Another one "shall I buy a property now" thread

[tashka]

Sorry, I know it has been discussed but… just really don't know what to do.

I have a flat in a OK-ish area of London (north east London). Flat is a reasonable size 1-bed in a nice Victorian conversion, nice street, very close to station, good commute to my current job. Mortgage left is quite big though as I bought in 2007 with 3% deposit :) and it hasn't risen in price yet -((. I do however have almost a £100K saved for a deposit for a new property so was going to keep this one as BTL for retirement.

We are generally OK living there at the moment (although would like a bit more space and preferably a garden), but I know that in the long term I don't want to stay in the area because all my friends are now living in the SW London. So I do plan to move somewhere in the SW London, especially when I have kids.

What I find at the moment though is that the houses I can afford (i.e. up to about £425K) in the SW London are either (1) quite far away from the station on not very exciting streets or (2) ex-council houses, and also not very near the stations.

It looks that the options I have therefore (unless I get something wrong, and please please tell me if this is so!), with pluses and minuses, are:

1. Buy a house I can afford in the area I don't necessarily like

   • I will have a house where I can live long term, including when I have kids etc -- the commute will be worse and longer, and I will be paying more every month (although still should be able to afford it, but now I can save this amount)

2. Stay in my current flat and continue to save

   • it will cost less per month, the commute will be good -- I may find myself priced out of "house" market completely (the biggest worry), also would quite like to move closer to friends sooner rather than later

3. Buy something I can afford now as BTL (ex-coucil?) and possibly use it as letting the BTL property out and renting something for myself in the area I like
   This is something need to do some proper research on, as only had this idea recently when realised that everything I can afford I don't really want to move into (like ex-council flat somewhere central which can be rented out to sharers)…

   • I will get a second property which I can possibly then sell and buy a house I like (the assumption here is that it looks like the property prices are rising faster than I am able to save a bigger deposit) -- feels a bit scary to spend all my money to buy something I wouldn't necessarily live in myself (and possibly don't really like).

What would you do in my situation?

Thank you so much in advance for any opinion!

Personally, I'd stay where you are, with the short commute and low costs, until you need to buy something bigger. Lots of things might change in the meantime!
But I admit that I would have been much better off if I'd bought a house when in your situation (many years ago though).

Do you have a DP already? If not, then that might end up affecting where you choose to live.

Finally, bear in mind that your lender may not be happy about converting a property with 90%+ LTV to a BTL.

I'd be really surprised if any property in London hadn't increased in value in six years.

I have similar issues to you about being priced out if I don't buy soon.

If we spend our entire max budget, we can get a family home in a nice area, albeit with a longer commute than currently. In a way, that would be great as we would have a home for life, and wouldn't have to worry about the market volatility etc. However when I add the increase in council tax and utility bills on top, it just seems like our outgoings would increase too much from where we currently live. Consequently, we would likely have to forego/curtail visits to relatives abroad, wait a few years after DC1 to have DC2 etc

The other option is to buy a smaller 2 bedroom terraced close to where we currently are. Utility bills, council tax and commuting costs would then stay approximately the same, but we would presumably outgrow the house within 5 years, and would then have around £20,000 moving costs to buy a family home, which might be out of our reach anyway due to house prices going up quite quickly. But, in the meantime we would at least be financially comfortable and able to have a bit of fun!

Not sure what is the best option really.

I think being in London you should upgrade now whilst the difference in price is smaller. Have you thought of a compromise like a 2 bed garden flat in SW. You could get a nicer location that the houses you are looking at but still enough space for a family. It sounds like you might not have children for at least a year or two which gives you almost a decade before you might need to move again (presuming you stuck at 2 kids!). I think 2 primary age children in a big flat with outside space isn't a big compromise at all.