WWYD - buying London

[brandyandcoke]

DP and I are currently renting. We'd like to buy and would like to stay near to where we are. Problem is it's uber expensive but we will move to a cheaper part. Previously we've calculated we could borrow up to £400k on our combined salary but the payments on that would be more than we'd like to pay, and we simply don't have the money for a deposit. Added to that, DP has just gone freelance so getting a mortgage based on his salary now is unlikely to happen until a lender can see two or three years of accounts. I have been told that Halifax may be able to help but I need to investigate further. But right now, based on my salary, we have a mortgage in principle offer of about £200k.

The flipside of our earnings halving is that we'll now also be more eligible for shared ownership, previously out of bounds because we earnt over the threshold. To do shared ownership you have to buy in the borough you already live or work in. There are some local two bed flats about though

Added to the mix, I am likely to come into some money at the end of next year which will mean having circa £30,000 in total. However we'll still likely not be able to get more than a studio for £230k (cash plus mortgage I can borrow)

So, WWYD? Go for shared ownership? Wait it out to next year to see what market does and reassess with larger amount of money? Or wait three years so dp's earnings can be taken into account?

I am conscious we're in our 30s now and would like to TTC, but having a baby and childcare will be expensive and I'm worried that could also affect mortgage chances. I also don't want to buy a one bed and I imagine we'll be buying to stay there for a while.

Any thoughts on our circumstances greatly appreciated.

[brandyandcoke]

Sorry, that is long!!

[brandyandcoke]

Oh and if we have a child while renting I would like to move to a bigger rental because our current flat is just too small all round.

[shaska]

I don't know anything about the shared ownership schemes so hopefully someone else can talk about that.

It sounds like what you're essentially doing is trying to find a way to buy a house in an area you can't afford.

My personal opinion is that London prices aren't going to drop enough to make a real difference in the forseeable, and are more likely to carry on rising. So while in theory it sounds like you should wait a few years until your DH has accounts, I can see that that's a risk, and it's not one I think I'd take.

When are you thinking about TTC? Would it be possible to buy a small flat in need of a bit of work, live in it, improve it and then sell it and hope to make a bit of extra money to put towards a bigger one, then do the kids thing after that? I guess that depends a bit on what part of your 30s you're in - if you're both 31 it's different to if you're both 37.

Without sounding harsh, it does sound like you're going to have to make a choice - put off conceiving, or move out of your ideal area, or accept being in a very small flat with kids.

I think what I would do is look for something that I could stand living in, as close to the area I liked as I could afford (or in a different area, if you can find one you like), and put some work in to make it worth more. I'd do it sooner rather than later. But then - that's what I did, so I would say that!

[brandyandcoke]

Thanks shaska.

If we could use dp's salary and wait for the bit of extra money next year we can definitely afford what we want, which is a two bed flat. Yes a three bed would be good but we really like where we live so are willing to make compromises.

Him having to go self employed has really thrown a spanner in the works! We do hope to see our salaries go up by a substantial amount in the next few years though.

[ocelot41]

Do you really need to live in London? If your offices are near a train station, I would consider moving out. Sometimes commuting in is faster than commuting across London and you may get much more for your money, esp in Essex, Kent or bits of Herts.

[shaska]

Have you spoken to someone who specialises in mortgages for the self-employed? I think they do always need a couple of years of accounts, but depending when your DH went self-employed, and if you're going to need to wait til the end of next year for the £30k anyway, you might be nearly there by then, which would make life much easier!

[brandyandcoke]

For lots of (quite identifying!) reasons we would like and need to. I'm not talking Knightsbridge by the way, on the outskirts.

[ocelot41]

Can you give us a rough area - NE/SE/NW etc and maybe we could DM you with suggested areas in your price bracket?

[brandyandcoke]

Yes I've spoken to a broker, and need to speak to them again.
Maybe we should wait.
Am feeling v impatient!

West London

[lindtsanta]

Shared ownership has its pitfalls, so look into it carefully. You get all the maintenance costs of ownership but a lot of restrictions compared to owning outright - e.g. some providers won't let you let out a property if you need to move, and the sales/staircasing options can be problematic. But it can work well for some people, and it's more secure than just renting. There are some very nice newbuild SO flats in good locations now - in the same building as some very expensive fully private ownership flats.

Living in a small property with dc is pretty common in London and I think it's easy to get used to as long as you pick a good area with good transport, plenty to do and outdoor space. So I don't think you'd really need a 3 bed, lots of families are in 1 beds. even with 2 dc. We have one dc (no plans for any more) and are in a 2 bed and we are very happy here.

For London, I would always go for location over space, and ensure that you're very close (same street!) to a good school in that area.

[ocelot41]

Alas thats not an area I know well so can't help, but hope someone will be along in s minute who can. Alternatively you could consider looking at areas along Cross rail?

[shaska]

I'm not sure from your OP - you can or can't buy anything right now? ie are you waiting for the £30k to be able to buy at all, or would that just help things?

I'd say buy what you can, if you can (though I wouldn't do shared ownership) right now, and then later on use the extra money and DH's accounts to upgrade.

[BauerTime]

If you don't have a deposit you won't get a mortgage anyway will you? Wait for your £30k and reassess. Bear in mind that you may need at least a 10% deposit plus stamp duty, solicitor fees and money for other associated costs to even think about buying. Or in fact being accepted for a mortgage even.

[DontEvenPoint]

Glad you are speaking to a broker. If your DP is on a contract (even though paid as freelance) there are some lenders who will use his projected contractual earnings to calculate what you can borrow rather than previous 3 years tax returns. We are currently using a broker who specialises in this, and so far so good, although not been without hitches! WRT buying now, I think there are definite signs of the London market slowing, so I would wait a bit anyway as you are in a good position to take advantage of any down turn. I am in Surrey outside West London, and prices here are down about 8% on the spring/summer.

[Blackeyez09]

5% mortgages available now on old and new properties plus stamp duty changes so not all bad!

[MrsFlorrick]

I would speak to a good broker who specialises in self employment mortgages.

Also have a look at areas like Sidcup, hither Green, some parts of Bromley/beckenham (Elmers End, Eden Park) West Wickham and Shirley.

Those areas around £230k could buy you a 3 bed house. A freehold 3 bed house.

I would go for that over shared ownerships or living more centrally in a studio shoebox.

All of the areas suggested have excellent commutes into central London both city and west end.

[minipie]

I'd look to buy in the next year or so, based just on your own earnings. This will probably mean reconsidering your area. I don't think you need to go out as far as Sidcup etc, you can go out a bit and get a 2 bed flat rather than going out a lot for a 3 bed house.

I wouldn't borrow based on your + DPs earnings, either now (if you can find a mortgage co who would take account of DP) or in three years time. If you are going to have children soon then one set of earnings is likely to be all or mostly taken up by childcare, so best to borrow on the back of only one set of earnings now.

Perhaps we can suggest areas that might suit? Where do you and DP need to commute to? What are your priorities in terms of area (both now and for when you have a baby/toddler?)

[cestlavielife]

it s a clear choice between your area you like eg shared ownership, small flat... or moving out.

moving out has its pros and cons eg if you both commute into central london - when you have kids you need longer hours of childcare. unless one of you is more flexible.

there are some nice shared ownership around . and you get the area you want...

[cestlavielife]

and maybe later if your h earns loaddsa money you could get a country cottage and keep your central london place...win win.

[cestlavielife]

depends what life style you aspire to.

[Somethingtodo]

Where in west London do you want to be and why...? There is often a trail/route where people move 5 miles further out along a transport link to get more for their money.

Also most people in London have to "downsize" and "compromise" when going form renting to buying - need to get your head around that,

I would buy now on your wages only as others have said - it would be good if you could find something that you could stay in long term and add to (basement, loft conversion, extension etc) when you can refinance with OH contributions. But most important thing is crack on with TTC -- everything else will fall into place.

[brandyandcoke]

Thank you for all of your thoughts. And yes, we know we have to compromise.

At the moment I work west and DH works all over.

[TheWildRumpyPumpus]

MrsFlorrick, it sounds like you haven't ventured down to South London in a while - we just sold our 3 bed in West Wickham for 590 and my friend sold her 4bed in Penge for 650

Madness.

OP it sounds like you should get on the ladder asap if you are determined to stay in London, buy whatever you can afford, if you can add value then do, and hopefully you will be able to upgrade once you can include your DH's salary in a couple of years' time.

If you don't have a deposit now though, you may not have that option?

[Viviennemary]

I wouldn't be surprised if the housing market falls over the next year or two but who knows. Reading on MN the best option would seem to be moving a bit further out of London. I don't think I'd consider a shared ownership. Why not start saving up for the deposit now and then when your £30,000 comes then buy. I think that's what I'd do.

[TreadSoftlyOnMyDreams]

Would you still like to stay where you are if there is no affordable childcare, if there is nowhere chic and inexpensive to pick up a coffee or sit with a few mums and prams while on mat leave, will you worry about the effects of pollution on your baby's lungs. Will you have no family or local support and therefore not go out to nice cocktail bars or restaurants on any sort of a regular basis.....

Having kids does change your life and your priorities somewhat. You may find that you are stressing over trying to maintain a lifestyle/living in an area now that you love that will die a natural death anyway when you have a small one