House Purchase Dilemna

yasmin2

Hi,

I have a bit of a dilemna, that I would appreciate people's thoughts and opinions on, as honest as they can be.I am returning to full-time education in september for four years, in another city, as a very mature student. I don't really fancy doing the whole student halls thing as too old and done it once already.

My dilemna is whether I should purchase a house and rent out a couple of the bedrooms, therefore only paying a third of the mortage. On my current salary, I could get a 100% mortgage for about £120-130 000. I will also be working at the weekends/holidays and this should bring in £950 and more during the holidays. The alternative would be renting a room in a house but it would be "dead money" and I think why not put myself out a bit now and then hopefully "reap the rewards" in a few years. This is assuming that the housing market won't crash.

My feeling is that I would be paying £250 a month in rent anyway so why not try and buy a house and use the money more benefically. The additional rent will complete the mortgage payments. I don't think there will be a shortage of students as its quite a large uni and a large post-grad population. My only outstanding debt is about £5000 on credit cards which I will continue to keep paying anyway..

When i finish the course, I thought I would keep renting it out to students unless work keeps me there which is a possibilty.

Any thoughts...

Thank you for any comments in advance.

griff.

How would you feel about renting out rooms and losing your privacy, and having to adapt to other people's tastes ?

You don't say whether you have been to this city that you are moving to before. Might it be better generally to rent a while in a couple of different places. You are going through a major change in becoming a f/t student again, it would be good for you to have a wee bit time to adjust maybe ?

There is no harm in waiting before you buy, put a time limit on it - a year perhaps ?

yasmin2

Thanks Griff,

I don't mind renting out the other rooms. I have always lived in shared accomodation and I think it would be a welcome relief from the serious amount of studying that will have to be done.

I haven't lived in the city but have visited it several times for interviews and looking at potential areas to live. It seems like quite a nice, vibrant and growing city. The only reason that I would be anxious to buy now (if I do buy at all) is that I am buying based on my curremt salary. I would not be able to get the mortgage I need on my part-time salary.

griff.

It makes a lot of sense to get the mortgage and do it just now...so why are you wary ?

yasmin2

Mmmm... not sure to be honest.

The thought of being saddled with so much debt as a student and I guess, one of the reasons for popping up here was maybe there are pitfalls that I haven't thought of yet. The only downside that I can see to this is the tiny hassle of being a landlord (but worth it in the long run) and possibly a housing market crash where I end up in negative equity but I would be living there for the next few years anyway.

griff.

If you are prepared to do what it takes to generate the income needed, and are confident that it will work, to match the predicted expenditure, then you shouldn't have any problems.

Sounds as though you know exactly what you want...and I am sure you will get it )

gallygirl

Sorry hon, you've left it too late. No way you could find and be in by Sept - plus all students will have accomm by now - those that ahven't are likely to be so disortganised you'd probably struggle to get rent off them anyway.

Assume you're giving up job as you'll be full time student? You must have handed in notice, or be about to - your employer would presumably have to put this on earnings confirmation to lender so they wouldn't lend to you anyway.

lynzpower

If cash flow is likely to be a problem, then making sure all the fixtures, fittings and remedial work is done to the property before you can get people in also could be an issue.

WestonDave

One point worth mentioning is that if you plan to rent rooms out you will need to notify the mortgage company - you may then not be able to get the cheapest mortgage rates as you may be considered a buy to let borrower rather than an own home borrower.

I would also urge caution on the "plenty of students" issue. Buy to Let has been a growth business in recent years - you cannot afford to have empty rooms but if there is a glut of rental rooms available it may be hard to fill especially given the late notice.

I'd say rent this year, that will give you an insight into the state of the market, where the popular areas are etc - as stated you are a bit late to be offering rooms for next year, but looking for one for yourself will quickly show if good rooms are scarce (worth buying for next year) or plentiful (you'll have trouble renting).

Another point to make is that most of the existing students will be sorted for next year - or at least most of the ones a mature person might want to share with. If you look to fill your house late you will get a load of freshers(first years) who will be first time away from home and may not know about looking after a home!

bap98189

Can you please tell me where you can get a three bedroom house for £120,000. I've not seen any other than in the Outer Hebrides.

yasmin2

They are out there, not as far out as the Outer Hebrides though. I would tell you the area but am fearful that the location and the other bits of info I have given out on this website might lead someone to identify me and I don't want that... I have been recommending this site to anyone who will sit and listen to me