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Having a kid and need to move but feeling stuck please help

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  • Having a kid and need to move but feeling stuck please help

    hi, I am a 33 year old owner of a London flat - purchased in 2006 for 239k on a credit crunch inducing northern rock 120% interest only mortgage.

    I was approved on payslips and I had no deposit at the time, I made several errors at the time - first I asked my parents for advice as they have made successful moves hopping up each time to more expensive place, the message from them was simply not to buy any property, I went against this advice because I didnt want to feel like I was wasting money renting, in hindsight I shouldve checked the market more and researched better but I bought from a friend that I trusted and paid the full asking price of 239k for a flat probably worth around 220k, the second error was the buying method - somehow I owed 250k on a place bought for 239k because of all the hangers on to the purchase.

    The mortgage is £1000 a month which didnt leave much left over to pay off the mortgage in chunks as planned, the balance remains now what it was then although I did get some inheritance and paid off 10k in unsecured loan debt from the purchase.

    The plan was to remortage the place but a wedding and then successive IVF treatments took all the money I had hoped to use to get us on to a repayment mortgage, I started my own business because of the need to earn substantial amounts to get out of this static situation and on to a path where the debt would go down and living costs would go down.

    I have now saved up about 50k and I am looking to move, I work from Home and I can live anywhere in the UK but as we are planing a family we need a house and not a flat.

    I have had several estate agents round to value my London flat for sale or rental, they have quoted 240-245k sale price and 1100 pcm - so it seems if I sell the flat after 8 years of ownership I will gain absolutely nothing and may even have to pay in because the sale price wont clear the outstanding mortage and costs.

    So it looks like the london flat is still a burden rather than an asset at this stage, but we really need to move as it is a very small flat and there is no way we will be able to have a kid with us in this place.

    So I am looking for advice please, what do I do to get us out into a house in a way that will give us the best possible financial future?

    Thanks in advance for any help and comments


  • #2
    Re: Having a kid and need to move but feeling stuck please help

    Hi Rob,

    Your flat will hit a ceiling for how much it will be worth so if you are getting £245k serll price now, it isn't going to move much more. I see it that you have 2 options:

    Option 1 - Change your current property to a buy to let and rent it - then start looking to buy a family home - Doe s£1,100 cover the mortgage and repayments?

    Option 2 - Sell the flat and buy a family home.

    Where you buy is up to you, but try not to buy in London at the moment. Your £1 won't go far, especially if you need the space.

    Look to move to non-commuter towns outside of London in Surrey, Hants or Berkshire. Nice land, property fluctuations aren't as mental as in London plus your £1 goes a lot further and you are not going to bid on a property with 10 other peoople like it is in London at the moment.

    GOod luck with the new arrival - If the baby is coming soon, you best hurry up and get buying as no mother wants to create a nest then have to move it; and youre neck will be on the line, trust me.

    Good luck

    Hope that helped


    • #3
      Re: Having a kid and need to move but feeling stuck please help

      Hi Rob,

      My advice is similar to the last posters.

      If you can secure a buy to let mortgage for the flat and look at very long term you will eventually make a profit from the property. As long as the property goes up which it will being in London in 5 years you can turn the buy to let into a repayment mortgage so in 15/20 years time it will be paid off and that can be your pension in the future. Dont look at the situation as all bad.

      The second option of selling isnt something i would advise as you have the property and as long as rent covers the mortgage keep hold of it is my opinion

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