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

PasturesNew

Rent. You don't really know this new partner from Adam... could turn out to be an annoying loser and if you've bought then it gets really complicated.

As they've no money, use that as a way of cutting back your own expenditure ... don't do stuff/don't buy stuff because you have more money and are happy to sub them.

Live frugally, pay down your debt in about a year or so.

Then, start saving. If you're still together in 2-3 years' time their business will have taken off or expanded and you'll have savings.

House prices won't be leaping up overnight. There's no rush.

grumpyteacher_2

Thanks for your post. I wouldn't feel right using my partner's money. It was inheritance and my debts were built up before meeting him. It wouldn't be fair.

I agree that maybe I could rent as cheap as possible and concentrate on those debts.

grumpyteacher_2

Hehe, thanks. We are quite frugal - I suppose I could pay more off if I limit myself to £100 a month for any non-essentials but I would struggle. I'm trying to pay £1000 a month but that will still take me over 2 years!

llh189

If you are earning £35k and live at home I am finding it hard to see where you spend all your cash, if you only spend £100 per month on nonessentials unless your parents are charging a fortune for you to stay there.

A full SOA might help us give better advice.

I also agree with some other posters that getting a joint mortgage with someone you've known less than a year is pretty risky for you both! I know you're in love and you want to be together but I guess 6 years go you didn't think you'd be living back at home after breaking up with your previous partner.

Like all the others I would rent - maybe a shared house with other professionals, or a small starter flat with your partner.

I know all about the SE living costs as I live there too but between you both, not touching his saving and continuing to pay off your debt you could get someone nice!

HTH

grumpyteacher_2

Thanks.

Just to try to answer your question - I've only recently got a payrise so before was earning around £31k. I allow myself about £300 a month for going out/clothes/hair etc. and the rest was on bills and my debts. I was earning about £1750 a month and paying £1000 on debts.

I will do a proper SOA and see how much spare cash I should have on my new salary.

Thanks again

missile

IMHO, you are doing quite well to pay £1000 per month toward clearing your debt.

If it were me I would look at the key worker deal, in my experience most deals are very good value. I think you need to investigate why your friend can't sell. Is it that these properties are overvalued or is he just like so many others who are struggling to sell their property?

PS: I hope you are wrong about quality of new build flats - as I live in one :eek:

I note your comment re 0% credit card. This deal ends when? You need to think about what you will do thereafter.

Good luck

grumpyteacher_2

Thanks.

What exactly do I put into an SOA?

mostlycheerful

SOA is statement of affairs which is a list of your financial affairs including income, outgoings and debts and there are lots of them on the debtfreewannabe board on this forum that you can look at and there are also links to the standard format to use. Once you’ve posted it, if you do, then people can make suggestions for how you might be able to reduce your expenditure and juggle the debts. And when you see it all listed out clearly it helps you to budget and understand what you’re doing and how to watch your money. Some people also post a debt diary and keep lists of everything they spend. Possibly people may suggest that you might consider reducing that £300 on entertainment and hair, for instance, if you want to pay off your debts sooner and be in a better position to buy a place.

As the majority of people believe, buying property is nearly always preferable to renting as with buying you own a property and accumulate all your money whereas with renting you just pour it down the drain and waste it and you’re always subject to eviction at any time. In UK 68% of people own and only 32% suffer the indignity of renting so definitely get on the property ladder as soon as you can any way that you can as that is nearly always vastly superior to languishing in the rent trap.

The cost of mortgages is generally cheaper than renting which, of course, is why most landlords get rich for little or no effort and why there are buy to let mortgages.

What a lot of first time buyers and, indeed, also experienced owners do is get a place big enough to have some spare rooms which are rented to lodgers and if you get a big enough place then you can have all the mortgage covered by the rentals. Millions of people do this and most of them very successfully, it’s one of the standard ways to get financially secure.

So in order to achieve this perhaps consider buying in a cheaper area and or team up with one or two financially able people in which case plan the exit route if one or two people drop out. If there’s two or three of you together then the economies of scale mean that you should be able to get a big place with lots of spare rooms to rent out and then you’re home and dry.

Yes, seriously, this is an intensely lucrative business model when you do it right, which most people do, and it’s pretty much the standard way that huge numbers of people in UK and all over the world sort out their housing needs and financial futures. Good luck with whatever you decide.

grumpyteacher_2

Right, here goes with SOA:

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1919.37
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1919.37
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 50
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 0
Clothing................................ 0
Petrol/diesel........................... 50
Road tax................................ 12
Car Insurance........................... 29.89
Car maintenance (including MOT)......... 4
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 23
Pet insurance/vet bills................. 27.28
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 30
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 346.17

Assets
Cash.................................... 500
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 2500
Other assets............................ 0
Total Assets............................ 3000

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Loan...........................5500......200.......5.8
Barclaycard....................1812......41........6.6
Tesco cc.......................2524......75........7.9
Lloyds overdraft...............150.......10........12.9
Santander cc...................2980......72........0
Lloyds cc......................1936......40........0
Total unsecured debts..........14902.....438.......-

Monthly Budget Summary
Total monthly income.................... 1,919.37
Expenses (including HP & secured debts). 346.17
Available for debt repayments........... 1,573.2
Monthly UNsecured debt repayments....... 438
Amount left after debt repayments....... 1,135.2
Personal Balance Sheet Summary
Total assets (things you own)........... 3,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -14,902
Net Assets.............................. -11,902


Just to answer someone from yesterday - I spoke to my colleague who is trying to sell his keyworker flat and they have valued it at £30k less than he paid for it!! Worried me slightly!!

grumpyteacher_2

Sorry, I put £0 on there for clothes!! That's obviously not right - more like £200 at the moment! But I am prepared to cut that down!!