Help please with big home decision!

[daretodream]

Hi all,

Interested in your thoughts/experiences as DH and I grapple with a big decision.

We have been very fortunate/lucky/careful up to now with money. I am 34, DH a few years older. We have 2 DCs under 3 and won't be having more. We have just paid off the mortgage on our 205K home and have 100K in the bank (inherited).

DH is SAhD, I have a good and flexible job with good prospects.

Our current home is fine, but has no garden and is close to a road. We had always planned to a) move to somewhere with a bit of land, a fireplace and a conservatory and b) keep our current home as a holiday let for future income.

A beautiful property in a location where we want to live has come up and I totally love it. It has an attached annexe that is a successful holiday let but is still (just) big enough for us. It's 450K. If we buy it but also keep our current house as a let, we'd have a 250K mortgage, but incomes from my job (about 3K pcm) and from both holiday lets. We've worked it out and it would be tight, but we could 'just' do it. IF the holiday lets work out OK.

Thing is, it's scary to take the plunge but it it stupid? To go from financially very secure back to hand to mouth for a while? It's our dream to have a home like that but financially it is a bit of a risk - do we follow our dream or play it safe?.

What do you think, wise ones? Any experiences of holiday lets / similar situations?
Thanks in advance.

[DontLetTinselDragOnTheFloor]

Would it be your Forever house?

I think holiday lets are a gamble, moreso than a standard rental property. Would renting out your current family home as a long term let be more reliable and financially viable?

[ChippingIn]

There's no way I would rely on Holiday Let money, especially in this climate.

Could you current home not be let as a regular let? There's a bit more consistency/security in that.

How tight is tight? How much wriggle room would you have if the 'lets' were empty?

[daretodream]

Thanks Tinsel,
Yes, we did wonder about longer term lets on this house. - We haven't looked into that but yes, maybe that would be more viable. I contacted a holiday letting agency and sent photos so they could give us an idea of how much it might rent for and how many weeks but I will definitelly look into longer lets too. One of the things that really attracts me about the other house is that they currently rent it out 40 weeks of the year, 2/3 to repeat clients.

I think it is my forever home. Dh not so sure as he says 'not enough storage' . I am more keen than him, but also more of a risk-taker. I keep trying to forget this house but I just LOVE it. But don't want emotion to take over from sense, iykwim.

[DontLetTinselDragOnTheFloor]

I would definitely consider letting your current house long term for stability. Relying on two holiday lets is rather too much of a gamble for my liking, especially as one is untested.

You would need to check how much work is involved in getting new bookings for the existing holiday let.

However, if your DH is unsure about the property itself, I wouldn't do it. You would both need to be sure about it in order for the financial gamble to be worth it.

[daretodream]

Thanks ChippingIn,
The great thing about the holiday let in the new house it that it is a 'specialist' let - all set up for wheelchair use and one of very few in the area, hence the high bookings. I hear you again about the longer term let of our current house, and yes it definitely has a lot of appeal and I will look into it. This is why I needed the wisdom of MN!

Tight - well, if neither of the other lets were taken, my salary would cover the mortgage, with about £300 to spare for food, bills, insurance etc. (we have outgoings other than the mortgage of about 1000 pcm, so we'd be short. We've got an 'emergency fund' of 30K. So we'd be ok short term but not long term.

I had this idea to make our current home into a really baby and child friendly let to try to get repeat bookings, but maybe longer lets is the way to go. It is a lovely family home, just not our 'forever' place. I'm ready for a change.

[daretodream]

I know, I wish DH was as in love with it as I am. But he is much more cautious, and I think it is the risk more than the property that is holding him back. It ticks all the boxes of our 'forever home' list and is very flexible. But you're right, current climate not good for risks, maybe.

[TheBolter]

I would sell your current house and get a 150k mortgage to live in the dream house. Any money you get from the annexe could be seen as a bonus.

On your income a 150k mortgage isn't too bad especially if you get regular money from the holiday let.

[ChippingIn]

If DH loved it and you could get a long-term let on your current house I would go for it, especially with a 30k emergency fund.

However, maybe you need to look around more. DH doesn't love it (although as you say that could be the risk more than the house) but you also say it's 'just' big enough.

Maybe it is a lovely house - but not your forever house?

[Fizzylemonade]

I'm with TheBolter, sell your current house, live in the forever house.

Storage can be created, it is a very small stumbling block.

Think of that garden we just moved from a 3 bed to a 4 bed house, much bigger gardens both front and back (although I was cursing having a drive for 4 cars when I had to clear the snow off it)

The freedom our sons have running around is fantastic. They are 7 and 4. A swing set is on their birthday list for next summer.

[daretodream]

Thanks Fizzy, the Bolter and ChippingIn.

We had planned to have our current house as a 'future investment' type thing - as DH hasn't worked for a few years his pension isn't great and we also may have school fees to consider. Although I guess if we weren't paying that extra 200K on the mortgage we could save the money.

Also, not sure how easy our house will be to sell. Is lovely family home but, no garden to speak of. We wouldn't have bought a home with no garden if we'd had DCs then. Houses are selling very slowly here.

I called a rental agent this morning and it does seem a viable option - could rent it out for about £900 pcm. If the annexe of the new house rents as the current owner says it does, we'd have a decent income from rental to pay much of the mortgage and with my income too that would give us 850pcm to live on after food and council tax are paid.I've also allowed £400 pcm for fees, upkeep of rental properties, cleaning rentals etc. We'd have to pay all insurance, fuel, opticians etc out of the £850.

Maybe we could start off trying the rental route and if it doesn't work out we could put this house on the market.

Thanks for all your thoughts, by the way, it is really helping to sort my thinking out!

[ChippingIn]

It all sounds very exciting :)

Are you going to have a look at other houses in the area?

[daretodream]

I've been watching the online property market since we moved here (6 years ago!!). But it's only recently that we've been seriously thinking of moving now we've got out of the 'baby phase' with the DCs and inherited this money. This is the first time I've thought 'This is the one'

There's something about this house! I dream about us living in it (no, I mean really in my dreams at night we are living there...).

ChippingIn have sent you the link.

[lalalonglegs]

If you think you can do it, then you should. Try haggling hard for the new place (there's no law that you have to pay the asking price) and, as everyone else has said, a long-term let is likely to be less stressful if your current home is suitable for that sort of thing. Save the holiday home idea for when you have a little less on your plate if your heart is still set on it - perhaps when your kids are at school and your husband can do the turnarounds etc.

[daretodream]

We're going to have another look at the potential 'new' house

DH might be coming round......

[awubble]

Have you checked to see if anyone will lend you £250K yet ? If you gross 3K a month, unless you can substantiate the income from letting you might have trouble getting that size mortgage.