It’s resulted in me sticking my head in the sand, procrastinating. Wanting to hide.
It all started with various conversations with my Mum, the gist of which you will get in the below summary of said conversations:
Mum: “I’ve thought about it and I definitely want to sell the house asap.”
Me: “What house?”
Mum: “The house you’re living in. I told you about it earlier in the year.”
Me: “No, you didn’t tell me.”
Mum: “Oh, it wasn’t you then, it must have been your sister. Did she not tell you?”
Me: “No. She’s been really busy sorting out her own house.”
Mum: “Well I want it sold. You need to move out and get your own place.”
Me: “It’s not a great time now. I can’t sell my flat as the cladding issue hasn’t been sorted. How about next year?”
Mum: “I don’t want to wait that long, just get it done. Since you can’t sell your flat, do you need a loan then?”
As a reminder, I currently live on my own in our old family home. I pay nominal rent to my folks but have been responsible for the upkeep and repairs of the house. Over the years, the house has been a UK holiday home for close members of the family to stay in when they are over on holiday.
I always knew I would need to move out sooner or later – later rather than sooner though, according to my plan.
My FIRE plan has always accounted for the fact that I would either be renting or with a mortgage once I’d FIRE’d. Originally, I planned to continue to receive rental income from my BTL property upon retirement, but I came to realise that I would find it too much hassle, so I decided that, at some point, I would sell it and use the equity to buy somewhere to live.
As I wrote here, my flat is caught up in the cladding safety issue. It doesn’t actually have any dangerous cladding but building inspections have revealed that it doesn’t meet the new fire safety regulations. Until this is rectified, I (and the other leaseholders) must pay for a Waking Watch (fire wardens), which has nearly tripled the service charges we have to pay, and we will also have to pay for the building to be made safe, whereby a safety certificate shall be awarded. I cannot sell my flat without such certificate.
Since I can’t sell it, I will have to borrow more against the BTL but am uneasy about this because I still don’t know what the final property bill will be yet. The rental income I’ve been getting over the years has been put aside for ‘property purposes’ but this is now earmarked to go towards the final as-yet-unknown cladding bill. I dread to think what that might be.
Because of these factors, it’s looking inevitable that I’m going to have to use part of my Future Fund to fund my house purchase.
The thought of it makes me feel sick and depressed.
This has really been getting me down. My Future Fund is not meant to be used now.
Yes, I acknowledge this is a first world problem, not a ‘real one’. I have the funds to use, so what’s the problem? The problem is that it’s messed up my plans, and I feel like I’m starting to spiral out of control.
I need to get my head around everything, adjust my plans (and my thinking) so that I feel like I know what I’m doing again.
I’ve always known that at some point in the future, my folks would want to sell the house, but why now? With my Dad’s heart issues one year which resulted in a cancelled trip and with no travel being allowed in 2020, it’s now been over 4 years since they were last in the UK. They used to have regular holidays, lasting several months, enjoying the British summer (such that it is), and avoid the worst of the scorching and humid summer months in the far east.
Clearly, absence has not made the heart grow fonder, and for some reason, their friends were always telling them to sell up and transfer the funds to Hong Kong (though what business it is of theirs, I don’t know…).
I think the pandemic has accelerated the timeline of the house sale. I reckon had my folks been able to make their trip over to the UK last year, I don’t think they’d be wanting to sell so soon.
However, it’s probably now unlikely that my Dad would rush to make the trip over at his age now – the effects of lockdown have made him years older – perhaps one more trip, perhaps no more, I don’t know, so I guess it makes sense for them to get rid of their last asset in this country.
Would I not want to buy the family home? Much as I love the house, it’s too big and way out of my budget and if my folks were to sell it to me cheaply, it would cause sibling friction and that’s best to be avoided at all costs.
Bank of Mum and Dad
I tried explaining several times about the cladding issue with my flat and each time, my Mum’s answer was that the issue would be resolved with her giving me a loan.
The first (and last) time I borrowed from my parents, I was 20 years old and the loan was used to buy my first car. This loan was paid back (as are all loans to family members).
I had used my own money to purchase my first property (the one I had with my ex), so it doesn’t quite sit well with me that in my 50s, I’m left with no alternative but to borrow from my folks to buy a house. I’m sure this might be normal for some people but it just doesn’t feel that way to me.
Perhaps it’s a bit of foolish pride – I would have much preferred to have done this all on my own.
Plan of Action
As already mentioned, I need to take action to bring some semblance of control back.
I don’t have a lot of cash in my Future Fund, just some in premium bonds. A week ago, (randomly timed before the markets started to wobble all over the place), I cashed in on some profits in some of my ISA investments, in preparation for when I might have to use the cash. As a mainly buy and hold investor, it was hard to sell but needs must.
From this month, the chunk of money I normally invest in my ISA will instead be lumped into premium bonds to add to my cash pile. I can’t bring myself to stop investing entirely so I will leave the small standing orders that pay into my ISA (and my SIPP). I’ll also continue to invest any extra bits of cash from my side hustles and also carry on investing any dividends received.
So, when it comes to dipping into my Future Fund, the premium bonds will be used first, then uninvested cash sitting in the ISA, then finally as a last resort, sell more equities if required. Or should I sell the bonds? Not figured that out or looked into that yet.
I’ve contacted my BTL mortgage provider and have received confirmation of the amount extra I can borrow, which I’m (mostly) comfortable with. However, as this isn’t the full amount of equity I could have realised from my flat sale, it’s unlikely to be a big enough deposit I would want to put down on a house. So it looks like a family loan will be required.
However, once I am able to sell my flat, I will be able to pay the loan back in full.
I’ve registered with various estate agents and looked online myself – houses are being snapped up really quickly and I’m finding that some appear on websites already Sold STC or Under Offer.
Due to social distancing, for houses I’ve wanted to view, I’ve been placed on a waiting list as I guess viewings have all been restricted.
I’m sure something will come up. I might not be able to stay in the area as house prices are mostly out of my budget but who knows, I may be lucky and the right property will come up and I’ll be quick enough to pounce.
Despite how it all seemed at first, I do have an element of control as I’m the one who will need to put the house on sale and I won’t be moving out until I’ve found a place to buy. The ‘chain’ also only impacts the property sale, not on the property purchase, since the funds to purchase the latter are not reliant on the sale of the former.
I reckon I will need to reconsider my costs (and my lifestyle) as I may have to tighten things up, while I adjust to change. My anticipated mortgage will likely be marginally more than what I pay my folks for rent right now so no material change there – it’s the initial costs of a new home which are going to be the killer, plus any other house costs which might have to be sorted once I’ve moved in.
And once I’ve settled in, a kind of normality shall resume so that I can continue on my FIRE journey in earnest.
I feel a bit better for writing that. The uncertainty of it all still scares me but things will become clearer in time. I hope it will soon feel like it was my idea to move in the first place and at that point, I think I will feel a lot more comfortable.
Some heart-felt thanks go to @indeedably who reached out, provided me with a friendly soundboard and ear, and made me see some of the positives, where I could only see the negatives.
Onwards and upwards.