Would love some advice - what to do next: rent/buy?

grumpyteacher_2

Hello

I'm hoping someone will be able to give me some advice on the next step I should take with regard to renting/buying.

I am a 31 year old female teacher who lived in an ex's house for the past 6 years before ending our relationship. I have therefore ended up back at my parents' house for the past year. I have been working really hard at paying off debt and have happily managed to get that down from over £22k to just under £15k. I realise that paying my debt off is important, but recently I've considered that maybe I should concentrate my spare cash on saving instead?

I am now in a new relationship and am desperate to move out. I simply cannot live with my parents for longer than a few more months. My partner also lives at home and we would ideally like to move out by the start of next year.

The current situation is this:

My income: £35,000
Debt: £14,800
Savings: £500

My partner has recently started a new business and does not have a very healthy income (about £10k). He does, however, have £10k savings and no debt.

We are really stuck as to what to do next. Living in the South East, renting is ridiculously expensive and it seems wiser to buy. However, with just my salary, we're looking at only being able to borrow around £135k and this wouldn't buy much at all in this area. Alternatively, there is the keyworker scheme but with this I would only be able to buy a new build flat which I'm concerned wouldn't be worth anything in a few years' time.

I am totally realistic that our situation is not the healthiest and that we might need to work really hard over the next few months to get a bigger deposit sorted or think about renting instead but I'm really confused about what to do for the best. I would really, really appreciate any advice as I feel my head is spinning!!!

Thank you!

grumpyteacher x

Radiantsoul

Pay off your debts before buying.

BitterAndTwisted

Rent. It doesn't make any sense to me whatsoever to be thinking about taking on all of the responsibilities a mortgage entails or to be stashing savings away when you are carrying that level of debt. It's possible that, depending on what exactly these debts are, you might find a landlord unwilling to risk letting a property to you without either providing a guarantor or paying six months rent upfront.

grumpyteacher_2

Thanks for your post. I have calculated it will take me over 2 years to pay off my debt completely. I can't stay with my parents for that long.

grumpyteacher_2

Thanks, Bitterandtwisted.

The debts are a combination of credit cards and a loan - four of them are 0% and my loan is 5.8%. I could feasibly rent somewhere pretty cheap and continue paying off my debts, I guess.

Radiantsoul

Are you including a student loan in that debt?
If so that might be more acceptable, but lenders will baulk at that kind of credit card or interest bearing loan debt.

grumpyteacher_2

No, that's not student loan debt.

missile

It is very easy to get into debt but very hard to get out. I can appreciate you wanting to move on with your life and having your own home will be a major achievement.

If I were you I would speak to a mortgage broker and find out what your options are. Unfortunately, I don't think this will be good news. Your partner would need to demonstrate his earnings over a period before his income would be considered. You need to think carefully before taking on a joint mortgage.

I don't know why you are against the key worker scheme. This would appear to be your best, if not your only, option. Perhaps you could discuss with a.n.other teacher on this scheme or with your union rep?

I hope you have researched and secured the best rate for your debt?

BitterAndTwisted

Sounds to me like your next move should be into a house-share

grumpyteacher_2

Thank you for your reply.

To be honest, I quite agree that it probably wouldn't be good news about a mortgage. I know I fit the criteria for the keyworkers scheme as it says maximum debt of £15k and you don't necessarily need a deposit. I'm just concerned about the quality of new build flats! I also wonder how easy it is to get out of the scheme. A colleague of mine bought through the scheme and is finding it hard to get out of now he wants to sell.

I understand that my debts are a priority. As I said earlier, they are all on the lowest rates I can get - most at 0%.

hazyjo

Use your partner's £10k to pay off your loan then clear the rest asap. And your £500. No point in saving if you have debt, just get it cleared.

Also no point in getting a mortgage before that. You'll end up being offered far less because of it, probably double the debt off what you could borrow without it. Does that make sense? I mean if you owe £15k (roughly), it'll probably knock £30k off what you could borrow. Pointless if you're buying together long term, plus it'll probably mean the debt will linger.

Just get rid of all the debt, interest or no interest, and start afresh. Then you can start saving together instead of using that money to pay off loans.

I agree renting's the answer for now, so long as you can afford to clear debt and save still. You'll not get a mortgage without a huge deposit so I do think you're looking long term rather than right now.

Good luck!

Jx