I'm leaving mse so removing some posts

WinterGhosts

I'm leaving mse so removing some posts

hazyjo

Are you looking for a home together, or a business venture/way to make money?

If you plan on being with each other long term, why don't you just buy a house for the two of you, that suits you both for at least say 5 years? Chances are prices will go down further so it probably wouldn't hurt to wait a year or so anyway, but you shouldn't really think of house buying as a way to make money and it should not be viewed as an investment.

If you do wait, bear in mind other costs might go up - like interest rates. The price might have gone down, but you might still end up paying more each month than you would now, for example.

No guarantees with property. Obviously nobody wants to lose money on such a large purchase, but, unless you plan on selling up, it won't really affect you. If prices have dropped when you need to move, hopefully you'll have enough equity to not be in negative equity, and anything you look to buy would have gone down too.

Jx

First_Time_Buyer_Guru

Hazyo is right. As long as you're not buying with any expectation of large rises in the capital value of your property, then take the plunge. The problem is that property's had the stigma of being a guaranteed inflation beating investment for too long. Even London is struggling to beat inflation now. If you intend to live there for at least 4-5 years then you should be safeguarded by the costs involved in buying, and the potential for extra dips in the market. Good luck whatever you decide to do! Hope this helps.

Running_Horse

If you need to ask, the answer is probably no.

WinterGhosts

I'm leaving mse so removing some posts

devotee

Depends on what you find to buy. If you want a refurb project then it'd be safe to leave some money aside for the works.

Larger deposit is always better, you'll have an access to better lending rates. 40% deposit is usually enough.

And if you want a good return of your investment then buy the house in a really good area, one that needs work doing and is close to good schools. And make sure you don't overpay. So in the long run you'll get a very nice family home and if you need to sell at any point, you won't lose any money.

hazyjo

IMO you need to think whether any savings would bring in more than the interest you'd be paying on the mortgage. I don't see how there's any point in paying to borrow money that you already have, but that's my opinion.

It's always advisable to leave enough in an account in case of an emergency (boiler/washing machine packing up, roof work, etc). Some people are only comfortable with tens of thousands in the bank. I'm not one of them. So long as I could find say £4k in a month or two, and have enough going into pensions, etc, I prefer to live and spend. Not very MSE, I suppose, but that's my personal situation.

I suppose it also depends on what your money can buy you in the area you're looking! No point in buying a one bed flat if using the extra cash meant you could afford a 2 bed house, for example.

Jx

princeofpounds

hazyjo has gone down the right path here.

You will need to consider what sort of mortgage deals you can get with different deposits. You will find that a smaller deposit can mean a more expensive mortgage, which is one of the opportunity costs you need to understand.

The next thing to do is to figure out where you might put the money that you keep outside of the property's equity. Paying off a mortgage is often a great way of 'saving', because it is a guaranteed return, disciplined and tax-free (because you are escaping a cost rather than booking a taxable profit).

If you think you can find a better investment after-tax and costs then it might make sense to keep money out to invest. However, be very aware of taking risk. Paying off your mortgage is risk-free, but putting the money into something like high yielding shares or bonds is not. You can get a higher yield from risky investments, but you must not compare them as like-for-like.

You must also be aware of the liquidity of your investment - should rates rise and you want to plow the money back into your mortgage, how quickly could you do it? And are there any early repayment charges?

It might be possible, given interest rates are so low and negative in real terms (i.e. below inflation) to find investments that beat your cost of debt. But cheap money is often an artificial way to get people to spend or put their money to work more aggressively and if that support is remove a risky asset will not do well.