Great property to buy but is going to be tight, any suggestions?

[Martha80]

Good morning lovely people. Me and my husband are in the process of looking for a house to buy. After a few months we found a leasehold property, which to be fair is very spacious, three bedrooms, a kitchen on the small side and no garden. BUT the mortgage is going to be quite low comparing with houses on the market. We were positive to go through as our offer was accepted, BUT at the last minute we found a beautiful house , freehold, with a garden, three bedrooms. Downside is that the mortgage on this one will be much more and we might be a bit tighter, not able to save as much in the future. We are so confused! We love the freehold property but unsure if is a good idea to push ourselves financially. Anyone been in a similar situation? Thank you!🙌

We really like to leasehold property too, as is close to girls' school, while the other one will require transport

How tight? Cost of living is just going to go up over the next few years.

What % on your take home is the mortgage likely to be? Any other expenses orn the horizon? Having owned a leasehold and sold it my advice is to avoid if possible.

Mostly worried about the difference in the mortgages, meaning that the money we would save while on the leasehold property would now be spent on the mortgage itself, so leaving us with very few at the end of each month.

The good news, is that the freehold property does not need any money to spend at the moment, all is in great condition to move in.

What is the remaining length on the lease?

How are your job prospects in the medium term? Eg part time now and plan to go full time eventually? Very secure or in a sector that could be badly hit by a recession?

How do the energy ratings compare?

How long will you be fixing on your mortgage for?

How would you manage with interest rates at 8%? 10%?

How tight is ‘tight’? No savings and not able to save? No holidays? Able to pay for car repairs or new boiler? Beans on toast tight?

Push yourself but get a 5 year fixed. If you are reasonably young the chances are you’ll have pay rises etc. if it all goes tits up the freehold one will be easier to sell.

How long on the lease? How much more per month? What % of net income?

without these it’s v difficult to give advice

Is it a short lease or a house in an area where leases are long and super common?

a lease wouldn’t put me off where I live - they only have peppercorn rents and lease of 999 years.

elsewhere, with 100 years or less and rates that go up unpredictably, I’d be tempted by the freehold.

there’s a lot to be said for being able to save though.

How safe are your jobs? With housing market uncertain I would not be over extending myself!

I have just sold a leasehold property and I would never ever buy another. It still bad 994 years left on the lease but the freeholder was a control freak and made life very difficult. I really would say if there are two choices, don’t choose the leasehold.

I'd budget at least 20% overhead for a new mortgage at the moment and save that money - you may otherwise find it's unaffordable at the end of any fixed term.

However interest rates pan out in the next 3-5 years, you'll either have a decent sum for home improvement or paying off more capital, or you'll be in a position to afford the remortgage at 13.5% apr.

Freehold, every time. I once had a leasehold, and it became a stressful nightmare when it emerged that the freeholder wasn't insuring it, and we had suspected subsidence. We managed to insure it ourselves, claim on the insurance, sidestep the freeholder's desire to do the insured work with his own company, get it fixed and then sell with no problems. But it was nearly 3 years of constant back and forth, difficult admin and worry that we'd be stuck in an unsellable place with a nightmare freeholder.

Push yourself, make cutbacks, find extra sources of income. You'll have a much better asset and you'll be in charge.