AIB stupid? House deposit in bank but struggling financially

[LadyHonoriaDedlock]

Any advice gratefully received as I am rubbish with finance!
After divorce, I have my share of the family house, £50k, in a fixed term saver account. This is meant to be my house deposit for when I can buy.
However, according to mortgage calculators online, I could only afford a house of up to £156k. I'd need at least three bedrooms as I have three kids (two can share) which costs at least £200k round here.
I'm struggling to pay the rent each month and am starting to feel a bit stupid, having that much money sitting in the bank. Should I withdraw some and have an easier life, or keep it in the bank and hope houses become affordable at some point?
Thanks for reading!

If you can manage I would try to keep the deposit and not deplete it in anyway. Can you rent anywhere cheaper or get a larger mortgage ( eg lengthen the term ).

It is probable that you will only be able to afford a house if you can earn more, is this likely at all in the future? If not, what is the point of struggling when you have enough money not to have to?

I'd buy a 2 bedroom place and turn the living room into a bedroom for myself. How long till one of them leaves home 😀

I’d probably buy a two bed as well and sleep on a sofa bed downstairs, but if you’d rather not do that and your situation won’t change for you to be able to afford a bigger place, I’d stop struggling and use some of the money now. No point it sitting there when you’re scraping together everything you have just to get by.

I think buying a smaller house is a good idea as one day they will be grown up and you will be pleased not to have to pay rent. But, if this is not possible then use some of the money. Also, if you were to lose you job, I am nor sure how the benefits system would treat your capital so you might kick yourself for not just using it where needed.

If it seems very unlikely you will be able to buy in the next 5 years or so, is there any mileage in buying somewhere smaller to rent out? You can then move into it when you no longer need 3 bedrooms. You will need to do your sums quite carefully to make sure they work out though!
Also- have you looked into shared ownership? And have you actually got a saved search on Rightmove for what you need and can afford? I now live somewhere 300k cheaper than I though existed in my area, so you never do know.

Talk to whoever you bank with. If you are paying your rent on time and if a mortgage payment will be less than that amount then they may offer a mortgage as you've already proved you can pay.

Thanks everyone, lots to think about there :) I have considered buying a two bed, but after the upheaval of the divorce and the kids having to move into a smaller house and share a room, I just don't think I can do it to them again.
I will go and speak to a mortgage lender in person though, before making a decision. It does seem ridiculous if I'm finding 925 a month in rent, a mortgage would be 700ish and no-one will lend to me.
notsuchasmug three years until the eldest goes to Uni so no joy there!

I would definitely buy if you are able, even if it means a smaller house or shared ownership. Try 3 different mortgage providers, including one broker as they sometimes have access to things that are hard to find direct. Other options could be getting a longer-term mortgage etc.

Is shared ownership or help to buy an option? (You don't have to be FTB)

You could buy 2 bed and make another room in the loft or garden. On top of deposit you may need money for stamp duty, survey, mortgage arrangement fee, solicitor fee, land registry fee, moving costs, other money including emergency funds. I would suggest looking at moving to a cheaper area, dividing a large room. Also get quotes from slot of mortgage providers, try money saving expert website.

If the kids are older, could you not take a second job to take you a little higher on the mortgage? You could sell and downsize when they move.

Definitely don't deplete the savings. Find a way to secure your housing. There has to be a way.

Looking in a more downmarket area nearby
Finding a 2 bed that you can be ultra-cramped in for a bit and then extend.
Government help to buy scheme or shared ownership

Buy something smaller and have an asset but don't rent. The £50k if you spend it will be gone in a breathe. Do not buy a house and rent it out, this would be high risk for you, expensive buy to let mortgage and risk of unoccupancy ...you could loose a lot of money and have a load of grief.

Mortgage calculators are not reliable. A decision in principle (mortgage promise) however is more reliable provided that your details are corect. Most lenders would take into account your income from employment (inc. bonuses, overtime, benefits) and also if you are in receipt of certain benefits. So this might bump your mortgage. If you have loans, credit cards, overdrafts etc. check see if its best to pay them off first.
See a few mortgage advisors at different banks, I find that the ones people don't think of going for for a mortgage because they don't have great rates (eg. Lloyds, Santander) tend to lend you a bigger amount.
Good luck

Look at it another way - how long would it take you to save up 50k? , because it is a lot of money. Therefore it would be better invested into property, because bank accounts paying very low interest rates. Try and estate agent, some should be able to recommend you to a free financial advisor to look at mortgage s and savings

What about looking for a 2 bed that has a separate kitchen and dining room? You could use the dining for a bedroom instead.

Similarly, in my area many larger bungalows have a separate dining too, so might be worth adjusting the options when you’re searching.

I would hold off dipping into savings for aslong as possible. It can get become a slippery slope of ‘oh just £100 here and there won’t matter’, but it builds up before you know it!

Whatever you do, don't spend your deposit on rent. If you rent, you will still have to pay rent when you are retired. If you buy, you will live with no accommodation costsonce you have paid off the mortgage.

Buy a smaller house and make do for now.

I totally agree with pp who said your kids might not understand now, but they would be heartbroken for you as adults if they realised you sacrificed your financial stability for the sake of one room.

Get a large two bed and subdivide to make space for the kids ? I know houses and flats that are officially two bed but the main bedroom is absolutely massive. Could easily put up a stud wall.

Many mortgage providers do not take maintenance and child benefit and tax credits into account when calculating affordability, but some do. After my divorce I only managed to find one lender prepared to lend me nearly £200k as my salary is only £28k. I'm with Santander. You need to really explore your options. Good luck!

Go to a financial advisor who can check the whole market for you. I’m with Santander who accept tax credits and maintenance as part of your income. Nationwide did too.

Also keep an eye on the market, some vendors will accept a cheeky offer of thousands less if they want to sell and it’s been on the market for a while. Any house is only worth what someone will pay for it. Recently I’ve seen people drop £20K to sell, plus your in a great position, chain free.