Help! Any creative ideas to obtain a family-sized house just out of budget

[spicydonut]

Hello! I was hoping there may be some creative ideas that I've not thought of that some of you may know about or done yourself to be able to obtain a property to raise a family that is slightly out of reach.

Our situation: we have been looking for ~5 years to relocate to a better area to raise our family in a nicer neighbourhood with better schools. We finally found that area 1 year ago and have been looking since then to find a workable house within the catchment of the good high school, which is one of the main drivers for choosing this location (although there are more). However, the house prices are premium level within the catchment. The house we require would be a 3-bed with office or 4-bed with one room being used as an office as I work from home.

We have seen a house that is 4-bed that is slightly over budget and just slightly out of the nearly guaranteed catchment for the school, but there is still a small chance they could get in.

The house is perfect for us and by the far the nicest we have seen in so long that could work for our family size wise and it is at a good price I think (although still slightly more than we want to pay - there is no negotiation on the price).

I freelance so my income is not guaranteed. However, I earn more than my partner so I figured it would make sense for me to work a bit more and he work part time so help with the school runs, which I currently do, so I won't be working every evening which has been hard. However, as we will be relocating his income is unknown at the moment. I know this sounds risky but I could alway go back to permanent if times got desperate but I would like to avoid this if at ALL possible.

We are hoping to create a better work-life balance without putting us under financial duress. I do not know if this would be possible for us. It seems as though we need to choose: either both work lots to give the children the nice family home, area, and good school OR work less but live on top of each other, no garden etc etc.

Puzzle: is there any way at all we can make this work?

I was thinking one way could be this, but I wanted to sense check if this would be a possibility and feasible/not against mortgage rules etc:

1. Could we secure the house with a 2 year mortgage, stay it in a year, probably eat into my pension savings a bit to pay some of the mortgage. Then could we rent it out for a year (changing the mortgage to a BTL? - how easy is that?) in which time we would rent a place for a year closer to the high school to ensure admission. Then after that year move back into the property and hopefully the mortgage rates would have come down and we would be more settled in terms of knowing what income we have and at that point know if we can afford it. If not I guess we would have to sell?
2. The other option is staying in the house for 2 years on a 2-year mortgage deal, use my pension savings to sub us, which would probably use most of it tbh :( if my partner won't earn enough, but when we resell we could maybe make it back as it seems a good price and needs a little work which we could do so maybe that could make a profit to pay back the pension pot?

Does anybody have any ideas or is there just no way around this?

Thank you so much for reading xx

LEA will use the house you own, not your rental address. You're not the first person to think of that idea.....

Brutal answer, sorry.
If you can only scrape together enough money to pay the mortgage on this house by eating into pension savings, it sounds to me like you'd fail any affordability test when applying for the mortgage - especially with the extra hoops you need to jump through to get a mortgage on a freelance salary.

I would second the point about affordability tests, the banks are applying them really strictly at the moment. The banks we had mortgage in principles for wouldn’t lend us in the application process when more questions were asked. We got there in the end but it’s a tough market! I imagine they’d be even tougher with BTL!

4 beds are always a lot more expensive. Do you need 4 beds, or can you use a large lounge/dining room as an office? Or a garden shed? That may really open up a more affordable market to you?

have you done your 23-24 accounts yet?
I would just tell your accountant that you’re looking to purchase a house that costs £X and see what they say

I wouldn’t take that kind of financial stretch for anything other than an absolute banker in terms of school catchment. You could be in the worst of both worlds- overstretched on mortgage and not in the right school.

If I were you I would suck up a smaller house until you’re in the school you want.

Thanks guys. We pass the affordability checks I have a limited company - I just don’t want to borrow the max they’d lend us because to me it seems like a lot on the monthly payments.

We can afford it IF we really wanted too, but it’s at a sacrifice of a work life balance - hence looking at using pension pot temporarily. I’m looking at ways to do both - so the question really was looking at any creative ideas to achieve this, e.g, interest free mortgage for a few years then downsize etc, but we’re not eligible for that

@notanotherrokabag - any other ideas?

@Seaside3 yes we’ve been looking at 3 beds like you said - the office would just need to be closed off

In this current climate 2 yrs is highly unlikely to result in a big increase in value. I wouldn’t bet on interest rates moving much in 2 yrs either.

@shockeditellyou you are spot on with what my logical brain keeps telling me 😂😂

And that is definitely the sensible thing to do!

I just wanted to check there wasn’t a way around it that I’m not aware of that could make it work before resorting to that option!

For example, I only found out recently about the Own New mortgage for new builds which allows you to get a 0.99% 2-year mortgage (dependent on LTV).

It would be good to know if there’s anything else there or other strategies I’ve not considered 💚

@Pollipops1 yes the reason for this specific house is because it’s being sold at a cheaper price anyway for a quick sale and it has potential to do up!

Agree can’t predict interest rates though

@shockeditellyou the house is just so nice (well it need work) but I can see the kids being happy with a nice garden and street to play - my heart is definitely there

but renovations are ££££

An interest only mortgage?

@Pollipops1 yes interest only - I keep calling interest free

Its more modernising so I don’t think it would need over £10k

If everything still functions in the house then swallow your pride for a few years and dont blow a ton of money on reno.

You need an emergency fund to cover costs of things breaking down eg new boiler, so factor that in.

Depends also how old you are. Messing with your pension is less damaging if you're younger and have more years to build it up again. Can you get a mortgage over a longer term eg 30 years?

Are you spending on luxury stuff like lease cars, gym, sky tv, expensive phone contracts etc? If you cut those right back your monthly living costs will reduce.

Thanks @HellonHeels !

Good tips! Yeah wouldn’t do masses but probably painting floors and bathroom at the beginning as that sort of needs doing but kitchen and garden etc could wait.

So we’d still have an emergency fund on top - I always have that.

We already live simple, no expensive anything. No loans or debt on credit cards but I appreciate your ideas ❤️

We are early 40s now so can’t extend our mortgage deal.

This is exactly the sort of ideas I was hoping to discuss though so thank you 🥰

We’re in a good position being chain free at the moment and the house just seems like a really good ‘deal’ it seems a shame to miss out on it, but there’s a few ifs and butts! We could be lucky and kids get in the school from there as they would have done looking at a couple of past years (not every year), and we could do it financially but it would mean less of a life balance and equally don’t want to miss being there for the kids when they’re young. Once they are a bit older we prob wouldn’t mind working so much so looking for a temporary idea of how to make it affordable for the next 7 years or so :/

A big reason this house is cheaper than other 4 beds in the area is that it isn’t properly in catchment. You are taking a gamble that may not pay off.

I would buy a 3 bed that is properly in catchment for the school you want. Buy one with a big enough garden to accommodate a home office being built there. In the meantime, put a desk in your bedroom or dining room, whichever is bigger.

If you‘re using at least 1 room for business purposes, is there any way of putting some of the costs through the business? Would your accountant be able to advise on that? I‘m not in the UK, but here we can claim property costs proportionally under certain conditions as well as associated costs (utilities/ costs of moving business furniture, etc)

I would not make financial sacrifices/risks for a just out of catchment house. Secondary school catchments are shrinking at the moment due to high birth rates around 10 years ago (peak was in 2012 but high rates in the few years either side too).

Find something properly in catchment.

You can in terms of expenses, but there’s nothing that would help with the mortgage; and the claimable rate is not very high. It’s unlikely to help OP much, to be honest.

OP switching to a BTL is a pain in the arse, and your interest rates would go up. The school would also use your owned house address for admissions, so you wouldn’t get into the school unless you’d have got in anyway.

Would you still want the house if it didn’t come with a school place?

I am really surprised you pass affordability tests if you don't have any luxury outgoings, do you save a lot currently?

I definitely wouldn't touch your pension savings at your age.

@YouveGotAFastCar well yes that’s why we considered it. As we’ve been looking for over a year this is the house we could see us being happy in. We knew we would have to sacrifice something moving to this area. The school is a gamble, but there is another faith school which is still highly regarded so we started to think well would a nicer house with areas for them to play etc but still a good school option be the right choice for us

I envisage the BTL being a hassle. But I was wondering what if we changed it to BTL and then bought a cheap house instead of renting? Then after got in school catchment could we swap the small one to a BTL and move back to the bigger one? Do mortgage lenders allow this? Xx

I agree with posters saying buy a house safely in the catchment area of the school you want.

If you feel a house is too small I recommend rethinking what you need to put in it - have a clear out of stuff, including pieces of furniture.