the comparable house prices i.e 2 bed or 3 bed. Also what is likely to happen to your incomes over the next few years i.e are you in stable well paid jobs with prospects of further salary increases?

Buying and selling costs are substantial (depends on house values of course) so you do need to factor this into the costs if you go for a 2 bed. My preference would be for a 3 bed especially if you do plan 2 dc's as extra space is important.
I don't think you are missing a trick on the mortgage, 90% is about the best you can get and there is no shortcut to saving unless you can beg/borrow from a kindly family member (or inherit, which seems to happen for a few of my lucky friends).

InMySpareTime Sat 07-Jul-12 19:43:36

Would a 3-bed be affordable if you rented out a room?
The govt has a "rent a room" scheme whereby you can get a certain income tax free. Otherwise, would an au pair in a spare room save you nursery fees?
How "handy" are you? There are usually bargains to be had if you can do basic DIY (although fewer these days). If you've sold and rented you would be well positioned for a house auction, where you could pick up an ex repossessed house cheap.

theborrower Sat 07-Jul-12 19:48:46

I don't like to give too many details about me away incase anyone recognises me and then looks up my other posts, but we live in Edinburgh. Not city centre, but not too far out either.

Re the car situation - I honestly don't think we can afford a car, living in either location. The mortgage payments will be a lot. And as tribpot said, a car is another expense. It is not cheaper living there, we'd just have more space. I really don't want to have to rely on having a car to get out and do stuff. I know it means freedom to lots of people, but it sounds constraining to me, not to mention expensive.

Also, it's my husband that will have the long commute (an hour) not me. He works right in the city centre (in the complete opposite direction to me) so taking a car to work is madness, not to mention extortionate in car parking charges. He doesn't work 9-5 hours, he often starts at 7.30am, so no, we can't share the car and drop each other off etc. I work compressed hours so start at 8am, so a long commute for me and DD in the morning is not ideal either, which is why we're looking at this particular side of the city.

If we move down the coast to Town A or B, he can stay on the good bus route (1 hour) or train (quick). I know this sounds like the ideal situation, but it's still means a long trek on the bus for me if we live in Town B and I want to go to town to do anything or visit friends and family.

We cannot afford to buy anywhere that is more than £140k because we cannot afford the repayments which will be £800 a month (and the mortgage advisor said that's taking us to the top of affordability as it is). In our area, we might get an ex council 3 bed for £135k, when they come up which is rarely. That would be great.

Otherwise, we might get a 2 bed for the same price, or about £125 if we move to Town A down the road (which is what we'll probably do, because it is only an extra 10 mins on bus and has decent shops, swim centre, library etc too), but a 3 bed there is harder to come by in our budget. The next town down, Town B, is about the same price, but if we move to the furthest away one, Town C, we could probably get a 3 bed for £140-£150. But Town C doesn't have a train, and is sooooo far away.

Oh, and I think our jobs are fairly stable, but we've not had a pay rise in 3 (?) years, and who knows when the tories will let us get one. I'm at the top of my salary scale though.

ClaireDeTamble Sat 07-Jul-12 20:11:43

I'd look for a two bed in town A but make sure I looked for one with potential for expansion - so either a house or ground floor flat with extension potential or house or top floor flat with loft conversion potential.

Also (depending on how old you are) consider a 30 year mortgage rather than a 25 year one. You can always overpay if your circumstances improve. This may allow you to borrow a bit more money.

For example - a 30 year 90% mortgage with Santander on a 5.99% 5 year fixed rate borrowing £135000 (so a £150k property) would cost you £809 a month.

The same mortgage on a property costing £125k so borrowing £112500 would cost you £599 a month. If you are budgeting for £800, you could put the other £200 away in an 'extension fund' for if and when you needed that third bedroom.

tribpot Sat 07-Jul-12 21:00:13

Funnily enough, I think I have probably lived in both town A and town B, theborrower, although many years ago before I had ds.

Supposing town A is the one on the train line, that is a lovely place but expensive. Town B on the bus route is a shithole. I would not live there again under any circs. It's quite isolating when virtually everything is a car journey away - and out there it is all car journeys; you may be able to get in and out of Edinburgh relatively easily but going anywhere else is nigh on impossible.

That said, there are MNers living out in the hinterlands outside Edinburgh, so you might want to canvass some other opinions. I have a friend in another town further into said hinterland, and I think he's finding the commute pretty wearing compared to living round the back of Holyrood Park.

Driving into Edinburgh is impossible. Not even worth considering.

I always wished I had moved into Edinburgh when I first started working over there, except it was very expensive compared to the hinterlands. But living out there, away from everything, was crap too. By the time I was earning decent money (a) prices had skyrocketed and (b) I was out of the country all week anyway. But I felt very cut-off out there. I would stay in the city, esp for a decent school.

theborrower Fri 13-Jul-12 13:57:59

Thanks for the replies everyone. I think what we'll do is follow my heart and keep our eyes peeled for a good 2 bed here, or one of the ex-council ones, or move to Town A where a decent 2 bed with room for expansion is much more easy to come by. I asked my sister what she thought about moving to town B and she was like "Borrower, no way, i know you'd be really unhappy there, there's nothing to do".

@tribpot - For Town B, do you mean P or T which is inland a bit? (I know, I know, talking in code!). No way do I want to move to T!!! I can't think of anywhere worse. No offence anyone that lives there!

What I didn't mention before is that we were gearing up to sell and hit a problem with our mortgage application (yeah I know, more bad luck) so we need to wait a few months before applying again. At least this gives us more time to save save save. We don't want to sell up and rent in the meantime as we figured that as long as baby still fits in her cot, our monthly payments are still less than renting somewhere bigger and we're paying more of our mortgage off, although yes, the value could still keep dropping.

theborrower Fri 13-Jul-12 13:59:57

@clairedetamble - I'm in my 30s, husband is in his 40s. I'm not sure a 30 year mortgage would be a good idea as he'll be in his 70s before its paid off - ? Mind you, at this rate, I won't be allowed to retire until I'm in my 70s...

Gingersstuff Tue 24-Jul-12 11:13:26

theborrower another East Coasty're right, T is a shithole grin Come to H (inland a bit)! Or D! I live in D, right on the coast, wonderful place, on the train line, fab schools, beaches, swimming pool and cafes...loads and loads for young families to do. Lost of new housing at very reasonable prices as well.

bigkidsdidit Fri 27-Jul-12 20:29:05

I'm looking to buy a house in east l and am DESPERATELY trying to work out where p is grin

theborrower Mon 30-Jul-12 19:28:31

@bigkidsdidit I'll keep my mouth shut grin

@Gingersstuff - so glad you agree on T! But I'm afraid that D is way too far away for my liking, my friends and family would never come and visit sad

Stonefield Mon 30-Jul-12 19:51:32

I am 32 and bought my 150k house 18 months ago with a 25k deposit. My term is 33 years which is terrifying but means my repayment is £520 per month. I find this less scary than having to find £800 per month.grin

LittleMissSnowShine Tue 31-Jul-12 16:29:19

We're in a similar situation - we bought our 2.5 bed terrace in 2008. I love the area, it's great for professional single types and also great for families...with a lot of cash! Because the area is so popular, getting a larger house round here costs £££ and there are very few with gardens since it's a lot of terraces built around 1920s so a bigger house with a garden in this area would cost us ££££££££££

Anyway, our mortgage is £125k now and being realistic I do think we could sell the place for around £125k but then we would have no deposit. My DS is 23 months and we're ttc no. 2 and we've had to make a decision about whether to stay put for another couple of years while we try and get a deposit together and reduce the mortage down in the mean time to £120k. Our alternative was to rent the place out and rent somewhere a bit further out with more space and a garden for a bit more.

In the end we've gone for option B, which we're able to do since our tiny house in a v popular area manages to get us £650 a month in rent and the lovely suburban palace we are moving to next week which is only 10 mins drive further out from where we are now is costing us £750. That's £100 a month that we aren't going to be able to save and put towards a deposit but for our situation and growing family we decided it was the best option, maybe thinking about selling the house in a few years when prices improve or holding on to it longterm as an investment and just renting long term ourselves. Just have to see how the housing market goes really.

Hope everything works out for you and you're able to find a great family home either through buying or renting - it's so hard to know what to do and no one seems to know when (of if!) things are ever going to improve in terms of house prices.. confused

solittletimeandsomuchtodo Tue 31-Jul-12 18:56:08

Children can (and do) share a bedroom. You may not outgrow your two bed (if you do purchase it) as quickly as you think. Go for big bedrooms though!

Chrysanthemum5 Wed 01-Aug-12 14:59:26

I'm from Edinburgh, but I'm confused by P and T! I thik personally, I'd look for a 2 bed in the area you like. children can share for quite a few years which gives you time to save up. You need to remember that rises are relative so if you stay in a smaller house in a popular location then in a few years it will hopefully have risen more than houses in town B (is that P?) so you may be able to afford a nice 3 bed there at that point.

Plus, I think with young children being near family and friends is pretty important.

twonker Wed 01-Aug-12 16:23:43

You have argued very strongly that you can't afford to mortgage. You say you prefer to pay the money in mortgage, because at least then the house is yours. I disagree. The bank owns your house until you have paid it off. I recommend renting for those of us who can't afford a mortgage. Good luck finding somewhere suitable.

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