Please help to make a decision(15 Posts)
Thanks for taking time to read. We live in a 2 bed flat council property in london (victorian house converted into flats). Have 3 children. Combined salary for both my husband and i is £60000/year. We have right to buy or can get £20000 from the council to help with a deposit to move. my husband and i have worked hard to get to the level of income we're getting and trying to save as much as we can but with 3 kids its very difficult and space is so limited. My question is do we try to buy the flat and sell it later to be able to make some money to enable us to buy a home which we can afford most likely outside London.
Or do we use the grant from the council and whatever we can save to try to get a mortgage which will probably be a very small house. With right to buy the discount is used as deposit(not sure). plus the flat needs a lot of work which will also be very costly.
Thanks again. i know some people may not agree with right to buy or the deposit scheme but this is the only way we could be able to own a home.
With three growing kids I would go for the option that gives you the most room and lowest maintenance. Would the small house have potential to extend or convert the loft?
Agree with Tiger about needing space, does your current flat have outside space/garden? Some outside space would also be a desirable thing IMO and potential to extend.
Do you know how much you would have to pay to buy the flat? Or how much you could afford to spend in a house? Do you like the area the flat is in? Would you be restricted as to what area you bought the house in?
I don't really agree with right to buy, but you absolutely have to do what is right for you and your family in the circumstances.
Would the house be in the same area? I don't really know much about right to buy, but I assume that your current property would be the best financial option under the circumstances, because a £20000 deposit isn't going very far in most areas of London. Personally I would do all you could to stay in London.
Thanks for the replies. Apologies for not being very articulate.
Tiger- sorry I should have made it more clearer, the small house is in reference to being able to get a mortgage that will only allow us to buy a property on the outskirts of London that potentially will also be small due to the amount we can borrow.
The flat is on the top level of a Victorian house split over 3 floors No garden or outside space. No loft space. We have not had a valuation as still need to decide. The flats in the area go for £500000+ but ours needs a lot of work to bring it up to market standard. Our guess is they'll value the flat at £350000+. We would get a £100000 (maximum I think) right to buy discount if which we could use this as a deposit to get a mortgage. We would have to stay in the flat for 5 years to be able to keep any money we would potentially make from selling the flat. If we sold it in less than 5 years we have to split the extra money with the council. The renovations potentially would probably amount to £50000+ as it's an old property and the wiring etc... Was done shoddily.
The area we live in is very central therefore cheaper to travel to work and convinient for shops etc... If we could afford to stay we would but we know it's impossible due to the prices. Unless if we bought the flat and sold it and use the extra money to get a bigger mortgage
Buy the flat you're in! It's like someone handing you over £100,000! Think how much better the house you eventually get for your children will be. £250,000 is not going to get you much anywhere within reasonable commuting distance to London. You should have a fair whack to put towards your new home in 5 years time.
Also, Op, I think the maximum right to buy increase is set to increase further (if it hasn't already). You have a great opportunity.
I would keep the flat! Get the repairs done now while the council own it.
A 20k deposit is nothing in or near London. It will go on stamp duty and moving costs
Thanks for all the comments they're definitely helping us.
there is no guarantee that in five years you would "make" anywhere near enough money to move onward. unless you move way out.
in the meantime for 5 years you will have 3 dc in a two bed flat - how will that work? can they all share? how old are they? will someone have to sleep in the living room? what are the estimated mortgage costs if you buy plus costs of repairs?
How old are your children OP? Are they at school?
I agree with cestlavie - whilst it sounds like a great opportunity on paper, having 3 school age children would be very hard with no outdoor space (sweeping gender stereotype but particularly if you have boys) and being in 2 bedrooms for the next 5 years. That's a long time.
If you do consider buying the flat, make sure you know exactly what you are responsible for (e.g. service charges and contributions to big expenses like the roof, communal parts etc). Also look at what kind of mortgage rate you'd be paying because some lenders won't lend on Right to Buy properties. Also think about whether there are any circumstances where you might be forced to sell within the 5 years (is there any chance you'd have to move for schools / work / care for elderly relatives) and therefore whether it sounds like such a good deal.
also even with discount the mortgage repayment plus repairs and maintenance is likely to eb a lot more than what you paying in council rent...ok to pay council rent and squeeze into a 2 bed flat with 3 kids; not so ok if you paying twice as much just on off chance you might be able to move on in 5 years...when you even more settled in schools, locality. more likely you will be stuck there til you can move further out of london when kids finish school...
Definitely more food for thought. My children are DD10, DS3, DD1. We sleep in the living room and the younger ones share. As for the charges they're manageable (info from neighbours who own). Have to really decide soon as the new rules regarding council rents will affect us as our income is above the threshold and if the rents are increased to the private rent levels then we might as well be paying off a mortgage as they're expensive. Argh!! So tough.
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