Impossible choice - Home A or Home B??

[InAPinkBubble]

Name changed but regular user. Details very outing to anyone who might know me!

DH and I currently rent a 2 bedroom new build house, through a housing association. It’s a rent to buy scheme so designed to give first time buyers a discounted rate so they can save more money towards a mortgage, and after five years you can buy the home if you wish. We’ve been here for two years exactly so far. Amazing area, real community feel and nice schools in the catchment area. Low crime rate and convenient for work. It costs us £600 a month in rent.

We have £15k saved as a deposit to buy a house, but currently waiting for a better time - interest rates are so high, that on another two bed flat or house in the same kind of area we’d be paying £1200 a month at least which at 30% of our combined income doesn’t leave much wiggle room for an emergency fund, savings or holidays.

My parents own a ground floor flat that they are looking to sell. It’s a two bed, in the next town along but on quite a rough estate. They have offered for us to buy it significantly under the market value. We’ve done a few sums and we’d be paying £350 a month on that mortgage. They agree it’s a poor area but believe we could live there for a year or so, redecorate, build equity and then move along. We’d probably have about 40k in equity if we did this. The flat would need new carpets and new decorating, possibly a new kitchen.

It’s an extremely generous offer, it really is. We just cannot figure out what to do for the best. We would be moving from a nice, safe area to an undesirable area.

By moving, we would lose:

Garden space
Separate kitchen and lounge (in the flat, it’s just a kitchenette with no real space for a dining table)
Driveway
Peace of mind in terms of trusting the area
First time buyer status…. (likely paying stamp duty on the next move, not being able to apply for any first time buyer mortgages or schemes when it came to buying our house)

But, we would gain:
£250 a month
All the equity when we come to move on

I don’t know if the two points above are enough to mean it is worth it - they are pretty big ones!

If it makes any difference, DH is a shift worker so there will be plenty of nights I’d be home alone so feeling safe is a big deal. We are also trying for a baby, and appreciate having lower monthly payments might be ideal in mat leave

Any thoughts appreciated, thank you so much.

*Rented house is Home A
*Mortgaged flat, Home B

Thanks everyone I really appreciate it. Genuinely they are the furthest from manipulative - they have helped us in so many other ways. They mean well and are trying to get us on the ladder. A few years ago and if the area were better it might have been a good move for us but not as sure in the current market and in our stage of life.

I don’t think your parents are manipulating you but I do think you should stay put in your current place, enjoy the garden with the baby and a safe feel and keep saving hard. Don’t give up your nice community. Just tell them thank you, you’ve thought about it hard but you want the garden with a baby, you love your current area and all will be well. Don’t let them persuade you otherwise

And if they want to help, they will give you some cash when they sell the flat. No need to mention it to them

Stay where you are. The cost difference isn't that massive and the area you live in is so important, especially if its a small flat with no garden so it's not like you can happily potter around your own property all day, I imagine you'd be wanting to get out and about (especially if/when you have a baby while living there!).

I moved to a horrible area (for very different reasons - it was a horrible suburb, without even a corner shop, of an awful commuter town and my street was all St George's flags and loads of UKIP posters in people's windows around election time) and even though the house itself was lovely inside and it did have a garden I have never been so miserable in my life. It started to feel like a prison.

I would stick it out in your current place. If you wanted a three bed does the time spent where you are now count towards the five years before you can buy, if you did a swap with the same HA? Or would you need five years in the same property? Just wondering if that might be an option when you start a family.

Also as others have said don't underestimate the hidden costs of jome ownership. You need building insurance and boiler cover for a start, then all the fixing up (carpets, paint etc) and you are responsible for any repairs. I've owned previously and am now in a HA place - DH and I discussed buying it (it's his tenancy and he's eligible) but decided against it for the above reasons (also we won't be having kids so no need to pass on an inheritance etc).

It would be absolutely CRAZY to move to a bad area, not worth any money. Don’t do it.

I would stay put.

My other half works nights and I get really jittery sometimes. In a rough area, I would find it very hard. Also, if the kitchen and carpets need doing you’re already tapping into that 30k equity.

The market seems so flaky right now - imagine if you didn’t have enough equity to move up and you got stuck there for a while. Before you know it you could be looking at nurseries and schools in that area too.

We bought a flat form our parents with a “genuine bargain price” mortgage (available through Nationwide). Our circumstances changed (I found out I was pregnant) and 6 weeks after completing it went back on the market at list value and we ended up with about £60k equity towards a new house. Depending on the discount, could this be an option?

It’s more likely that they backed out because they did some research/asked friends about the area. If they felt it was outdated they would just have offered lower than asking price.

I think you should stay where you are.

Stay. 100%. The £250 a month will soon be eaten up - not so much with the new carpets but def the new kitchen.
If you want to sell quickly, as you say you won't be able to benefit from any first time buyer tax breaks (which, given we will probably have a labour government for the next 5 years may be significant).
Buyers will also be suspicious of the quick hike in price. They'll think there's something wrong with it that they haven't uncovered yet on their searches/ surveys and they won't swallow "we bought it on the cheap".
Selling with kids or when pregnant is STRESSFUL.
Also - financial deals with family are rarely as simple as you think they are. Money and family don't mix

A.

Stay in A.

@InAPinkBubble yes, I'm sure your parents mean well, but actually they're off loading their problem on to you.

thanks but no thanks.

if you're finding it hard to say no thanks & seeming ungrateful just emphasise the stamp duty & first time buyer mortgage advantages.

on an estate like that, you'll be taking a huge gamble on your work/expense of 'doing it up' paying off. Theres an estate near me which is a bit scruffy & rough, I wouldn't feel unsafe inside a house I don't think, but I wouldn't walk around there at night. A few of the houses have been bought, refurbished, garden ms done, look really really nice, but just aren't selling. No one wants to pay £xxx to like on XXX estate. (And that's cheap for our area an equivalent house not on that estate, would essiky be £100k more.

you don't want to spend your pregnancy, maternity leave & God knows how much longer living somewhere you don't feel safe.& in a 'project' do you?

keep saving for the 3bed & garden you want. You'll get there!