House buying opinion needed urgently pls

Legacy_user

I have been looking / saving to buy a property for about 5 yrs now. I currently have 3 options available to me and would like your opinions on which option is better. We are currently renting.

1. A mature 3 bed (2 plus 1 box room!) on a large plot in a popular area but needs refurbishing. The old lady who lived there has moved to a home and her daughter is selling the house. Was originally on the market for £149,950, reduced to £134,950, she has accepted our offer of £126,000. We have a 25% deposit.

2. A new build 4 bed quasi semi on shared ownership in a not so good area, with decent sized gardens. Full price £150,000, 50% or 75% share available. The house is obviously ready to move into and has good sized rooms with an ensuite, downstairs shower room, plenty of storage.

3. Stay in rented accomodation and use deposit to pay off all debts (about £40k). We are in our early 30s with 2 young children. We earn approx £4000 a month but have a lot of outgoings too. Also the house we live in is on a rough council estate. I hate living there, spend most of my time at my mum's instead and have daily arguments with my husband as he was the one who chose it!

Look forward to your responses.

pawlala

I would take no.1 - and spend 20k on refurbishments. Plus large plot - possibility for an extension for your family? (the new build may have restrictions on planning if you were considering extensions there)

so... no.1 = a more modern house in a nice area for the same price that it was on the market for!

kinglewis

I would clear off your debts and start saving towards a deposit to but a house.

for the following reasons....

1. House prices are not going up any time soon
2. The mortgage plus debts may be affordable today.. but if rates rise considerably you could be left in a mess.
3. Once your debts are cleared you will have a huge weight lifted off your shoulders and you havea good income to save for a deposit.
4. You are too young to need the stress of debt especially with young children. Why the need to feel the pressure of society to own a home? A mortgage of £600 / mth will involve interest of £450 / mth (if not more!). When people talk of rent being dead money... so is interest. The banks always win.
5. Only you can really know what you want to do.. but that is what I think.

Good luck!

CloudCuckooLand

Have you found a lender who will give you a mortgage with that much debt? What interest rate are they going to charge?

Pay the debts off.


How about Option 4: Stay in rented, but find another one somewhere nicer to take some of the stress away.

System

CloudCuckooLand wrote: »

Have you found a lender who will give you a mortgage with that much debt? What interest rate are they going to charge?

Pay the debts off.


How about Option 4: Stay in rented, but find another one somewhere nicer to take some of the stress away.

Thank you for your response.

The Abbey have approved our application with a 25% deposit at a rate of 2.94%.

Have explored that option too and anywhere half decent costs more than our mortgage repayment would be.

property.advert

It is a no brainer. Get the house on the mortgage from Abbey. Presumably your mortgage will be less than your rent.

To get debt under control and paid off, go interest only for a couple of years.

Borrowing £110,000 is only £230 a month on 2.94%. Repayment on 25 years is £442.

If you get 4k a month - is that gross or net ? If gross then you have net around £2900. You should be able to pay off £1500 a month unless you have other strange outgoings, which would clear your debt in around 2 years. You could then save to repay the mortgage.

Smashing

With a 4k income and debts of 40k I would pay off the debts and get a grip on the outgoings before committing to a mortgage.

chodges84

I'm guessing your mortgage is for 2 years. In 2 years time the Base rate could be back up to 4 or 5% with mortgage rates of 6 or 7%. Could you afford your mortgage at these rates?

I would personally go for number 1 out of your options. Buy a smaller house in a better area. You already live in an area you are not happy with, so don't make the same mistake again.

That said, I would try and pay down your debts asap. I am quite surprised Abbey were prepared to lend to you with that much debt to be honest.

jharper

I would stay renting. Particularly with all the uncertainty in the market.

kinglewis

If you currently have £40k worth of debt you are currently living beyond your means. You need to get this sorted before buying a house and committing to a mortgage.

I understand it is tough living in an area that you are not happy in so I would consider the 'option4'.

Harsh words but debt can crush you if you over commit.