Mortgage free down-size to a flat - would you?

[MrsBobDylan]

I'm not looking for advice on how to improve our financial situation - we have tried everything but it is what it is. We are sick of struggling financially.

We have lots of equity in our house and are considering downsizing to a 3 bed flat to become mortgage free.

Flat is in a more upmarket area but is first floor so obvs no garden. The block is four storeys high and ex-Council so good sized rooms.

We have 3 kids aged 7, 11 and 14. They can stay at their current schools so no upheaval there.

None of the kids want to move but I'm conscious they know we struggle for money and the stress that puts them under, although we don't talk in front of them and do our best to shield them.

I grew up with awful parents who had money. I have managed to provide a very loving, happy home for my kids but no money. I just want the best for them.

Wwyd?

I'd move. Doesn't sound like much of an upheaval and it'll allow you a less stressful lifestyle. Just check out leasehold charges, etc

I would try and stay where you are tbh. Unless you are under threat of redundancy and live out in the middle of nowhere.

How much equity do you have if you dont mind saying and what part of the country are you living in. I have a garden that I probably take for granted. My DS is living in a rented flat and he REALLY misses the garden aspect. He will be moving soon and is looking at something with a garden even if its very small.

Have you worked out costs of moving and repairing a new house? Any payments relating to a lease etc.

It might be better to keep looking for a more affordable place with a garden. My dc have really found it useful on occasion to have a space to retreat to.

We bought a flat because it meant we could have a nice low mortgage payment and live in an area we couldn't afford a house in. No regrets. Some of my neighbours in the block have kids; they go to the park a lot.

I’d be tempted to move, in a few years they won’t play in the garden and will want to be out and about with their friends. Do you have three bedrooms now or more?

Would a flat with a garden be an option? I think it would make a big difference to have your own outdoor space directly off your home. Also really consider storage, no loft or shed which you might be used to having.

The house we currently have was a downsize for us 2.5 years ago. That involved moving schools for the kids and the loss of a garden for a small backyard. The garden would be a loss and is the bit makes me feel teary.

We really couldn't find a cheaper house or a cheaper area than the one we are in. We have £200k equity.

My middle son is disabled and has lots of appointments preventing me from working. I used to have a good job with a good wage but I haven't working for the last two years and the world isn't designed for families where only one parents works, even when they earn a good wage like dh does.

My youngest is very active and loves the outside - we spend most weekends at the skate park with him while the other two (ASD) prefer to stay inside. We love to camp and do lots of it throughout the summer to give the kids a feel for the outdoor lifestyle.

18 months ago we hit the skids financially and struggled to make mortgage payments and buy food. We dug ourselves out but it was terrifying. We are struggling again now and I can't bear the slide into the abyss again...

I think the move could be ideal for you, you’d have a nice family home, DC can stay at their current schools and you’d be a lot less stressed over money. If things improve in the future you could always move again.

I think you need to be really detailed and add up the costs of moving and deduct that from what you would gain so you have the bottom line. Then work out what your running costs would be and compare (e. G. leasehold costs?).
Work out exactly how much extra money you would have each month and what this would bring you in real benefits (save for comfy retirement, have a holiday, do hobbies, put the kids thru uni etc).
Note down what you would lose, garden, freedom from neighbour noise etc
Then discuss it all as a family. You need hard cold facts for something like this cos it would be hard to get back if you jumped without looking and it wasn't worth it.

Any chance you could get something similar with a balcony for a little bit more? Definitely check about ground rent, service charges, planned major works programmes etc.

We downsized a couple of years ago and released money that we just didn't have. Life was hard before and now we have a nice life with a very small mortgage.

I live in a flat but we have a communal garden. there isn't much price difference between flats with communal gardens and flats without. SI there a flat in your area with a communal garden that you could maybe keep an eye out for?

The kids in my block do love playing in the garden. Some are younger than your children! I am in a 2 bed flat but am aiming to move to a 3 bed flat rather than a house in future. Simply because I never want to be in a position where I would struggle.

Our view of moving up the property ladder is actually influenced by the experience of many of our parents in the 1970s- there was high inflation and high interest rates- so the mortgage in the first few years was punishing- but wages grew and then the mortgage became a smalller percentage of the overall income and then house prices jumped. So buying a large house made absolute sense and we get older people telling us how sacrificing for that large house was absolutely worth it as they were only skint for a few years. Today we have stagflation (higher fuel prices, higher food prices)- no idea if that would lead to wage inflation. We are also likely to have higher interest rates in the future due to the stagflation so you being mortgage free could be a lifesaver if you are already struggling.

With all my heart I think if it is possible to be mortgage free while still having a good standard of living then I would go for it. It is just so so freeing.

How much are the annual service costs and leasehold fees? For some flats they are just as much as a mortgage

Moving from a house to a flat might mean you would then have maintenance charges and ground rent to pay. Would those charges be affordable, or similar to your current mortgage

That's very true @Cruiser11.

DH and I are happy to sleep in the living room so the kids can still have a bedroom each. We currently live in quite a rough area (although we have found it safe and like it) and my eldest goes to a struggling secondary school where we're have ongoing issues with bullying. This flat is near two secondary's which are good/outstanding and ds could join their sixth form there.

OP, I note that you have already downsized snd yet you are still struggling. Would you end up trying to move again in another few years? Will you be able to manage better financially or is it a panic reaction?

I don’t know what advice to offer but I worry that you have already downsized - so this is your second sale of a home and purchase to save money. Have you really looked at the total cost of moving and also the annual maintenance charge on the flat?

Perhaps try posting in Money Matters? There are some really knowledgeable people on there.

I would definitely consider it.
You need to check yearly fees, they can be high and increase suddenly.
Also any H&S issues like cladding.
Make sure you have enough parking spaces and some green spaces nearby.

We are thinking of moving into the heart of our city next year with our teens, to be nearer their school. They don't use our garden at all now.

How much is your current mortgage? Could you extend I’m the term?

@AgathaX it really depends on the area but in expensive areas, a house is so much more expensive that it would need to be very expensive service charges that tip the balance. for example a 2 bed house in my area is 600k compared to a flat that is 400k. £200k over 25 years at a 2.05% interest rate is an extra £850 per month!

Thanks very much for everyone's comment. I have been desperate to talk it through to try and make a level headed decision. @CleopatrasBeautifulNose I am going to sit down and do that tonight, it is great advice.

The leasehold is managed by a housing association so are reasonable. There is no cladding and a lovely communal garden. It is also next to a nature reserve which is a thousand times nicer than where we are now.

That's a reasonable point about money and this being our second downsize. When we first did it, I was still able to work a little bit but this house needed a lot of costly work and we didn't release enough equity so got into debt and nearly lost everything. This flat is in good nick and we could buy it outright so just the service charge/bills each money. Council tax would be much less too.

If downsizing means you have to sleep
In the living room. That is not a workable long term solution. You need a room too.

@MrsBobDylan as a flat owner, i would really try to find a share of freehold/flat where residents own the freehold. I have heard bad things about housing assocations, so worth it to google the housing association.

I don't think its a bad idea at all but you might need to wait around for the perfect flat.Also can your kids share a room. I shared a room with my sister until university even though we had 2 spare rooms.

@Toddlerteaplease we could make two dc share a room. I don't think dh and I would mind sleeping in the lounge though, we are quite relaxed and laid back about that sort of thing.