Should I buy or stay put for now? Help please!

sw_jay

Hi everyone, I'm in a bit of a dilemma and would be interested to get people's opinions before I make a decision.

My current situation is that I own half of a property worth £160,000 with a £60,000 mortgage (ie. £20,000 equity). My sister and I bought this house from my mother as she was struggling to keep paying her mortgage and she will continue to live in it for as long as she wishes and is able. Therefore my £20,000 equity in this property is tied up until then.

I am currently renting a property however would like to purchase another home of my own as I'm now 36 and do not want to leave it much longer.

Until now I never thought I would be able to own another place, despite being on a good salary. However I have recently come into some money and with savings that I already accrued have around £50,000 at my disposal. This is clearly a nice sum to use as a deposit to purchase my own home. I only need a small 2 bed home for myself so would only need to borrow another £70,000 - £80,000 or so, although I'd have to take my current mortgage repayments into consideration.

My dilemma is whether to buy somewhere now, or wait for 12 months or so and hope that property prices continue to decline.

In my eyes there are two trains of thought.

If I buy now I might be able to get a real bargain as I am in a great position to move straight away. If I wait for 12 months when the economy may have picked up, there might be lots of buyers about and bargains will be harder to come by.

Alternatively if I wait 12 months or so prices are likely to be a bit cheaper, and I will have saved at least another £6000 (I'm saving around £700 per month) to put towards my deposit and fees, furniture etc. This would help keep my repayments lower.

I'm in no particular rush to move as I'm quite happy where I am, have money in my pocket and can save a fair bit each month. However I really do need to think about getting my own place at some stage and am now in a better position than ever with the cash windfall I have been lucky enough to receive. I just want to make sure the timing is right... any ideas?

Thanks

poppysarah

Ignore the equity. It's confusing you. You have a 60k debt on your mother's mortgage.

You have about 50k to spend - so you want to take out a 70k mortgage on top.

So you'll actually own 1 1/2 houses with 130k debt? Can you afford a 130k mortgage? That's the most important bit.
Prices might get cheaper - but that would also erode the equity you think you have ...

sw_jay

poppysarah wrote: »

Ignore the equity. It's confusing you. You have a 60k debt on your mother's mortgage.

You have about 50k to spend - so you want to take out a 70k mortgage on top.

So you'll actually own 1 1/2 houses with 130k debt? Can you afford a 130k mortgage? That's the most important bit.
Prices might get cheaper - but that would also erode the equity you think you have ...

Yes I can see that... my 20k equity could soon be reduced to very little if the market continues to drop. I'm not too concerned about this though as it's a long term investment and I would expect the market to rise in the future.

My dilemma is more about whether I buy now and grab a potential bargain or sit on my money for 12 months or so, save as much as possible in that time and have a larger deposit and lower mortgage when hopefully prices will be cheaper.

poppysarah

Can you have a total mortgage of 130k? That's the question you've got to get answered by looking at your salary and speaking to a broker

sw_jay

Yes it shouldn't be too much of a problem... I earn over 35k so my mortgage advisor thinks I'll be ok... Not that I'd take anything for granted in the current climate!

poppysarah

Is your job secure? What happens if you can't pay your mortgage AND your mums mortgage?

sw_jay

Yes I have considered this Sarah... I have a very secure job in the police force. In fact I will retiring on a full pension in 18 years time.

The fact that I'm paying half of my mum's mortgage means my spending power is reduced when coming to getting another one for my own place, however it is only £200 a month so not too damaging.

If all goes to plan I should own one and a half houses by the end of this year with a mortgage of around 120 - 130k.

My dilemma is still whether to buy now or hang on...

poppysarah

You should start looking - view a range of houses - check out the areas properly. Make it a process - aiming to take a while rather than buying the first house you like.