Should I buy my house now or later?

kiely27

Can anyone offer me some advice please.

I am living in a housing association home. Up until last year it was council so I continue to have the right to buy. I would value it currently at 200k and not so long ago houses in my street were selling for as much as 250k. We are entitled to 16k discount.

Now here is the killer question;

As my rent is so low is it safer to save the difference between the rent and what we would expect a morgage repayment to be for 25 years. Which we have worked out as if we put £300 each into an isa every month over 25 years at a rate of 5% to be over 400k. Then buy the house outright.

Or to buy the house when it seems to be at the bottom of the market?

Which is likely to have a better return?

poppysarah

Cheap rent or dear mortgage and then repairs?

Radiantsoul

I calculate that you would save about £360k if you save £7200k per year at 5% for 25 years.

A £200k house would be worth £360k if house prices rise by 2.3% per year. However you might want to allow repair costs, assumign they are 5% of the properties value each year you would need to prices to rise by 4.2%.

I guess it looks like a reasonable deal, although money is more flexible and in the short term you may lose as prices fall further.

zone

kiely27 wrote: »

Can anyone offer me some advice please.

I am living in a housing association home. Up until last year it was council so I continue to have the right to buy. I would value it currently at 200k and not so long ago houses in my street were selling for as much as 250k. We are entitled to 16k discount.

Prices are still falling at the moment. So even if you could buy for about £184k now it might drop down to £150k by the end of the year. Would you be ok with that and happy to live there for the long term?

carolt

Don't buy now. Buy if and when prices stop falling. No advantage I can see by buying now.

brit1234

Don't buy prices are falling so fast now and unlikely to stop. Even the housing minister who said things were improving was forced to retract her comments on live TV

kiely27

Sorry haven't been on here for ages and thought noone had replied to this post. Musn't have set up emails.

Thanks for the advice, I have taken it on board. H2b is keen to buy now as he doesn't believe in waiting around for things to happen, but I think in this case it would be wiser to do just that!

JonnyBravo

Radiantsoul wrote: »

However you might want to allow repair costs, assumign they are 5% of the properties value each year you would need to prices to rise by 4.2%.

Repair costs at 5% of the property a year?
It's got to be a pretty run down place to need that much money spent on it year on year.


As an aside I agree with a few of the regulars.... all things being equal wait a while. Prices will come down further this year and it's not like someone else can buy it from under you

Robert_Sterling_3

You aked which would be better over a period of 25 years.
Well for a start the 5% is picked more or less at random.
However we do not know what interest rates will be like next month or next year let alone over a period of 25 years.

So you and whoever are left to decide will it be now, later or never.