buy house or save?

georgy9

hello, im a bit new to all this. i know how much prices have gone up in teh last few years. i inherited £20k 3 years ago, and because im living with my mother, i can afford to save £500 a month (earning 5% interest). the £20k is also earning 5% interest. i was thinking about buying a house/flat 3 years ago. my question is: taking my financial situation into account, would i have been better off buying that house/flat 3 years ago (in which case ill be forever kicking myself!). and heres the big question (youll need to put your prediction hats on for this!): will i be better off in 5 years time if i buy a house now and lose all my savings and interest earned and monthly savings and the interest earned on that?
i think what im trying to say is im cr*p at maths and dont know how to work this out!!! thnx

Sapphire

georgy9 wrote:

would i have been better off buying that house/flat 3 years ago (in which case ill be forever kicking myself!). and heres the big question (youll need to put your prediction hats on for this!): will i be better off in 5 years time if i buy a house now and lose all my savings and interest earned and monthly savings and the interest earned on that?
i think what im trying to say is im cr*p at maths and dont know how to work this out!!! thnx

The house prices were lower three years ago, so yes, you would have been better off in terms of mortgage repayment if you'd bought a flat then.

No one knows exactly what is going to happen to house prices, but the indications are that they are going to drop in value eventually (they have already in some parts of Britain outside London), and quite sharply. House prices are currently too high for first-time buyers to afford, which affects the prices of houses further up the buying chain (in fact they are ridiculously high). In addition, many people have borrowed vast sums of money and when interest rates rise they will be in trouble. In my view it's a question of when, not if, a crash will come.

It's all part of the same type of boom and bust cycle as you get with other aspects of finance, such as shares. Investors don't believe a crash will ever come, and it inevitably does. The ones that are affected the most are those who invest at the peak of the boom, just before the crash. Unfortunately, the spin in the media from interested parties in the business who are making a profit from the rise in prices (e.g. estate agents, banks, etc.) only helps to prolong the inevitable (IMHO).

Not sure whether this is of any help to you . . . :cool:

Mrs_pbradley936

You would have been better off buying back then, but so what that was then and this is now. I would buy a one bed flat so that I was on the property ladder but not stretched too much financially. If she will put up with you, you could even rent it out and still live with mum. That way the rent cover the mortgage you just have to be prepared to cover “voids” (gaps where you have no tenant and therefore no rent). If you move into yourself later on you will not have pay Capital Gains Tax because it will be your one and only property (your home) BUT you would have to pay income tax on the rent.