WWYD - housing options and debt

[BasicDistinct]

Divorce leaves me with 150K cash.

A property I rent yet I can either continue to rent or sell.

I am unable to work due to incurable disease so cannot rely on that as an income as am largely on benefits.

I have DC maintenance income but only for the next few years unless they go into higher education. Either way, it's not long enough to tie into a 20 year mortgage.

Would you:

1. Buy a small place in not very nice area, mortgage free so no money worries over buying kids clothes and shoes and a holiday once in a blue moon. Can live a high life from a rubbish property. Oh, and can't get out much due to illness.

1. Buy a small place but slightly larger than option number 1 with a small mortgage, so moderate money worries over buying kids clothes and shoes and a holiday once in a blue moon.

1. Keep the rental income and mortgage heavily but risk not being able to pay in a few years as the Dc will be out of the education before mortgage paid off in 20 years

1. Something else I haven't considered.

Any thoughts?

Surely the rental property is limiting your access to any means tested benefits? Or do you not claim anything means tested?

I can't because I do get a small medical early retirement pension which blocks it by only a few pounds (the cut off is £750 and I earn £760 type of thing)

Also when you have a terminal illness benefit it's not means tested

Op sorry your faced with this choice. I would go for the smaller property and enjoy your life.

It's not terminal as in death in a year type terminal but will knock time off my life and degenerate over time in terms of disablement. The medics termed it 'terminal' because it's incurable and will get worse.

From that point of view I'll be around long enough to think long-term as well as short term.

Sorry you’re going through this OP.
I would go with the small property. You don’t want to be left worrying about money, so minimising costs might feel better.

Renting out property looks to be a pain in the backside, as they need maintenance. However, it depends what your rental property is like and what is paid off there - maybe you could remortgage that, release equity there to pay fir your own smaller house? And still keep the rental as a partial income?

I don't understand. In addition to 150k cash, does OP own a property she rents to other people and gets income from them paying rent, and she is thinking to sell that BTL property to have a single stockpile of cash she could use to buy somewhere? Or is the picture something else.

How big is the rental property? Could you not move there? Sorry if this sounds bleak, but will you have enough spare income to manage the rental? What if you don't have tenants or if you need new boiler or significant maintenance?

I think, not wanting to drip feed here, that the housing situation before divorce was pretty plush and I have child custody so am concerned about how this will impact them

Yes...In addition to 150k cash, I own a property I rent to other people and get income from them paying rent, and am thinking to sell that BTL property to have a single stockpile of cash i could use to buy somewhere. It's not a huge amount of equity though, once sold.

The options are:

1. Sell and use that money to add to the value of a very small property.

1. Sell and use that money to add to the value of a medium property, with a small mortgage.

1. Keep renting out and use a hefty mortgage to buy something more in keeping with the standard we've had in the marriage, but risk crippling myself financially as it would take the rental money plus a lot more to pay back, and leave much less leftover each month. Also, I'd be relying on maintenance which obviously ends way before the mortgage does, so would probably have to downsize by then anyway, but at least the children would have grown up in the same kind of place they've been accustomed to.

It's only a studio, and there wouldn't be enough room to house a whole family.
You make a really good point about spare cash for emergencies; I'd have to keep a float for that out of the £150k cash which would detract from what I could spend on a house.

Personally I'd buy the smaller house and have no mortgage, are your DC old enough to understand that after a divorce it's not always possible to maintain the standard of housing they're used to?
I've just paid off my mortgage, the relief is fantastic, extra money at the end of the month, knowing the house is mine and whatever happens in the future I'll have a roof over my head.
Seriously, I would not get into debt with a large mortgage in your situation.

This is my preference however the smaller house is in a rougher area which makes me hesitate as strength fails me I feel more vulnerable.

Also, their other parent is still in our posh house in poshville, so the contrast will be quite striking for the DC.

1. Small mortgage you can handle,

You should move to a part of the country that is cheaper, you could get a nice place for the £150k and have a stress-free higher quality of life existence.

Have you checked you can actually get a mortgage? Lenders may see you as too big of a risk so may not even lend. Check this first as it’ll help with your options.

Sell the rental and go for what you can with the 150k plus money from flat. How much will you get from the flat?
I wouldn't put it past this govt to means test all benefits at some stage.
Go for a small property in the best area you can.

Also, rough area doesn’t necessarily mean all housing there is equally rough. A lifelong friend of mine lives in a rough area but she’s actually in a cute little block of 8 flats just on the periphery. Her neighbours are mostly working or semi retired but all look out for each other. She’s never had any problems, feels very safe, and has been there nearly 10 years. So it’s possible to find a little gem in the rough!

Are the divorce financials finalised?
£150K is a lot of money but noting that he still lives in Poshville and you can work - is it definitely the right split?

I would opt for the middle ground. £200 k can buy a decent home in many places

@BasicDistinct
I live in what is considered a rough area on the outskirts of a lovely tourist city.
I keep myself to myself, speak to my immediate neighbours, never had any issues.
Maybe take the option of a small mortgage, you need to be comfortable with your surroundings.
Good luck ❤️