Upsize and renovate, stay put or BTL

[Tobi22]

Hi

Currently need some guidance and outside perspectives as I am currently at a crossroads re our next move property wise and want to make a sensible decision....but unsure of what that is right now

Currently own 2 bed maisonette on nice residential rd, it is bigger than average, own large garden and parking, though on top of horrible neighbour. Now have some equity in the property which is worth around £60k more than we brought it. Have 2 large rooms which for now meet family's needs. Current mortgage really affordable

Option 1 stay put and renovate to further modernise property which will improve lived experience and future saleability eg we will then achieve nearer to top end asking price of £300k, current state of property would probably get £275/ £285.

Option 2, try to move into a small house (which are currently around £325-350 locally. I went on a viewing today however felt that my current flat actually has more floor space in every room including the kitchen which contains a dining table etc and better suits family needs as all rooms and bathroom on same floor ( helpful with children using bathroom at night etc) whereas in the houses that we could afford, bathroom is always downstairs through the gallery kitchen which I hate, plus front door opens directly into the living room which again I hate!

This option would mean selling current flat, using as deposit, I could port my current low mortgage and rate, but then borrow the extra needed at a higher rate on a tracker mortgage for a year, then consolidate/ merge mortgages next jan, and hopefully fix at a lower rate, but this may mean overall mortgage payments of around £1800pcm

Option 3, try to get a cheap BTL property in a cheaper area for around £100k, keep current property with its rate etc, but get a 2nd charge loan of around £30k against current flat to raise the deposit and fees which I am scared to do as obviously there is a high risk of defaulting and I would then be liable for 2 sets of mortgages ( though would obviously try to rent out cheaper 2nd one), plus the loan given for the deposit which is secured against the 1st flat

I am totally stuck on what to do, and really need to make a decision asap

I'd go with option 1.

You don't like the option 2 property and that'll really grate on you over time, you don't want ti be miserable in your home.

Option 3 is a none starter, it's too high risk and you shouldn't go into landlording unless you're very clued up on what your responsibilities are.

Option 1.

What's driving options 2&3 op? You feel you should move/progress?

Option 3 doesn't sound affordable for you.

Stay wheee you are.
House layout is rubbish
Why do you think you have to have a house when what you have is better

Partly that this was always the plan to move up the property chain, I always hoped to raise my children on a house rather than a flat

Secondly we do not get on with downstairs neighbours who have at times been quiet bullying towards us and as we share a building, if outside work is required for pipes etc, it is difficult to approach them. They also make a lot of anti social noise throughout the day and night which I am tired of.

I honestly wouldn't do BTL. I think any advantage of that will be whittled away by legislation, and unless you're really professional about it and do it almost as a job it's easy to fall foul of the many pitfalls of both tenants and laws. I'm a landlord in the US and it's getting more and more bureaucratic here, but still nowhere in the same league as stories I hear about in the UK.

If you did option 1, would there be any way you could expand the area of your property? Upwards or outwards?

I guess it's just one of those 'ideals' I always had, but perhaps I need to let go of. Also tired of downstairs neighbours

I don't think that we could extend as such although we do have a large loft which is mainly used for storage.

We are based in an expensive city and whilst I would love to move outwards to get more for our money space wise, the kids are really settled in the area and their school

Bump

I wouldn’t do btl with a mortgage, it’s far too risky, especially if you’re a first time landlord and with the current financial crisis.
Can see how your current flat works for your family but bad neighbours are always a downer.
Can you look for a different lay-out in a house? Downstairs bathrooms are always difficult, unless you can fit a loo/washbasin somewhere upstairs.

Would downstairs sell to you?

The problem is the budget is not that large for the area and so what we have available is limited and for some reason many of the houses have been built with a downstairs bathroom

It's not just the downstairs bathroom though, the gardens are smaller than what we have, and there is literally no room to extend outwards

Downstairs is council owned, I had approached them already about this but they will not sell the property

If you have a large loft, and you like the area and the kids' schools, it would probably be worth your while to get quotes for extending upwards. I know you don't like the neighbour, but neighbours can move, and if you have another floor you can get further away!

I will look into this, the council I am not sure will agree but I guess we can ask though this will be expensive

Why would you even consider a BTL in a newly falling market? Likely to be left with negative equity.

Option 2 not viable. Who want to pay over the odds for a smaller pokey property with a galley kitchen with young children?

Option 1. Bide your time, enjoy a decent sized kitchen ( ideal with children) ignore your neighbours and lap up the sun this summer in a delightful large garden- which you won't get with a small terrace.

It will be expensive, but not as expensive or disaster-prone as the BTL option, will leave you in a good long-term position if you want to stay, and you'd recoup it in the end if you ever decide to move.

This seems really logical, I am thinking of repainting the whole flat if staying, plus some other minor improvements eg new built in wardrobe perhaps higher fences in garden etc

On a separate note, does anyone have any suggestions for hard wearing paint colours that still give the space an airy feel, currently tired of magnolia and white which makes everything feel so dated and dirty

Also not sure of best way to finance home small improvements to ensure little to no risk to my home, I think I may need a few thousand....😞

Sorry I am so new to all of this 😔

It depends on what kind of debt you feel comfortable in taking on. This is where you need to get quotes to see what's involved. We've been renovating our house for the last three years or so. We got a home equity line of credit from the bank for the biggest part of the work, and basically paid the rest in small bits over the time from income and on credit cards. We still owe the bank on the line of credit but we're paying it down steadily.

You can always do things in phases - for example we did our kitchen and the downstairs utility room first, and our home office, as we work from home and those were the things we thought most basic. If converting a loft, you might start with joist strengthening to carry the floor, adding flooring and providing a staircase. You can put in a ceiling and windows and do electrical and plumbing work later.

My husband is an architect, and he would say (and I agree) that it's worth getting an architect in to do the planning. You'll recoup the money you spend on that phase in a much better plan and layout, and consideration of a lot of things that wouldn't occur to most of us but will improve your enjoyment and use of the house. Disloyally, I would say that the architect needs to know your budget as many of them seem not to have a clue about that side of things!

I’d be looking for an option 2 scenario, where you can move upwards in the property market rather than putting the money into where you are now which, it sounds as though, is unsuitable for a number of reasons (neighbours downstairs being one of them).
Perhaps a bolder option now but will stand you in good stead if you can manage it financially now. Try to look through the layout/ design of a house - these things can be changed in time if you need/ want to

I am just worried that if I push myself I could ideally get a better type of property for myself and that I am not moving forward due to staying in my comfort zone

Maybe consult a local estate agent about how prices are moving in your area? If there is a downswing that's a good time to push yourself. We bought a house in 1993 at the bottom of a downswing that we couldn't possibly have afforded three years earlier, and I sold it nine years later for about two and a half times what I paid for it. I couldn't afford to buy it again now! We had to tighten belts considerably for a couple of years though, until the rent caught up with the mortgage.

Not rent - earnings! Dyslexic fingers...