buying a property outright

solongmarianne

please bare with me as I am totally new to all things mortgage/buying ect

I am in a position where in 3 -4 years time I will have enough money saved to buy a VERY modest property outright.
i have alrady been looking and have sussed out what i will be getting in my price range, which i know is not alot
I am unaware of all the costs involved, obviously I will need to pay someone to chec the place is ok, and also solicitors fees, but apart from that once I have paid there is nothing left to pay right?

I know there is concil tax and home insurance ect ect , but for all intents and purpouses the house is mine, end of?

I have never bought a place before, as iv not been in a financial position to evn consider it until now.

I also am clueless as to how interest rates work ect ect , but in my mind it makes more sense to buy outright than to keep money in the bank and pay a mortgage? again I am prbably asking silly questions but I am wanting to get a better idea . I will be paying (hopefully) less than £45000.
if it makes any difference, I dont have credit cards ect ect , I just save what I earn , I am hoping to do it this way as I dont like the idea of mrtgage debt, and if I am correct, you pay a hell of a lot extra in interest, bank fees???

If I am able to do this I will be left with less than £2000 savings for anything else that may crop up, though since starting my new job I haveben excellent at saving, so dont expect to wait long to build it up.


in case your wondering ... I rent a council property, very cheaply £70 pw, my outgoings per week are less than 160 inc.., and im left with a good amount which i save the whole lot. I do not drive or smoke, i walk to work, which probably helps me save quicker.

I am (working it out) saving per year of my wages £10000, which is why i estimate 3 to four years time.
any advice appreciated even if its t tell me im dreaming lol

DVardysShadow

If you are a first timer, get a small mortgage. 2 reasons for suggesting this

• If your are a first time buyer, the protections a lender will require your solicitor to provide in terms of assurances about the purchase will also protect you in areas where you may be naive [edit: with no mortgage, the solicitor might feel less constrained and not inform you of some issues]
• If you get a mortgage, you will be able to afford a little bit more which will enable you to avoid scraping the bottom of the barrel to find a property

No need to go overboard with a mortgage - something costing a bit less per month than your rent will make a great difference in avoiding the absolute cheapest houses where you will probably end up paying more for the repairs issues you might find.

solongmarianne

thanks, I am going to be swatting up, I have a few years to familiar myself with it all, its interesting , there are so many different things to look into.

the places i have been looking at are much cheaper than down here so i also think its a location thing. the places i have seen are basic, bathroom and kitchen in good clean condition, nothing amazing but def nice enough to move into. no garden, just a courtyard area, but again , this isnt an issue for me. exactly the same type of property here is £120000 at least!

MobileSaver

solongmarianne wrote: »

I am in a position where in 3 -4 years time I will have enough money saved to buy a VERY modest property outright.

The only financial difference between getting a mortgage and buying outright are that with the latter you don't have to make a mortgage payment every month. All others fees and costs are pretty much the same (Insurance, utilities, council tax etc.) apart from of course the mortgage will cost a lot more over its lifetime.

One point to bear in mind is that house prices are currently lower than they have been for some years. Prices may have started rising again in 3 to 4 years, so £40,000 might buy you a modest place today but only get you a tiny place in 4 years time when you've saved the money up.

Also because interest rates are so low right now many believe this is a great time to get a mortgage. MSE have a new article "Five-year fixed mortgages at all-time low" that highlights this. However if you have no credit cards or debts then ironically you may struggle to get a mortgage anyway.

It sounds odd to be suggesting someone get a mortgage rather than pay cash but in your case you don't actually have the cash yet, a mortgage will allow you to buy something better than a "modest" house and for both house prices and mortgage rates there may never be a better time to take the plunge.

Ultimately though it comes down to why you want to buy a house. If you are not in rush and would be happy in a modest house then just keep saving!

One other thing to mention is that on your quoted figures you don't seem to have actually saved much money yet so how realistic is your £10k a year?

JustKeepSwimming_2

I'd agree with DVardysShadow - a small mortgage will give you more choice in your property. If you hate the idea of mortgage debt then you could consider a flexible mortgage/offset bank account that you could pay off early as you sound very sensible with saving.

The mortgage could also allow you to move more quickly if you wanted to & maybe allow you to keep more cash easily available for emergencies.

You have lots of time to learn about the market in the area(s) you want to live in - start doing the homework now as it will pay off! Just take what estate agents tell you with a decently sized pinch of salt...

Good luck! I'd love to be mortgage free & own my home outright {sighs deeply & shakes head}

rosyw

Having been mortgage free initially, then taking out a mortgage to get a "better" house a few years later, personally I prefer the mortgage free option. Get every check done that you can on whatever you buy, and put a fair proportion of whatever you've been paying in rent every month into a savings account for emergencies. I have always felt more secure knowing that my home is my own, and that no one could take that away!

poppysarah

Be mortgage free if you can find a house you like at the price you have in cash.

Cash buyers should be treated better than mortgage ones so it's a case of looking and keep looking for the right property.

solongmarianne

thanks everyone I appreciate the advice..

with regards to the savings situation, I am well under way already, I have set it at 10000 a year as that is comfortable for me. In my job I xpect it to continue for the forseeable future, so , as long as i am in this career I cant see why I wouldnt get to target., obviously i could be made redundant, or become ill, but I have done my sums and I am on track.
I am very orgonized when it comes to saving, ect ect.

with regards to the property. I am not a hugely materialistic person. I earn good ish money and would prefer to spend it on travelling than keeping up with the joneses in a big posh house i dont need. the places I have in mind are just yur average small terrace. having guest rooms and a huge garden is not important to me, i do want to have my own place, but i dont want to have to work to live for the next 30 years, if that makes sense x

olias

The problem with posting on an open forum is that you will get a lot of conflicting advice and reccommendations and alll those posting will believe that they are right.

You must do what you want and what you feel is right for your situation. FYI, I used to get told my choices and way of doing things re house buying were wrong/flawed by friends/family. They now all still have large mortgages, whereas I am now mortgage free with a large 4 bed home. I am not saying that to gloat, rather to say that if you have done your sums, and research and are happy with your plan and that it will work for you, then go ahead, and don't be dissuaded or persuaded to change your mind by others.

Good luck!

Olias

Fly_Baby

olias wrote: »

FYI, I used to get told my choices and way of doing things re house buying were wrong/flawed by friends/family. They now all still have large mortgages, whereas I am now mortgage free with a large 4 bed home.

Impressive. How exactly did you achieve that?

olias

That could be a whole new thread for the mortgage free wannabee section!

But as you asked;)

Basically, I took on huge mortgage (poor house in good area) and redecorated and tarted it up a bit, then sold, kept back about £10000 of profit and used the remainder as deposit on another house (poor house, good area, huge mortgage). I used the £10000 to fit new kitchen and bathroom, re-decorate, new fireplace, new front door etc. I sold for a much bigger profit and this time kept back £30000 of the profit and using the remainder of profit as deposit and a much smaller mortgage, bought an absolute shed of a house, but in a beautiful and desirable area. I completely renovated this - DG, CH, re plastered, new kitchen, bathroom, dowstairs loo, laundry room etc etc etc - basically a full renovation. Sold at a huge profit, paid off my mortgage and moved to an equally nice, but less desirable area paying cash for my current house (4 beds, 3 baths, granite, oak etc blah currently worth about £220000. This was all therefore achieved in about 12 years.

There was a bit of luck and good timing involved. My final sale was in early 2007 just before the crash so I got top dollar, I then rented for 18 months (interest on profit paid for the rental costs). I then bought again end of 2008. Vendors were desperate to sell and although house was on the market originally for £285000, I bought for just over £200000.

I think it will probably be at least 5 years before the market starts to pick up enough that you could start to do a similar thing. My next project will hopefully be a barn conversion or a wreck of a farmhouse with land. Profit could be huge with that, though I'm now really looking for somewhere I'll stay until my retirement, when I will downsize and take some equity out to fund my retirement.

HTH

Olias