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

Please do not use your pension, that’s the worst idea I have ever heard.

@mrsplum2015 we have never had a problem with affordability tests - this really isn’t the issue! We don’t want to borrow close to the max they’ll lend us because we want a good work-life balance. The question is looking for creative solutions please not an assessment of our affordability

@mrsplum2015 we have never had a problem with affordability tests - this really isn’t the issue! We don’t want to borrow close to the max they’ll lend us because we want a good work-life balance. The question is looking for creative solutions please not an assessment of our affordability

@Sunnyandsilly i have another pension - as this would be an investment into property which could be recouped when downsize in the future it’s not that silly

@Twiglets1 yes I agree with the logic. There’s not a massive difference in price between the 3 bed within catchment and the 4-bed on the border. It’s 50k difference working out at an extra £250 a month in the mortgage

Thank you for your suggestion ❤️

Where would you get the deposit from for this second house? From your pension? If you buy a second house, you will have to pay higher rate stamp duty, likely change to a buy-to-let mortgage on a higher rate and need to be getting sufficient rent to satisfy the lender's criteria e.g. they may ask for 125% of the mortgage balance as rent. You would likely need to prove this before being approved for another mortgage, which would be difficult in terns of timings, as you would need tenants in your house before you bought a new house. You would also pay tax on the rent.

i don't know the sums, but this doesn't seem like the best plan for saving money on mortgage payments. Also it could still be stressful for school admissions as it all sounds like an attempt to get a specific school place, so the LA might investigate closely and could insist on using your first house as primary address.

@spicydonut You sound a little muddled. You wants are :

1. a house in catchment
2. more time with the family for both of you.
3. enough money not to struggle

You’d like (but don’t really need):

1. 4 beds.

Whatever you do, prioritise the actual, defined catchment area. LEA’s want to see where we are based utility bills for more than a year before application at the address on the application so they can check consumption is commensurate with a family of 4 etc- so that is a year starting from the sept of year 5 as applications are sent in October of year 6. Catchment areas are a sensitive topic so do not rule out someone (rightly) aggrieved (and who will report you) because you have taken a place from a child who actually lives in catchment. Consider how you’d feel if you do stretch yourself only to find someone has taken the place you hope to get by doing what you suggest…

Back to the house….don’t stretch yourself or use pension money - that is setting yourself up to fail. In your position I’d Look for 3 beds and either add a garden office or use a carpenter to build you a hidden office in one of the reception rooms. Kids want time with parents, experiences (going on holidays/school trips/theme parks etc) and attention- teenagers need parents far more than when they are toddlers and you can realise this sometimes when it is too late.

BTL means you’ll pay tax at your prevailing rates on 100% of the rental income - no offsetting Mortgage costs or interests. And being a LL is a PITA. I wouldn’t recommend it unless you are certain. You need to consider the fact that occupancy won’t be 100% and you still need to pay the mortgage on it, plus council tax and insurance on an unoccupied property (not cheap either).

I’d sit down with your other half at the weekend and set out your shared goals and then move towards that. Paying the mortgage on a shabby house whilst your kid goes to a second or third choice school would be the worst of all worlds. Good luck with the search!

It's up to you - how important is work/life balance vs having this house?

@BendingSpoons thank you so much - these are really good points to consider! Yes the deposit would be from my pension pot - i call it that but I should clarify that this is more a savings pot that I wanted to invest in something like property for a pension later on.

I would need to do the sums but was initially thinking that the rent would cover 125%. However, the timing is something that could be a problem. So you don’t think it would be possible to buy the second house before converting the other one to BTL? I thought this was quite a common situation as I know some people do this when they move from their first to second home and keep the first one as an investment?

How would the LEA know about the first house if that was seen as investment - wouldn’t we put the one we were currently living in (the second one) on the form?

Thanks so much for helping work through this idea xxx

The LEA would consider you having just moved to be in catchment I’m afraid. If you have a question about catchment areas I’d recommend posting a separate thread on the secondary education board - but fair warning, posters hoping to get a place at a school by temporarily renting a property usually get their arses handed to them on a plate ;-)

And wrt the BTL, don’t forget the additional SDLT on the second property. If that property is also a leasehold consider the added expense that goes with that.

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

Sadly, this is completely untrue. I know many people who rented houses in catchment whilst applying for schools & then moved home again. Not one of them lost their place. It pissed me off, the amount of lying, it's rampant.

Added stamp duty on second property (can be clawed back if you sell within 3 years, but that means you’re forced to sell even if market is bad). And CGT on any gain on second property.

Lots of regulations on landlords meaning it is more and more expensive to be a landlord. And increasing tenant rights so less flexibility.

BTLs are being sold all over the place because the figures don’t add up - and that’s people who bought cheaper and bought specifically for investment.

I really really wouldn’t base any plans on a BTL.

It varies. Some councils are more on it than others. And of course it depends on whether someone shops the renting family as having an owned home elsewhere.

@Netaporter aw thank you for your thoughtful response!

Haha, sorry if it sounded a little muddled — it was about trying to get all those wants you mentioned, which realistically doesn’t seem possible at the moment (hence this post for suggestions)

I totally understand about the moral aspect as well - and I have considered this. Tbh I just don’t know what to do! We have been looking for so long now and are uprooting our family to move away to achieve this for our children. This isn’t the way we wanted to do it at all but after a year we’ve realised that we don’t think we’re going to be able to do it, so it’s a last ditch attempt to see if there is another way before we sacrifice something

I’ve checked with the LEA and they said it doesn’t matter how long we’ve been in the property before the application - we just can’t use a future address. I think they all have different criteria

Yes the BTL could be risky - what does LL and PITA stand for?

We do need a good chat but keep going round in circles with our priorities 🙈 xx

@notanotherrokabag that is the big question for us :) - it seems it has to be one or the other at the point ☹️

Buy a smaller house that has a side garage to convert into an office and build a bedroom above. Or a big enough garden to build a garden office. Or a loft conversion.

God Bless you (and you’ll need his divine intervention if you want to stay sane being a Landlord)

LL - Landlord
PITA - Pain in the arse

😂

Agree with @Twiglets1

I have known quite a few people who have moved near a catchment but not in it and are then gutted when they don't get the school of their choice.

If schools are one of the main drivers of the move, just think how you would feel if you moved to this house and got your 3rd choice school

You're mad to take on that financial stretch for a house which isn't even in school catchment! You sound like you're in love with the idea of the house but you need to use your head not your heart.

Look for a smaller house, in definite catchment of the desired school. A house with two smaller receptions rather than one big one, or a knocked-through-lounge which could easily be re-partitioned, would work and probably be cheaper than a fourth bedroom. You can always plan ahead for a loft conversion or a garden office when finances permit.

What are the figures involved?

You say you can afford it, can borrow more but don't want to. It would be a good idea to set it some numbers - incomes, mortgage monthly cost etc.

Any buying and selling of property frequently is going to be very costly. Stamp Duty, solicitors fees and estate agent fees really add up. You could easily be spending £30k just to move.

Don't spent your pension. Compound interest is key, especially as you don't have a huge amount of time left to save for retirement.

If you were going to spend your pension fund you'd need to be very calculated about this. Investing it in property with a view to downsizing as you retire and releasing the equity. But bear in^ mind the moving costs...^

And as others have said BTL isn't always very profitable, especially if you are just talking about one property.

In your situation I'd do as others suggest and get a 3 bed house in catchment with a long garden for a home office.

Alternatively, buy a 3 bed with any sized garden and look at co working spaces or hiring an office space.

I didn't change my mortgage to btl I just got permission to let.
How easy are rentals in the school catchment area ?

I think you should buy a 3 bed in catchment and extend /add garden office - you will get the benefit of getting the right school with the least financial burden.

i live in a 3 bed semi and extended out on the first floor to create extra room downstairs which is our home office -it’s lovely and light and airy and used by me and DH.

Buying houses then changing mortgages and buying another house so quickly will be costly and stressful and wasted money, I mean this kindly OP- I think it’s a really bad idea.

Are you sure you can’t take out a longer term mortgage? I believe that Yorkshire Building Society for instance will go to 80. I know that many people on here hate the idea of owing more but you could re-mortgage later to a shorter term or overpay if it turns out your business makes more without you having to work really long days.