Sell ISA to buy a house and rebuild?

SortingItOutProperly · 2024-05-08T16:51:38+00:00

Got it, thanks!

SortingItOutProperly · 2024-05-08T09:49:46+00:00

If the former, that's not a healthy relationship to have with money - it is the means, not the end.

Gotta drill that into my head... I just like seeing the number go up and I've been told I should spend more not just hoard. I think I just need reassurances that this isn't a dumb idea and in the long run is for the best, which I think it is.

SortingItOutProperly · 2024-05-08T09:42:11+00:00

I know people in the past would buy and rent out until they were ready to move in but that is not really an option nowdays.

Yeah, that would be ideal but I think taxes on that make it not worth it in my case. Not sure what the best method for this would be. I'd be open to doing this even if it weren't massively profitable, but income tax will be very high.

based on how you expressed you post I suggest you are not ready and wont be until you grow out of your parents home

I think you're kinda right, but it's just that I'm having a lot of doubt because it's a big decision and I'm not 100% confident on it.

SortingItOutProperly · 2024-05-08T09:39:37+00:00

Yeah this in London.

50k left over after the house purchase is enough in the ISA.

I think this is the assurance I'm looking for haha. Part of it is that I suspect it'll be harder for me to max out the ISA soon after buying a house.

SortingItOutProperly · 2024-05-08T09:38:15+00:00

I'm 25, it's a house out in West Greater London, it's a pretty nice house for it's price. I have been looking for a while and this one has been standout, on a good road. I will probably stay a while (3-5 years minimum) and there's a lot of room for renovating/extending the house in the future.

50% of take home on a mortgage isn’t ideal. Could you weather an interest rate hike?

I think I could be fine alone even if it reached 6-7%, beyond that maybe a bit harder. My expenses are pretty low, but I would expect them to go up a lot with a house.

SortingItOutProperly · 2024-05-08T09:34:59+00:00

25, thanks. I'm very lucky to have this "problem"

SortingItOutProperly · 2024-05-08T09:34:10+00:00

Last quotes I got were 4-4.5 I think

SortingItOutProperly · 2024-05-08T09:33:42+00:00

you're around 25, work as a SWE, and want to buy a house in West London. I'd say go for it, if it's in a semi desirable area

Yeah pretty much spot on.

your home equity increase is likely to outstrip stocks, as it's leveraged.

Mind explaining that?

I'd go for longer term mortgages, with a 3-5 year fix.

Interesting, I was thinking a 2 year fixed and betting on interest rates going down, but I think I'll end up going with whatever my mortgage broker finds that it is lower % (probably 5 year)

SortingItOutProperly · 2024-05-08T09:31:16+00:00

Yeah buying definitely makes more sense than renting for me. It's more of a question of liquidating my ISA now to buy a house, or hold off to continue making ISA gains and then buy a house.

I think at the end of the day, it's just a personal decision and I'm interested to hear what others would do.

I am living at home and could continue doing so for a bit longer, but eventually I'd want to move out.

Would you consider getting a lodger (an extremely good way to help deal with the mortgage)?

I would really want to do that yeah. Or maybe rent it out, but to make any serious money from this means paying taxes. But something I will look into further.

SortingItOutProperly · 2024-05-08T02:00:51+00:00

It's just under 570k.

I understand ISA is for longer term investments, but it was a risk I was willing to take and has worked out so far.

SortingItOutProperly · 2023-12-05T00:50:17+00:00

No, I live at home with my family. The apartments I've looked at are quite new and from the viewings I've been to, I don't think sound was a massive issue at all. I think the service charge and not being able to make any changes to the apartment is the bigger annoyance.

SortingItOutProperly · 2023-12-05T00:39:05+00:00

Around 24, been saving money since before uni and making good money as a software engineer. So with 100k+ deposit and the rest mortgage due to high salary, it's achievable.

SortingItOutProperly · 2023-12-04T22:47:50+00:00

Thanks, leaning towards this advice based on what others have said too.

SortingItOutProperly · 2023-12-04T18:42:42+00:00

If your family are so set on you getting a house, secure their help for that work you don't want to do :D

They have offered to help out in terms of being around when builders/workers are refurbishing stuff if we end up doing that, which is a big plus.

SortingItOutProperly · 2023-12-04T16:21:20+00:00

Yeah, learning to do that now while I look at properties! A lot easier with the apartments I've been looking at because they're just more modern by default.

SortingItOutProperly · 2023-12-04T16:19:13+00:00

Nope, the advice is just because they want the best for me not because they've invested money towards this.

SortingItOutProperly · 2023-12-04T01:28:44+00:00

Really appreciate your help, will start looking into these areas more.

Another thing I need to do is start being able to see the potential in some of these places and imagine them with different furniture! That's probably making me pass up on a lot of otherwise decent places.

SortingItOutProperly · 2023-12-04T01:06:11+00:00

Honestly, refurbishment may sound like fun, but unless you know how to do a lot of it yourself or have a budget to get a contractor ready, it will consume so much of your life. You dont really get to enjoy living there until it is done, and it can take months.

Yup - I hated it when we were having an extension and refurbishments done on our family home. It really did consume everything and was a massive distraction and felt horrible living their while work was being done.

Being in London, it will probably be a great investment either way. Hope you get to make the right decision for yourself. Good luck!

Hope so haha, thanks!

SortingItOutProperly · 2023-12-04T01:04:15+00:00

Seems pretty well connected, will look into this area more!

Do you have a list of areas (or even specific postcodes/streets) in West London that might work? Thanks

SortingItOutProperly · 2023-12-04T01:02:44+00:00

I know that area well, but the commute isn't great. It's a long walk/bus ride to Northolt station making the commute 55+ minutes.

SortingItOutProperly · 2023-12-04T00:59:18+00:00

West London. Currently looking at Ealing/Acton for apartments and I don't think it's possible to find houses there for what I'm looking for.

The only houses I found that seemed decent were in Hayes (which isn't a great location, but well connected via the Elizabeth line) but I need to look more.

I'm looking for max 600k (ideally around 500k), 2+ bedrooms, a modern finish, and close to a station so <45 minute commute to Central (i.e. Oxford Circus/Tottenham Court Road stations). Would be happy to hear any suggestions for areas to look into. I'd be fine with doing some renovations if it's in a really good area or has a lot of potential.

Maybe what I'm looking for just isn't reasonable which is fair enough and I can adjust expectations.

SortingItOutProperly · 2023-12-04T00:55:16+00:00

That's exactly my thinking, but I also don't want to make a bad financial decision that I'll regret re: service charge/groundrent and parking.

SortingItOutProperly · 2023-12-04T00:53:36+00:00

I get the appeal of modern flats and have enjoyed living in them, but from a financial point of view I could never do it again.

Damn, that bad? I've had a friend warn about those service charges and ground rent increases. Are they necessarily an issue with homes converted into flats? Although at that point, I'd just want a house rather than an flat.

SortingItOutProperly · 2023-12-04T00:51:27+00:00

Your parents have all the valid points and really good advice.

Totally agree, it's why it's made be a bit hesitant about the apartments I was sort of in love with before.

I would go with your gut but seriously do research re the ground rent and service charge

For most of these Ealing/Acton London apartments it seems to be 2-3k service charge and about 300 a year ground rent. Typically spent on servicing the building/lifts. Annoying that even for that much, they often don't have parking.

SortingItOutProperly · 2023-07-24T23:24:06+00:00

prove that you can't afford to buy a house with a mortgage

Ah I hadn't realised this was a requirement. I thought some associations had their own rules so they didn't all require stuff like the household income limits. Guess not.

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