Purchase dilema: go for the fab expensive property or the more affordable not so fab one(29 Posts)
The saga continues for us....
I have seen an amazing garden flat in the right area. 3 bedrooms (one really huge one and two good sized doubles). 1 ensuite bathroom, one family bathroom, large double sized reception room leading through to open plan dining room leading to massive kitchen. Utility room. Amazing 100ft garden (and about 25foot wide too!). All done up to an amazing standard - granite work surfaces, oak wood floors, etc. Unsuprisingly, it is over budget by about 100K. We could just about stretch to it with mortgage and possible a bit of family money. Importantly, it has the option of having a fourth bedroom by dividing up the really large one with a partition wall. So we could stay there long term.
Or....we could get a garden flat on the same road that is also nicely done up. But it has the three bedrooms without the possibility of dividing one up to make a fourth. The living space is smaller. No utility room. A nice large garden, but not quite as park like as the other. It costs over £100,000 less than the other though. I just can't see us being able to stay there long term though.
What would you do?
Depends what you mean by "stretch".
If you mean you would have to strain every nerve and cut back every month to pay the mortgage, then I wouldn't do it. If interest rates go up, you'll be royally screwed.
However, if by stretched you mean doing without a holiday or whatever, and actually you can afford it, then buy the flat you love.
Hmmmm.....by stretched I mean we would really have to watch what we spend. Definately no holidays beyond cheap caravans. We have done the budget sheet and the numbers add up, but it is close. You are right about interest rates too.
I would go for number 2. You need to have some excess money for emergencies, car repairs, dentist bills etc.
I didn't read much past a few lines, I just answered as I wanted to know what your gut reaction was when you read my choice. Sometimes that tells you what you should do.
100K more on price is a big hit on stamp duty as well
Option 2 - 100,000 is an awful lot over budget. Better to go for the cheaper one and have some money to spend on it and on holidays etc.
There is an option 3 too. A house, rather than a flat. Good garden, but not park like. 4 bedrooms instead of 3 and potential for loftconversion with additional bedroom and bathroom. Needs whole new kitchen moved into reception room 3, needs downstairs cloakroom and utility room put where current kitchen is. Needs total redecorating including plaster. Needs bathroom redoing on 1st floor. But if we do all that, it will be a really great house with enough space for us to stay long term. All for the same price as the cheaper of the two flats I mentioned before.
However, we have been unable to get in to see it as owner has died and the family is sorting things out with funeral etc. We have been asking for weeks now and we can't really wait much longer.
SOrry, that message reads wrong. Option 3 house is listed same price as cheaper flat. All that work would be extra.
I'd hang on for the house....if you can bear to do the work
I was in exactly your position 17 years ago.
A good friend said "if you can possibly stretch yourself and it is your dream home and you can see yourself there in 15 years GO FOR IT."
I did and it was a great decision both financially and for the family
My Dad only gave me one piece of financial advice which was "saddle yourself with the biggest mortgage you can afford at all times".. I have done this and it has served me well
DON'T settle for your second choice.
What seems like a huge mortgage today will be piddling in 5 years
Hi Jasper, thanks for that. My dad has always said the opposite. Particularly in the present economic climate he is cautioning me. I am not sure I understand your last statement though about the mortgage seeming piddling in 5 years. What do you mean by that?
I would go for the house, then.
If you invest the 100K, or even 1/2 or 3/4 that sum in doing up the house, you'll wind up with a better asset which is worth more.
A good deal of the price of option 1 is probably the finishing. People expect a lot for, and people seem to pay a lot for, finishing.
when I got my mortgage 17 years ago the monthly payments seemed huge (house cost 160 k - seemed like a fortune)
about 5 years later the payments seemed not so big.
The house is now worth about 600k and the mortgage seems tiny.
The other property we considered at the time (SECOND FAV, much more affordable) then cost 82 k and recently sold for 225.
property is always the best investment in the long run. Plus you get to live in a great place in the meantime
I'm not sure we're going to re-live those property boom times again in a hurry Jasper. I'm not knocking your experience btw (I bought my first flat when I was 19 many years ago and also benefitted from the boom) but we're living in a very different economic climate now.
IlanaK - I'd hold out for option 3, unless there's some reason for you having to move soon.
We do have to move soon - our place is under offer and things are moving very quickly. However, we can move in with my mother (shudder) if we need to.
Part of the discussion my dh and I are having is the value of such a large (and virtually unheard of)garden in zone 2 London. 100 ft by 25 ft. The value of that has got to go up in the long term as London gets more and more crowded.
Are the flats leasehold, share of freehold or freehold?
I would opt for a house over a leasehold flat any day.
But if you have freehold or sof then the flats go on even footing with the house.
Are you sure you can find the money to do the works to the house?
Unless your income is going to increase considerably in the next few years or you're sitting on a pot of money somewhere, then house no 1 is out. Interest rates are due to go up in the next two years. You also want to be able to live; plowing everything into a house and living like a pauper takes the gloss of 'the dream' & could turn into a keeping you awake at night liability.
Is house no 3 on the market? Can the EA tell you a timescale? My gut says go for that one, as that's the home that will increase most in value and is also a long-term prospect.
salty when I bought said house it was at the peak of the then market. Prices dropped and for several years I worried I had paid too much but taking a LONG term view (nearly 18 years in my case ) it is almost inconceivable that house prices will do anything other than rise,
The market is depressed right now so it is absolutley the time to buy and spend as much as you can afford.
Ilanak a big garden in London is not just a fab thing to have but is also a great investment.
I know several people in my generation (I am late 40s) and above , ie my parents' generation who really regret not stretching themselves further in the property market when they were younger.
Sorry to sound like a stuck record but in the LONG term property has always been the best investment and my very clever financial adviser swears that will always be the case.
OK, I don't wish to be giving anyone economics lessons but jasper took a gamble. She did not make a brilliant decision made upon searing vision - she got lucky in that inflation wiped out her debt.
Over-stretching yourself is a gamble - so, do you feel lucky, well do ya? Punk?
well we have a massive mortgage and a fab house and it is a stretch, very uncomfortably so and it does limit our choices elsewhere in life (holidays etc) so you need to decide what you are most comfortable with, regardless of the rises in prices etc. its a lifestyle decision as much as a financial decision at this point in time.
regarding property, you have to think whether the 100k extra is really buying you that forever/long term aspect. For me, a flat is a flat is a flat - it will never be a house -to some extent whats the point of spending extra 100k on a fab flat if you will be sitting there thinking i wish i had a house. save the 100k/pay of mortgage earlier so you can move to a house quicker iyswim.
from what i read if there is an option to buy a house you should check this one out very very carefully before you commit to the fab flat...
bibbitybobbitycat makes a good point but remember even share of freehold/freehold flats still have to agree with other owners regarding works etc.
Or you'll be doing it all over again in a couple of years with extra stamp duty and stress and cost.
A good purchase is always a stretch for the first couple of years. You might as well spend your money on an investment as meals out. Or you're only delaying the pain.
The house (option 3) Your own space is the way forward.
Flat might be great but if you get sh*tty neighbours living on top of you...
Granite work tops cost £3000 approx and oak floors a few thousand more (depending on area) but £100k extra? Doesn't seem worth it.
Living with your mother might seem like an unpleasant prospect but it's alot better than regretting a rushed decision for the next 25 yrs! Go for the house!
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