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?

Thank you@MargotEmin I have never been called a treasure before (or any of the other fab stuff you wrote). I will insist your words are on my headstone instead

@MrsBobDylan I think you are being too hard on yourself. A lot of people have houses they struggle to afford; it's just that most don't contemplate leaving and so they would rather muddle through than downsize. If you look at the threads on Mumsnet about gas price increases, you would see lots of posts about people who can't afford an extra £100 in heating simply because the budget is so tight (and from the sounds of it they live in quite large houses). The general advice is to put on another jumper rather than live in a smaller house which would be cheaper to heat and also probably cheaper to pay for so you would have higher disposable income to accommodate inflation.

My MIL has no pension other than state pension but she does own a 700k london house which she is unwilling to sell (mainly cos she doesn't want to leave the area due to religious considerations and the only other place she could contemplate moving to is Israel which is more expensive property wise than London). I want her to stay for selfish reasons cos I already bought my flat based on where she is living and I would like her help with childcare but I often think how much better off she would be if she actually sold up at least in terms of finances.

I have done this. We split it into two. One in a city and one small cottage in country. Sold the big family home to do it. Would I do it again? Yes in a heartbeat. Even though I really loved the family home.

Owning a flat was the most financially stressful time of my adult life. The developer sold the freehold to a property company who saw it as a job creation scheme for their employees. Ownership of the other flats changed too often to make running an effective management committee possible.

Although the management company was required to provide quotes they never did. Our works requests were largely ignored unless convenient/lucrative for the property company.

We would come home from work to find unexpected building work going on. On one occasion their team spent well over a week constructing a very elaborate bin store. There was no need or request for it. This then made parking very difficult due to the increased area that the bin storage took up. The property company then came and white lined the parking area. The only way to make the correct number of spaces was to lay it out so that the last one in blocked everyone else in. Eventually they knocked down the bin store.

Each of those actions was billed to us over and above the monthly bill. The company never gave any notice of works or any indication of what they were planning to do so you couldn't plan financially. They were dreadful at producing accounts and ignored written communication unless it came from solicitors.

It was an awful time and I could never contemplate ever risking purchasing a flat again.

We live in a flat and have done for 20 years, brought up two children here. Close to the park and shops / schools.

We (well DH) took over running the management committee (mainly to save money) so we have more of a say in decisions for the building.

It seems to go OK...there is a cleaner who does the hall / shared stairway who we pay monthly then the other owners pay this back on a yearly basis

Things like a fire alarm system for the whole building were quite expensive but as this is shared the contribution was OK.

We are also newly mortgage free, so this helps with being able to afford things. Just in case this helps the OP.

We also have yearly meetings for the owners where they discuss any works needed / concerns. Seems to go smoothly enough.

I secnod @MargotEmin. You are doing brilliantly for your family.

I also downsized from a property I loved (due to divorce) and have settled into the less expensive home (flat) knowing that I can afford the bills, just about.

OP, you are doing brilliantly. I would go for the flat - I love flats and if I lived in London (or another big city) I would live in one. My friend moved to London with her DH and DC for his work - they live in a flat. She loves it - less stress than a house and garden.

My earlier post was to try to get you to be sure the move ends up with you in a strong financial position - life will be easier- though not very easy with all your DC to take care of - if you eliminate the financial pressure.

Hope you like the flat. From your first post I thought 'no' but the more you write, the more sense it makes.
One advantage of a flat is that rooms can be more easily swapped. So if there's a big living room, you could consider partitioning with clever use of shelving to give your younger DCs some separation. Or give them the biggest room and you have the smallest even if it only fits a double bed and you have to have a wardrobe elsewhere.
I do think you all need some individual space and the living room would drive you mad.
I would check the sound insulation as you don't want your middle DC unsettled by neighbours but there are things you can do about this.
With extra cash for clever furniture and storage I'm sure you could make it work.
What sort of price difference are you talking between flat and house? May be worth calculating the amount you will save in interest as that can be offset against initial moving costs.
What do you see for the longer term future when kids finished school and work maybe isn't tied to London? I.e is this your forever home or somewhere to get you through this period of your lives? You are in an expensive area so even a cheaper flat probably still means you have future options

Thanks for all the lovely posts and helpful suggestions, thought you might like an update .

Lost out in the flat which was gutting but understandable because our house isn't on the market yet and the other people were chain free.

Nothing as cheap or as good out there atm so just keeping our eyes peeled.

In the meantime we are meeting with a mortgage advisor on Tuesday to explore the option of borrowing to create a self-contained studio flat on the ground floor of our house.

It would have its own access via the back yard (and private use of it) and we would convert the internal garage and utility room and rent it out for £800pm which would pay our mortgage.

We would keep our little front garden (which we use a lot and is sunny) and would have our own front door and alll the rest of the house.

The other houses around us are mostly split into studio flats and rented through the Council, so it is a good option for the area.

I think ultimately we would split the house into two maisonettes and split the leasehold and sell one or both. Or try and hang onto it for my middle son to move into when he is 18, with support from us and carers.

Two years ago my credit rating took a hit but I'm hoping my husbands excellent credit rating, plus the equity we have in this house, will persuade the bank to extend our mortgage.

If anyone is interested, I'll update again.

It would be a great way of staying where we are, becoming financially stable and possibly giving my most disabled child a chance at safe supported living with a degree of independence at some point in the future.

Sounds like a really sensible, creative solution. Best of luck, do keep us posted!!

Hi OP. It sounds like life has put a lot on your plate and you are having to adapt away from the life you thought you might have. I just wanted to check that you and your boys are definitely getting all the benefits you're entitled to? If you are and money still seems very tight then I think this is a great idea. You've obviously thought things through and as long as you make 100% sure you know about the real costs of living in flat, then I'd go for it. It is perfectly possible for children to have a wonderful upbringing in a flat. It sounds like you've got some great outdoor spaces near you and a garden is not the only way to enjoy the outdoors.

We do get nearly everything re: disability benefits. I would like to apply for the higher rate mobility for my middle child. We do run a car but because it's old, the bills can be big.

I have to drive my middle son to his special secondary school and back everyday. He won't travel by taxi after a bad incident last year, and he gets scared being outside because of the cars and especially motorbike noise.

He tried walking home last week with dh but he wet himself. On the upside, he thought it was very funny!!

We have a blue badge that helps keep him safe when we drive places but a big van type thing that was reliable and where he could have his own row of seats would be a game changer.

I'd be very wary of moving into a flat with lots of dc, your going to be a slave to noise issues, causing them but also being affected by other propels noise.
I'd prefer to keep my self to myself with my family, be self contained. The garden option sounds v promising

Your new plan is quite novel! I don't want to be pessimistic but being a landlord is not for the faint hearted these days! I mean, you would have to account for voids, and the increased mortgage due to the increased borrowing would need to be paid. Also you would have to maintain and redecorate the property every few years- would you have savings for that. You need Epcs and to manage the property and also need to follow all regulations as a landlord.

It is an interesting idea and one that could be a good idea for your son esp if you think he may want a studio in later life, but it's not quite the same as being mortgage free. The studio flat idea would create passive income but also incur taxes in addition to property depreciation through wear and tear- and the passive income would pay your mortgage but only if the flat is occupied! The second idea is more lucrative in the long term as you hang onto the house and also increase value while ensuring mortgage is covered but the downside is that it is more risky. If you embark on the second idea, there needs to be backup savings in case anything goes wrong (as landlord you are responsible for all repairs and rent may not necessarily cover all eventualities) or when there are void periods.

A mortgage free flat would have service charges and maybe a big bill but the bank wouldn't be expecting the mortgage so that is one expense you don't need to worry about.

I think your motto should be “nevertheless she persisted.” Good luck with it all.

I think it sounds a good idea of the flat is a good size and in a better area. Intend to do this but once the kids have grown up. Beware huge leasehold bills in council flats though. Check what major and even minor works are planned in the next 10 years and set aside your own sink fund of day £100 a month so you have a pot of money if necessary ( and if not it is your savings)

@MrsBobDylan* *
I am in total awe of you . Please don't minimise how much work you do daily . Ps Mortgage free is absolutely the best , however follow all the advice you've been given . Good luck