am I mad to be considering a holiday home

[princeperch]

For a little while now I've been mulling over in my mind the prospect of owning a flat on the norfolk coast. I'm considering cromer or the areas in the surrounding area - 2ish bed flat for something in the region of £130-150k (about 600-700 sq ft).

There is a niggling bit of my mind which says dont do it. But then another bit of my mind says, take the risk and do it and enjoy it.

so I own a house with the missus (which means I'd have to pay enhanced SDLT so fair enough). the mortgage on that house is under 500 quid a month repayment with 14 years left on it (I think we owe about 75k on it or so). I can probably come up with the deposit on the new flat without having to borrow much, if anything, against the house.

I think to justify the flat (which would only be used by us really at weekends or during school holidays as the wife is a teacher) I would probably air b n b it for a few days here and there to help (if a flat then would need to check the lease to see if this is possible). There are obviously tax implications to that, and I wouldn't make much money off it. So whether its worth it given the wear and tear I dont know.

so is it too tight to do? is it worth it?

fwiw (using round figures):

I earn just over 50k. I dont anticipate any uplift to this because I am fairly lazy and cba to get promoted.

wife is on mat leave but will probably go back to work in the next few months (she earns 37k). I expect most of her salary will be used up for childcare etc, so I'm basing this decision just on my salary.

I can afford the two lots of mortgage (500 for the house and probably 550/600 on the flat plus say 50-100 quid pcm maintenance charge). so call it £1100.00 all in for the two mortgages, plus bills.

does anyone have any horror stories of owning a second property in similar circumstances? or should I just use what we have to holiday on the coast and and when in nice hotels/air b n bs?

part of me also thinks that it will be a good pension move in that we could sell our house in London in 20 year time and move to the flat when retired.

or is this a pipe dream best forgotten about...

[princeperch]

its about a 1 hr 50 min drive door to door all being well...

[princeperch]

do you mind me asking why you got rid of it Paul? not being used enough? needed to free up the cash?

[princeperch]

thats another fair point.

500 quid a month is a lot of money to most people, including me. however its not just about "holidays" and that 500 quid being eaten up by the flat rather than going to spain. we could do both. but that 500 quid a month on the flat is going towards buying the flat and having something to use in old age.

thats also quite a big concern to me. even with 2 decent public sector pensions I am slightly concerned about having sufficient income in retirement.

[princeperch]

Muzzer79 said:

princeperch said:

thats another fair point.

500 quid a month is a lot of money to most people, including me. however its not just about "holidays" and that 500 quid being eaten up by the flat rather than going to spain. we could do both. but that 500 quid a month on the flat is going towards buying the flat and having something to use in old age.

thats also quite a big concern to me. even with 2 decent public sector pensions I am slightly concerned about having sufficient income in retirement.

I've always been very sceptical about holiday homes as investments.

On your stated salary, we're talking about 16% of your take-home income going into this 'investment'

That's a lot. If you do budget to go away somewhere else aswell/instead, that's over 30% of your take-home going towards holidays, from one wage.

Yes, you'll recover some of that but it seems a big exposure in one area.

IMO, holiday homes are for when you've reached a certain level of financial comfort, not for when you're effectively on one wage and still have a decent chunk of your main house to pay off.

TLDR - I think you're a bit mad, but it's your money.

our current house is worth 600k and I would guess than if we were to go ahead and buy this flat, the outstanding mortgage in 2 years would be about 50k. what is attractive to me is that we could sell this house in 20 years time (lets say its worth I dunno, 850k/900k by then) and simply move into the second property..

[princeperch]

That is an interesting point and one I hadn't really thought about...

[princeperch]

All very interesting thoughts.

Perhaps I would be better off bunging the money into a LISA every year, getting the 20pc bonus there every year, and then buy somewhere for cash using that money when retired.

I'm bunging the max into my work pension that I'm allowed to do on a monthly basis without having to do a tax return..

Re my point on retirement , perhaps I over illustrated my concerns. If I retire when I'm 55 I'd get 18k a year (no lump sum) and if I managed to get to 60 then go I'd get 22k a year or so. The wife would get a pension of about 11k. So whilst we wouldn't starve, I'm not sure it's enough.

But I'm not particularly concerned about my capital position, because in that time we probably would have built up some savings. But I do want to think about income provision in later life and a nice little property in a good position might help with that.

I've also had a little look around the cheaper bits of France. However the French love their property taxes and they also love their motorway tolls...