Hi all,
I'm an early 30's FTB in London, and would really appreciate some input on my situation. I'm looking to buy somewhere in zone 2/3. I'm recently single, and have been renting with my sister for a few years. I unfortunately can't afford to buy in the neighbourhood I live in, so will be moving to a new neighbourhood. I am looking at a 5 year fixed term. I am considering two different options:
1)* *Buy a nice 1 bed flat for 300-350k in a nicer area. I realistically won't be able to overpay the mortgage much in this scenario, as I'll be paying service charge/bills on my own. The main advantage to this scenario as I see it are the independence of living on my own/sense of 'growing up' that would bring. However, I am concerned that I might find it quite lonely living on my own (I never have done), and if I find a partner I presumably won't want to stay living in a 1 bed, so will have to move again at some point in the future, which will involve stress/money for solicitors/moving/stamp duty etc. I've also read a one bed can be harder to sell, however, the desirable one beds in the areas I'm looking in don't seem to be staying on the market long, so I don't know if that's such a concern. I've decided I don't want children, so that is not a consideration.
- Buy a nice 2 bed flat for 400-450k in a slightly less nice area. Take my sister as a lodger (I've discussed this with her and she is happy to do this) and use the money I would charge in rent to help pay service charge/overpay the mortgage until the fixed term ends, at which point I can hopefully remortgage at a much lower rate. The advantages to this would be I would have someone to split bills with, and won't be lonely! Having the extra bedroom will be helpful in having someone help pay the mortgage, whether it's my sister, or somebody else if they move out. Also I presumably won't have to move again for a long time (even if I find a new partner), and the 2 bed will hopefully be a bit easier to sell if/when the time comes. I think this option will also work out slightly cheaper for me overall in terms of monthly outgoings, so I'll have more disposable income.
However, although most of the time I enjoy living with my sister, sometimes I do find it quite stifling. Some days I'm happy to be living with her, other days I feel like I want my own space. I'm wondering if it is a mistake to make this level of financial commitment that involves relying on another person. For all that I am happy to live with her now, I'm not sure if I'll still feel the same in 5 years' time! I also wonder if continuing to have a flatmate (especially a sibling) will make it harder for me to find a new relationship. Although I could afford to pay the mortgage for the 400-450k place on my own, I couldn't afford to overpay, and would be burning more money monthly in interest/service charge than I'm currently paying in rent, so feel I'd be better off just staying renting.
I know I could always do option 2 with a lodger I don't know, but to be honest right now this option is really not appealing to me right now.
Basically, I feel option 2 is the more sensible decision for long-term financial planning, but it's more of a toss up between the two as to which is the better choice for me as to the stage I'm at in my life and personal growth.
Just to add, I'm a freelancer, and my income will not be increasing beyond where it's at now, apart from inflation-related increases to my rates.
What would you do? Just curious to hear others' opinions.