I'll try to keep this as brief as possible. We are in the middle of quite a few major life changes. Notably, after 5 years of living apart due to our jobs, I decided to quit and become a trailing spouse. I need it to avert a burnout, and we need it to ensure our relationship stays healthy. At the moment there are no plans for me to pick up any particular job, but the ideas range from a SAHD (no kids just yet, mind you), a writer (fiction and textbook), teaching, or a start-up. Luckily, we are m(o)ustachians so we can easily live on one income and still save close to half of that.
The real problem has to do with our relocation. I need to sell my house in Northern Ireland (which was bought cash), and we need to buy a house in Scotland. Renting is not an option due to our dogs, and moving out of the UK would be career suicide for my wife at this stage. The best option is to stay here for at least 2 years (hopefully much longer, but that entirely depends on job options for myself and how Brexit turns out).
We are originally from continental Europe, with a fair amount of funds still in EUR, and this puts us in an awkward position. Buying a house in our area of Scotland would probably cost about £150,000 for what we want. Selling the house in Northern Ireland should net us at least £75,000. We have another £35,000 on our current accounts at the moment that is available for buying a house. This means we still need to cover an extra £40,000.
The problem comes down to Brexit. The GBP is really being slammed and the EUR/GBP could get a lot lower in the weeks/months/years to come. This makes me hesitant to transfer EUR to GBP as it seems it's on a downward slope, and because chances are at some stage we move back to a EUR country. We also have investments in GBP, about £15,000, which we could use to fund the purchase. These are invested in a worldwide index fund so they have provided a formidable shelter from any GBP woes (up 20% in 3 months). Do we touch those, or leave them alone? We could also borrow the money. This is a bit tricky as I may not have work and my wife has a poor credit history (she only officially started living in the UK 3 months ago). We could borrow up to £350,000 on both our incomes, but I expect this would drop to no more than £90,000 in the new situation (2% interest first two years, 4.5% afterwards). Do we take out a small loan, or a big loan? In the latter case we can invest the remaining GBP, with the risk that GBP has bottomed out and we just bought our index funds very expensively.
So, what to do?
- Downsize (this would get small: 2 bedrooms, 70m2/750sq ft). Only buy with cash what you can afford.
- Downsize. Borrow as much as you can and invest the rest.
- Buy the house cash. First get money out of the GBP investment, only then use EUR money.
- Buy the house cash. Only use the EUR money.
- Go for a loan. Try to borrow as little as possible.
- Go for a loan. Try to get as big a loan as possible and get all remaining GBP invested.
- I have a better idea! See my reply below.
