Help me understand how the property ladder works??

[Keke94LND]

Hey all, so I am an idiot and don't understand how the property ladder works at all.. please help me with the following scenario..

Thinking about purchasing a 2 bed garden flat in London that needs work, price is £425k, 15% deposit which is £63,750, so we would be borrowing £361,250. We would put in an initial £30k to do the flat up (replastering walls, re flooring, new kitchen, new bathroom, do up garden) over time we are also thinking we could add a home office at the end of the garden, we would make the house look nicer from the outside to increase its curb appeal etc etc etc.

Other similar 2 bed garden flats, that are already done up, on the same street have sold this year for between £500k and £550k, so we are thinking, if we put in £30k to do it up, we could instantly increase the value by double that?

We would likely stay in the flat for 5 years, the flat is in an area of London that has been growing over the last 10 years and is still growing (for reference its an area close to Balham that could become similar to Balham in years to come). We are thinking that by doing the flat up and with added inflation over 5 years, there is potential that the flat could be worth up to £600k by the time we come to sell (maybe we are being naive and overly optimistic in thinking this??)

This is where my main confusion comes from.. I don't want to live in a 2 bed flat forever, and would want to move into a house outside of London in say 5-7 years, but I am concerned about being 'stuck' and not being able to afford to move when that time comes, as i know stamp duty and fees etc are all very expensive.

So how exactly does it work? Am I right when I say the following:

We save over the 5 to 7 years to afford the fees and stamp duty
We still have out £60k deposit
We could have £175k equity (if we were lucky)
So we would then have £235,000 to put towards the next house, would this be our deposit? so we could possibly buy somewhere for maybe £550k? and our next mortgage would then be £315,000

Am I on the right path or am I way off?

Thank you!

I’m a parent of 3 grown up children. I downsized from a 4 bedroom detached house to a 3 bedroom semi in a cheaper, but just as nice area.
I have shared the equity between the 3 of them so that they will have a decent deposit for a flat (London Borough) or a house outside of Greater London.
My reasoning is that I don’t want them to wait until I die to own their own house, they are all now in their 30’s.
I want to share the good luck that I’ve had in buying a house, but it has taken me 40+ years to go from a 2 bed flat to a semi & then detached house. I’m really happy with my smaller semi. And happy that my children don’t have to wait until I die, I want to see them & their children happy now while I’m alive. Is that so wrong?
For anyone who’s going to say what about care, I’ve been a care worker for many years. I don’t want to go into a care home. I’ll pay for care in my own house or if I get a terminal illness get one of my children to take me to Dignitas in Switzerland. This has been discussed & understood.

I often forget that other people have family wealth or parents and grandparents who benefitted from London house prices.

I mean, in my (Yorkshire) family it's neither, it's just that you could build a 4 bed detached including the land for £90k in 1990 and my parents never moved after that. Neither ever earned above £30k but they did both work. They could easily release some equity now if they fancied (they don't need to on my behalf, we bought in 2008).

Number of children is important though, yes. All 4 of our parents have 1 sibling. I have none, DH has 1.

OP just a note on garden office vs extension - garden offices are super useful and all the rage right now as we know.

However - outbuildings don't count in the square footage in the same way as an extension to the main property. Agents tend to list the square footage of garden office separately if at all. They're a good selling point, but if you want to maximise your investment - £20,000 towards an extension will directly add square footage and thus add ££ to your property value.

So really worth costing out extension vs garden office.