Future proofing- downsizing now in our 40s or wait

[Ugutff]

I will preface this with, I grew up in Europe and would love to get feedback from Brits on what makes most sense.

We are both in our 40s and have one primary school age kid. All this talk about recession and rising interests got me worried.

We live in London in a four bed house which we bought assuming we'll have another kid but that never happened. But we still owe 400k on it and are clearly not getting any younger.

Would it be totally silly to downsize now to a two bed flat and cut our debt?

Friends have pointed out that people usually do that when they are older and often to release equity. Because we moved to London in our 30s, we never got a chance to buy when houses were cheap. At the moment mortgage is 50% of take home as we are overpaying.

Family back home all rent so no advice from them. What would everyone else do? Is this doom and gloom just getting to me? Or would it make sense?

I find it so strange that housing has become such a financial instrument in the UK. We simply don't have such discussions back home

well I find it odd that most people rent in other countries. How on earth do you afford high rents when you are retired. Pensions must be so so generous.

Although in the UK I think that on the whole people buy a house as a home, not as a financial instrument. It's only later that the finances of it are relevant, for example if your house is worth £500K and you can buy a house for £300K in a different area, you might move to release that money for retirement, as we don't have generous pensions in the UK on the whole.

Do you actually need to stay in the area you are in? I would be looking to move to a similar sized house outside London for less money and with better schools. You're in the south-east of London so you have places like Tonbridge or Rochester kind of on your doorstep. You'd still be near family in London.

Renting in other countries on the whole is less expensive than here. We have a bizarre housing situation due to mass selling off of social housing and the promised replacements never being built.

I think elsewhere pensions do assume that you are still paying rent and it works.

My insecurity here is that I dont want to get it wrong in such an uncertain environment. It seems like you can go wrong a lot more here than elsewhere. But I also dont want to spend my kid's life with us trying to pay a mortgage rather than enjoying life

@Ugutff having children is a marathon not a sprint and I think the people who pay a lot for children’s hobbies and indulge beautiful clothing for children lovely toys etc should really just be a bit more honest and say that they buy that stuff for themselves not for the children and I am wholeheartedly in that category.

in retrospect I should’ve ploughed all my money into my mortgage to give myself a lovely asset that I could downsize and then been an indulgent grandparent and allowed my children to have more money to spend on their children’s hobbies clothing toys private education etc or if none of that was affordable to at least secure the roof over my kids house for the rest of their lives.

with no mortgage your DD would have a blissful existence as an adult and for me that’s far more important than the short years of childhood.

True, true....I guess we have both sets of grandparents who live in million pound houses and dont even get our kid birthday presents - so I am more cynical perhaps. We've had no help from either set in anything and after I moved here in my 30s (my parents were already here) - it's as much about trying to make sure we're fine in the present as in the future

That was exactly my scenario with the grandparents sent my 12-month-old some boiled sweets in her Christmas stocking that were out of date and I just thought to myself I’m gonna have to spoil these children because literally nobody else is going to. I do kind of regret it though, they literally have no memory of it. I sent my daughter a picture of herself horseriding when she was six and she made this big fake fuss about ohhh I remember the name of the horse and I thought no you don’t because I do and that was the wrong one 🤣🤣

@AuntSalli so what would you focus on if you had your time again? Am assuming we'll have to move to secondaries so that would be for our kid. What else?

Do boiled sweets even go out of date? They’re just sugar, which is a preservative.

It sounds very much like you are so stressed about thing as you are overpaying so much that the mortgage is taking half your income
You are in a fixed rate for over 5 more years. So much can happen in that amount of time
No way would I move from a house to a flat in your position. Just wait it out. If you are struggling for money stop overpaying the mortgage

They had a best before so God knows how long they’d had those sweets rattling around the house. Possibly longer than my 12 month old baby had been alive.

What normally happens in such recessions? Like do first time buyers just all go for houses in which ever areas they can afford and skip flats?

I heard that in London people are already trying to skip the flat stage. Would areas that are still up and coming or lets say mixed such as where we are keep their value or drop as people try to buy in the naice areas?

What happened in the 90s was that FTBs were spooked and dropped out of the market completely for a bit. There were repossessions at every level of the market. With lots of people in negative equity nobody moved unless they had to so there was very little on the market. Nobody paid asking price. I bought in 1991 and refused to look at repossessions, the agents thought I was mad.

It was obviously different in 2008 because of the massive fall in interest rates. But they’re going up this time so I think this is going to be more like the 90s.

People skip the flat stage in my experience because they are in their 30s and are planning kids. I bought in my 20s and bought a flat. Also it's weird to say this but whether you are an ethnic minority plays a bigger role in whether you buy a house or a flat as a first property in my experience. DH is a typical north London Jewish boy and most of his friends have bought flats. This is because they wanted to stay in the traditional Jewish areas near their family and social networks. DH is more likely to move country than to move to South London lol.

Well I can't give any advice on the financial side of things and I wouldn't. Things have not gone as I have expected in the last couple of years so I am loathe to predict anything but uncertainty! The only thing I can say that I did move from a large 3 bed house with a big garden to a much smaller 2 bed flat with shared outside space and a large balcony area with my DH and teenager and it's been really good for us. You do have to make compromises and get rid of stuff but it is more than suitable. We moved to get into a better area so our flat was actually 17k more expensive than our house was but we are in a great location and it has been worth the sacrifice.

One thing I would advise anyone to consider when moving into a flat is make sure you look at what separates the flats. Our floor is concrete so I don't get any noise from downstairs neighbours, but the one shared wall between us and a neighbour seems paper thin (although she is quiet). We are getting sound proofing done on that wall next year. I am happy and I like my neighbours who are friendly but not overly friendly. We do plan to move into a bungalow before we retire as I don't want to live in a flat as I get older, but that is over 20 years away. God knows where we will be by then! Good luck whatever you choose.

Also our factors fees are quite expensive but includes landscaping the area and cleaning the communal areas as well as buildings insurance.

I really wouldn’t move to a 2-bed flat with a child. No room for guests, no chance to take a lodger if needed, no garden, much less flexibility.

It’s far from future-proofing, as your needs may change. What if you need to work from home at some time? Cramming a desk into a living/dining room may drive you mad. What if you have another child (though you’re not planning to at present)?

Buying and selling property, and moving, is expensive in itself.

Downsizing to a flat very much limits your future options.

Just some thoughts. I hope it all works out for you.

@Ofcourseshecan Thank you for your thoughts. It's hard not being able to discuss this honestly in real life. Not only do most of my friends have two kids but the majority are firmly in the need a house in the suburbs category which is fab but just not me.

Sadly, we definitely won't have another child or visitors but I get that a two bed flat might be a bit too radical. Would a teo bed house be better?

How recently did you come to the realisation that you would only have one child @Ugutff? I'm wondering if you are still coming to terms with that, and feeling a bit like an 'imposter' in a house that you bought when you had hopes of more children. That's a HUGE thing to process and I'd definitely advise you not to make any quick decisions about the house whilst you're working through it.

@Bramshott honestly you might have a point. I am now 43 and since the end of the summer we are no longer trying. The reality is I have no idea what to do with the extra room to the point where it's now standing completely empty. This is essentially a perfect house for a family of four with a lovely office space/tv room. But we are not a family of four and now I don't want to be stuck here, overpaying it while not needing the space or having the life

@Ugutff I guess you're keeping an eye on the news, too, re mortgages, interest rates, etc.. scary. That adds an extra worry, I expect. I can only reiterate what I posted earlier on in the thread, that I scaled down, sold a big old house & moved to a warm 3 bed semi with no mortgage and if the kids & I fancy a few days away, for example, we can afford it. No regrets whatsoever.
I would be looking for a 2 bed house if I were you, tbh.. no service charges, hopefully freehold, & I find houses hold their price better than flats, although I have NO idea of the London market, it could be different there.

Please don't let the decision take over your life though, or the news push you into deciding NOW one way or another. Take your time & make the right decision for you.

Why not invest the overpayment into converting the upstairs to a flat - like the otherss at round you and then letting it out. You keep the downstairs and garden?

Then you get the best of both?

Yes, downsize.. puts you 10 to 20 years ahead.. frees up cash.. why pay all that interest to the bank for those 10 years on a house you don't need and no garentee prices will go up and who will be able to afford if it does. house prices won't be making gains like they have in the past in a hurry.. the demographics of the future with the boomers dieing off. House is a house, you only get one life.. money should buy freedom, big houses and flash cars is the old flex, the real flex now is freedom..not being a slave to a mortgage. Money buys freedom and stress free time with your family.

Whatever you do - don't go leasehold. That probably rules out getting a flat. Bad management companies, increasing charges, changes of management and the leasehold owners - all potential nightmares. Whatever you do, do it freehold.

@Wavyline yes I was just going to say that. With a flat especially in a converted property there is also the chance that a nightmare neighbour will move in, shared entrance ways are often cramped less soundproofing than in a larger block etc

Also unless you get a ground floor flat its not practical in much older years.

I would wait until your DS is working/at uni and move area to a 2/3 bed smaller house.

We have found that we need more bedrooms, less often, rather than fewer bedrooms more often, now that our children are adults. If they come to stay with their children we need a minimum of 4 guestrooms and it would be more comfortable with 5. We don't have that many, so it just means that we can't have them all to stay at the same time, even if we use the sofa and a folding bed. As it is we need to put a trundle into my office, but when I stop working we will make that back into a single bedroom.
So my point is, IF you can afford it, stay in your larger house, or go to a 3-bed rather than a 2-bed.

To me it is a more simple question - do you like your house and can you afford it? If yes to both of those then stay put. Houses are for living in, you'll drive yourself mad trying to second guess everything.

We live in a 2 bed flat in SE London as it is what we can afford. It is perfectly adequate for our needs and we like living here.

I disagree with the scare stories of service charges and repair costs as you get older. Yes you still have to pay them but they cover things like gardening, repairs, insurance etc.. Freehold houses don't magically become free to run when you have paid off your mortgage. Also the benefit of a flat is someone else organises those big ticket repairs.