To Buy or Not To Buy

PinkChampagne

Hi All,

I am really unsure what to do here and I would really appreciate your opinions.

I have £50k inheritance due to me in a few months and clearly I would love to buy a home as this is a once in a life time opportunity to have such an amount.

I would like to use £30k as a deposit and the remaining £20k to clear any debts and for buying costs etc. I have used a mortgage calculator and spoken to an independent financial advisor and on my salary the maximum mortgage i can get is £95K.

The following options that I have been offered and I have also considered are:

1. Part buy and rent and I can get the 2 bed that i'll ideally prefer.
2. Buy a one bed on the open market but leave Central London as that is where I currently live right now and I work in central london.
3. Save the money and wait 5 years to see if the housing market becomes more affordable and/or I have a better job.

I am in 2 minds I want to part buy part rent but I have read horror stories for when it comes to moving. But if I buy on the open market I can only afford a one bed.

I am really lost on what to do.

Background info on me
23
Still living at home
Im only considering South East London as I know this are very well

Cubbington

I'm personally not keen on shared ownership but I think shared equity (depending on the t&c's) is quite a good idea if they have any of those around (as you don't pay rent and have 10 years to find the extra money/mortgage for the remaining share). However I think shared ownership does work for some people, you just have to weigh up the pros and cons. (Pros - you can get on the housing ladder, you effectively own your own place that you can decorate/do what you want with, Cons - you might find your rent increase at any time, you dont own a whole property, you might find it takes a long time to sell when you decide to move as it normally has to go through the HA channels first)

Would it be possible to move further out of London (but not too far) and cost up the travel/time of travel? You might find some areas where you hadn't thought about might be more affordable and not too much of a hassle for travelling i.e. reasonable walking distance of bus stop/train. Might be worth looking x amount of miles in each direction to see if you have any better options.

Presumably the longer you live at home the more money you can pay off your debt and then save up? If you can bare living at home for a little while longer it's worth doing - you said you're waiting a few months for your inheritance so maybe timescale an extra 6-12 months at home and look at what extra money you'd have avaliable?

PinkChampagne

Thanks,

I will try looking in a few other directions and weigh up the travelling costs.

Running_Horse

You're not going to get much for £125,000 in central, or outer London. Further out on a train line might be worth a look, but fares are very expensive. Dartford offers a few possibilities near the station:

http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=STATION%5E2645&sortByPriceDescending=false&minPrice=110000&maxPrice=130000&minBedrooms=2&radius=1.0

I'm not a big fan of shared equity; you suddenly need to find tens of thousands years down the line when you are most likely to be thinking about moving on. Shared ownership is usually only good if your circumstances do not change.

I bought at your age, and to be honest it often felt like a tie when I could have been getting on with life. It might be worth paying off your debts. investing the rest for a few years, and keep saving.

brit1234

Shared equity is as much a scam as shared ownership, they are just a way to hike the price artificially.

Best to pay off your debt and save for a couple years while London prices fall.

Orpheo

Shared equity/ownership is a scam.

PinkChampagne

Orpheo wrote: »

Shared equity/ownership is a scam.

Can you please elaborate why it is a scam?

dorset_nurse

I personally would not want to get involved in a shared ownership scheme as the property is not wholly yours and means you can be messed around as you only own a share of the building. You will be paying rent for the remainder which may not be realistic compared to the percentage you own- and how do you contest when the rent goes up? Or you have to pay to decorate/maintain/repair?

I wouldn't save at this moment in time because savings rates are lower than inflation so I'm actually regretting having savings and trying to put as much on my mortgage as I am allowed.

If I were you I would buy a place I could afford outside of London and pay off the debts you have. You are not wasting money renting and you can still save to move further up the property ladder when the time comes; and in this market you may get a good place for the money.

Running_Horse

Even allowing for buying costs, £20,000 is a lot of debt for someone your age.

If you do buy, money will be very tight for the first few years.

Please please please avoid borrowing again during that period, and be sure you can afford all the costs of home ownership.

PinkChampagne

Dorset_Nurse should I just bite bullet and get a one bed which I know I will be able afford then go for a two bed?

PinkChampagne

I got a loan for my post graduate course which is £12k that is the only large debt I have.

The remaining £8k I want to use to pay for solicitors, moving and furniture etc