Active discussions

Meet the Other Phone. Child-safe in minutes.

Meet the Other Phone.
Child-safe in minutes.

Buy now

Please or to access all these features

Talk
Property/DIY

Join our Property forum for renovation, DIY, and house selling advice.

Original poster

Mortgage/ options advice sought

35 replies

neighbourhoodwitch · 28/12/2013 16:07

Hello

I bought a large two bedroom garden flat 18 years ago for £65K. It is now worth c. £450K. There is not long to go on the mortgage and the monthly mortgage amount is £78.

It is in a decent part of North London. We have two DCs in local schools and we have outgrown our living space.

The cost of houses is now sky high in the area and I do not know what to do and my DH does not want a massive mortgage. He is talking about renting out our flat and using it towards renting a larger property. I really want to buy, however.

I feel stuck and really upset about this and do not know what to do.

Any advice would be welcome, thanks.

OP posts:
noddyholder · 28/12/2013 16:09

Can you use some equity to extend and keep your low outgoings? Otherwise I agree with your dp. Or sell up bank money and rent. There is another huge bubble in the SE and it will probably deflate once the election has been decided and IRs rise

mumtosome61 · 28/12/2013 16:11

Personally, I would rent the flat out for maybe a year until the mortgage is cleared if there isn't much left. I understand the reluctance for a massive mortgage especially in London, but you are right in that it would be more beneficial overall to buy.

I suppose the quandary comes in the price of the current flat £450k versus the inevitable higher cost of a bigger property. How much are the sorts of houses you are looking to buy? And minus the £450k?

Original poster
neighbourhoodwitch · 28/12/2013 16:24

Hi, thank you so much for your responses.

Noddy - hearing re renting out from another source is good to hear, iyswim. I am not sure extending would work, but I will have a think about this - thank you. Yes we could sell up but savings rates are so low and I just want to feel that we have something of our own,..

Mumtosome - starting at c. £700 - 800K so we would be looking to borrow some £300 - £400K? (and - this is out of our reach - £1.4M). Just feel gutted that this is not how things 'should' be? I do not want to leave London and the DCs would be besides themselves at the prospects of leaving their schools :-(.

Could buy somewhere out right up North but I do not want to leave, so sad (but on the other hand we are lucky - sorry, just upset and confused, silly I know). I also have several older relatives asking when we'll get a 'proper house' (thanks a lot :-() and this really upsets me but I also know we have a lot and I am blessed with a lovely family.

OP posts:
Original poster
neighbourhoodwitch · 28/12/2013 16:30

I don't even know what such a large mortgage would cost - but we could probably pay up to £2K per month.

OP posts:
Clargo55 · 28/12/2013 16:31

What type of building is it? Any scope of buying the flat above and turning it into a house?

noddyholder · 28/12/2013 16:34

Could you move area or buy a doer upper?

Original poster
neighbourhoodwitch · 28/12/2013 16:45

Clargo - thanks. Yes, we'd consider that if it was ever put up for sale. It is the ground floor flat of an Edwardian conversion (two flats above ours),

Noddy - thanks. We have looked outside the area but all still v. expensive and would like to keep the DCs in the local schools (5/10 minute walks away). I will have a look out for ones we can do up - good idea, thanks.

OP posts:
noddyholder · 28/12/2013 16:47

An upper maisonette with the loft can be a good buy for extending and family life! I have done several Just finished one and it is worth it financially and makes a lovely home

Original poster
neighbourhoodwitch · 28/12/2013 16:49

Noddy - thanks, another great idea!

OP posts:
WhataSook · 28/12/2013 16:50

Agree with Noddy, there is a bubble in the SE that I think will burst soon enough however I think it will ramp within a short time again especially in London and that this will now be the new normal of very short bubble cycles.

But to your question I would rent out your flat and rent a larger place. When the DC move out and you need to downsize you will have your garden flat to move to Smile

Canthaveitall · 28/12/2013 16:53

Depends on how old you are, your earnings, outgoings and long term plans re: schools. If you are young enough for a mortgage, can afford the monthly outgoings and want to stay then I would either sell and buy or rent out your place and buy. Difficult to answer without all the info but to me even if you had a 400 k mortgage you would still own half of it and as its in London it will most likely keep going up. That's assuming you can afford a 400k mortgage of course and if you can then what else would you be doing with that money? Paying off a mortgage is as good an investment as any if you ask me. Paying rent however is dead money.

noddyholder · 28/12/2013 16:56

I never understand the dead money argument It isn't as if you aren't getting something for the money. You are paying for a home. I still think 2015/16 will be a good time to buy as IRS will rise and the govt schemes will bite the dust. The mini bubble followed by reverse is very likely to be the way it f=goes now

Original poster
neighbourhoodwitch · 28/12/2013 16:57

Whatasook - thanks.

Canthaveitall - your words resonate with me; this morning I said to DH renting was 'dead money.' He disagreed so strongly :-(

OP posts:
Original poster
neighbourhoodwitch · 28/12/2013 17:12

Noddy - sorry, I missed your message; I will think about your words around 'dead money.' I think for me it is just psychological - that it's not really 'mine' (rightly or wrongly)...

OP posts:
glorious · 28/12/2013 17:25

I don't know if this would be too much of a wrench but you can get a nice, large 3 bed house in our part of SE London for £450. We have one Smile 21ft kitchen, big bathroom, small garden. 20mins into Charing Cross and lots of green space nearby. It's not the most exciting place but it is safe.

WorrySighWorrySigh · 28/12/2013 17:29

How old are your children? How much longer will you need access to schools? This can have a major bearing on your decision.

In many ways mortgage interest can also be viewed as dead money - it is after all only the price of renting the money.

When looking at buying and selling dont forget to include the actual costs of buying and selling in your thoughts.

Clargo55 · 28/12/2013 17:44

If your stuck for other options I would make enquiries on the flat above wether they currently had it advertised or not. Nothing too lose they could be interested.

Original poster
neighbourhoodwitch · 28/12/2013 18:20

Glorious - I would love to but I honestly think it would be too much of a wrench :-( It's not like where we live is so amazing, it is just that we are settled here? (so hard!!)

Worry - one is 7 (Y2 of primary) and the other is 11 (Y7 of secondary) so a few years to go (if we stay put). Re: dead money - that is what DH says (i.e. that the property isn't yours until the end of the mortgage term). Yes re costs - I would need to factor that in (just need a windfall... :-().

Clargo - thanks - I'll certainly ask.

Thanks all - really appreciate your suggestions.

I think we'll see an independent financial advisor as soon as we can.

OP posts:
TreeFuMom · 28/12/2013 18:33

Don't forget that if you rent the flat out, you will have to pay tax on the rental income. This would reduce the amount of rental income that you could put towards the rent on a bigger place.

Original poster
neighbourhoodwitch · 28/12/2013 18:54

Tree - thanks loads. I will bear that in mind.. I am now thinking I will draft some kind of plan of options etc - and certainly including your important point - thanks.

OP posts:
glorious · 28/12/2013 19:12

I totally understand OP. I'm just always shocked at how much more expensive anything north of the river is!

WorrySighWorrySigh · 28/12/2013 19:16

You would be able to deduct for tax purposes a number of costs if you let out your flat.

If your older DC were to be going to be university then your need for more space is really only for another 7 years.

In an ideal world would you live in the flat once your DCs have left home?

Original poster
neighbourhoodwitch · 28/12/2013 19:57

Glorious - thanks. Wish I did have the balls to move to SE London but I am so concerned re: the prospect of taking them out of their schools.

Worry - thanks for your message. Your question has got me thinking - whist I do love the flat, I think once they've left home, we'd probably live on the South Coast by the sea. Again, that may change! Also, I would love a garage/ off street parking, which we do not have the luxury of. I love the flat but probably can't imagine being here forever?

Also, and I do not mean to sound grabby/expectant, but we will receive two large inheritances of around £900K in total in time. That sounds awful and I do not want anyone gone, but it is true. Again, I am not relying on them coming through and one can never say when, and anything could happen.

OP posts:
glorious · 29/12/2013 17:51

I can imagine (my DD is only 11mo so not really an issue yet but even then I would be reluctant to move if she settles well with the childminder).

I hope you find something that works and that you do get to move to the seaside in the end, that sounds lovely Smile

littleredsquirrel · 29/12/2013 17:58

have you looked at how much your mortgage repayment would be?

For guidance our mortgage is currently 350,000ish and on interest only at 2.49 percent the interest element is £800ish. To make it up to the equivalent of a repayment mortgage we overpay to make a total payment of £3k.

So unless you can get a mortgage at a lower rate than that it doesn't sound affordable (although we only have ten years to go so that will affect the figures).

You need to plug your figures into the calculators on moneysavirngexpert