Do I take a step down the ladder?

[VirginiaMilf]

This is more of a what would you do if in my shoes.

Late 30s, eternally single, no children, OK job with reasonable stability. I own a small family sized home worth £1.2m in a nice part of London. I have around £800k equity. I am struggling financially as my income is out of kilter with the property expenses.

Do I (1) sale the house, downsize to something half the price and get my finances in order. But this means I will likely never be able to upsize again and live in a desirable home and won't benefit from the increases in value. Or (2) keep struggling for the next 2 years until I get my share payout, then downsize at a later date when it should hopefully be worth more allowing me to be mortgage free?

Tbf, PP point is valid in that, if you don’t have children, the housing ladder can be less relevant.
personally I’d get a week day only lodger (great idea!) and stick it out for two years.
but it honestly sounds like you don’t want to do that.
so downsize. A doer upper will mean you can add value. And when you downsize again for retirement, perhaps you can change area?
eg here in lovely Devon you can have a 3 bed townhouse in a very desirable area for £500k.

Not with a Monday to Friday lodger.

I've worked with a few, I've been one myself and have friends/acquaintances who have done it in the past. Most of the time as you want to make the most of being in the office so you only go to the lodgings to sleep. If you can go home on a Thursday you go home rather than go back to your lodgings.

You just need to ensure there are parking spaces on your road or nearby that don't need permits. I've actually been allowed to park on church grounds a few times.

Oh and another type of lodger you can have is someone in the TV/film industry who needs a base but works all over the country. They then won't be around a lot for periods of time. I know someone who has a lodger like that - they got them through world of mouth.

You need £1500 just to stand still each month? It's a no brainer. Sell your 3 bed house and use the equity to buy a smaller home. You'll feel so much more free.

Agree with @Nanana1 . If you were mortgage free and had an £800k house that’s still going to get you a nice property even in London and in a lot of the rest of the country would get you something superb. You are in a great position to still be able to house yourself really well and sort the debt, I would definitely go for it.

I would start looking for the smaller property, and try to move when you find it. A single person doesn't ‘need’ two spare bedrooms, the extra one is just a drain on your resources.

I don’t think interest rates will be going down significantly any time soon, and people like you ( good earner, decent capital albeit tied up in property, no dependents) are £££ signs in Rachel’s eyes.

The cost of renovation has gone up a lot and it is more difficult getting tradesmen. So it is only worth buying one if you can do a lot of the work yourself.

It all depends on how much needs doing. In the long term it would be far more sensible to research 2 bedroom houses now and perhaps be able to afford to buy one that needs little or no updating. The fact that the OP currently requires such a large sum each month just to stand still makes this a case for downsizing.

I am not in agreement that you should let go of a 1.2m asset. Whilst I think it’s very questionable how much that might rise in value over 5-10 years, I am in little doubt that it will be worth a small fortune in 30.

Should you meet a partner, it will put you in a powerful position for equity put into a joint home (protect your share!).

Should you meet a partner with a kid, there’s a place for the kid to stay.

Plus friends can stay over, which is comforting when you are eternally single. I thought I was as well til I met my life partner at age 42, btw.

Couple of thoughts:

Could getting a second job AND a lodger work? If your job is too senior and demanding might you be able to do the odd four hours a week using your skills with say tutoring people in your area, or whatever it is you do?

Have you spoken to a broker about both going interest only for two years and lengthening the term? Banks are usually alright with interest only for high earners as long as there is a ‘repayment vehicle’ and your shares could be part of that. Because my OH has a good pension they will lend to him up to the age of 74.

Might you get rent that covers most of the mortgage if you switch to BTL, get a tenant and move into a tiny home for two years?

Thanks, these are all good ideas that have left me even more confused!

Oopsie/you are welcome. Ask away if needs be.

@KievLoverTwo

2nd job wouldn't work due to the intensity of my role and I've exhausted options with the bank. I guess what I'm really thinking about is whether the hassle and stress of having an extra 2 bedrooms is worth it? There is a big gap in value between a 2 and 3 bed at the moment, around 300k.

Have you exhausted all options with OTHER banks? It might be worth paying an early exit fee if another bank can actually give you what you need.

I don’t know anyone that did this and declared the tax
(prepares to be slated 😅)

i’d get a couple of mon- Fri professionals in

amazing amount of equity well done you!

you could also switch to interest only on 30 years if you haven’t already looked at that

I would be extremely clear about the renovation costs before assuming you will make much out of the downsize. Has a renovation been costed? I downsizing for less financial stress the absolute last thing I would be looking to do is renovate and I have done more than my fair share of that.

What’s your income, and what are your expenses? Why is it now too expensive?

Id try to avoid moving if I were you.

Id also say… if your costs are too high now they also will be when you move, and you will just chip away at any capital you gain by overspending each month.

40

some banks will now lend for a 40 year term if you are young enough +’have a good pension

@MidnightPatrol Has a point.

OP if you go on the MoneySavingExpert website they have a budget planning tool (You can simply Google MoneySavingExpert budget planner) Then you can join the forum and go to a relevant part to work out how to balance your budget.

This is massively outing and I was avoiding disclosing this, but I don't think I can get accurate views here unless I do.

I was extremely ill following an accident during the pandemic years. NHS wait tike was over a year. I decided to go private and complications during the various surgeries meant I ended up spending close to £200k on medical fees, including a very extensive hospital stay totalling months. As a consequence, I have a £100k debt I am chipping away at.

My income is £8k per month post tax. I am due a £50k payout in shares in late 2026. I have no savings due to all the above.

This is easy. Sell. Buy something for cash or small mortgage. It will be a relief. Maintaining a big house is a financial strain. Life is for living, not fretting about things that are in your remit to change.

In that case, OP, I would speak to an independent financial advisor who can help you decide the best course of action in light of your debts, your asset(s), your income, and your pension projections. Mumsnet is not the place to get sound financial advice, frankly.

OP are you back to your old self or do you still have long term health issues? Even if you speak to a financial advisor they would need to know this and it would helpful if you had a budget planner as well.

OP I’m so sorry you went through that, it sounds awful.
i think you need to look after yourself and do whatever will help you feel less stressed.

oh wow
did not know that…!
guess we are moving towards a Japanese type model…

separately OMG @VirginiaMilf sounds horrific 💐 hope you are feeling better now

Yeah, it's pretty unpleasant. I don't think there are a lot who will lend 40 years, but there are definitely some. They started hitting the headlines in my snoozefest property emails last summer.

I am back to my old self. The surgeries were linked to the accident, and I'm all put back together again. But going through something that terrible leaves you in a constant state of anxiety.