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First time buyer dilemma, advice please!
ckui
Posts: 18 Forumite
Found myself with a bit of a dilemma and looking for some advice, I'm a first time buyer, no debt, around £20,000 deposit.
option 1)
I have an accepted offer in on this house.
shared ownership scheme 50/50 market value £120,000.
so I would be mortgaging £40,000 - inc the rent of the councils 50% I would be paying around £400 per month.
option 2)
Similar houses appear on the market in the area at around £110,000.
They sell quickly but the general advice at the moment is that you can get them cheaper (~£100,000)
So if lucky I could get this instead with a mortgage of around £80,000 costing around £520 per month.
Option 2 would push me close to the limit in terms of affordability when taking into consideration all bills and other costs.
Would love any advice.
option 1)
I have an accepted offer in on this house.
shared ownership scheme 50/50 market value £120,000.
so I would be mortgaging £40,000 - inc the rent of the councils 50% I would be paying around £400 per month.
option 2)
Similar houses appear on the market in the area at around £110,000.
They sell quickly but the general advice at the moment is that you can get them cheaper (~£100,000)
So if lucky I could get this instead with a mortgage of around £80,000 costing around £520 per month.
Option 2 would push me close to the limit in terms of affordability when taking into consideration all bills and other costs.
Would love any advice.
EZ
0
Comments
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Does your income support the £80k needed on the second option? Around £20k needed for a 4x multiple.
Second option would be a better long-term bet, as there are re-sale issues with SO, due it not suiting the whole market.
And of course, if you get £10k to £20k off the price, over 25 years of a mortgage that is a lot of interest being saved.
Only you can tell whether you would really struggle, not get any pay rises to ease the position over the next couple of years, etc etc.Act in haste, repent at leisure.
dunstonh wrote:Its a serious financial transaction and one of the biggest things you will ever buy. So, stop treating it like buying an ipod.0 -
Why are you buying a house as opposed to a flat, do you have a family? If it's just you and you are aiming for a two bedroom, if so could you take in a lodger to help cover the mortgage (tax free income)?Declutterbug-in-progress.⭐️⭐️⭐️ ⭐️⭐️0
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My income would support the 80k. It would be more of a month on month affordability problem.
No cheap flats around here, terraced houses seem to be a cheaper option. Have considered lodger for both options but would prefer not to have one unless I really needed to.EZ0 -
is the £520 figure based on a £80k loan without your bills? if so then it looks a bit excessive. A mortgage should be cheaper these days. talk to a good broker and see if you can make option 2 work with a better mortgage deal. its always better to own the property outright, especially when you are buying at lower levels in this market.0
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If the houses truly are similar, then the shared ownership ones are overvalued by £10,000...
shared ownership scheme 50/50 market value £120,000.
...
Similar houses appear on the market in the area at around £110,000.
Would love any advice.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
It does seem, on balance, that you're right to rethink your original shared-ownership deal. I did read (although can't qualify this) that shared-ownership was being used as a means of retaining hypothetical values of houses so that a developer didn't then sell at a paper loss. Equally, if the value of 'your' house increases then you will be paying proportionately more for the other 50% of 'your' house in years to come.
I think shared-ownership is a bit of dog's dinner of a deal - especially when the market is so depressed. I'd do some research on recent property values (actual sales) in your chosen area via the many web pages that offer this service. Knowledge is power and all that. Rent + mortgage is not going to be enormously cheaper than a bigger mortgage in today's market. I'd look for a long-term fix.
IF you're a first-time buyer ... then you're obviously in a brilliant position to negotiate anyway!0 -
DVardysShadow wrote: »If the houses truly are similar, then the shared ownership ones are overvalued by £10,000
you mean by £20k as the op goes on to say:but the general advice at the moment is that you can get them cheaper (~£100,000)
So as per usual these dodgy schemes to keep prices afloat are overvaluing houses by 20%0 -
If you are debt free and have saved the deposit sum, them it sounds as if you are reasonably financially savvy. Is your salary likely to rise? Are you in a job with reasonable security of employment? If the answer is yes to both of these questions, and if you can find a house nearer the 100K mark, then I would say it is a no brainer to tighten your belt for a couple of years and avoid the shared ownership deal. You are cerainly doing the right thing by stopping in your tracks and thinking hard...Debt September 2020 BIG FAT ZERO!
Now mortgage free, sort of retired, reducing and reusing and putting money away for grandchildren...0
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