To Save or Buy?!

littlebearbeer

Hi all,

Sorry if there are other answers or discussions already in the forum but didn't really get anything out of the search function!

My partner has been left some money from his grandmother, approx £50,000 and we are wondering whether to save this money whilst we still rent (£850pm) or go straight into getting a new house/mortgage?

Savings seem pretty rubbish but is there also a chance of waiting out for house market crash?

Any ideas or suggestions would be most welcome... we don't really know where to start!

Thanks for reading

Pimperne1

littlebearbeer wrote: »

Hi all,

Sorry if there are other answers or discussions already in the forum but didn't really get anything out of the search function!

My partner has been left some money from his grandmother, approx £50,000 and we are wondering whether to save this money whilst we still rent (£850pm) or go straight into getting a new house/mortgage?

Savings seem pretty rubbish but is there also a chance of waiting out for house market crash?

Any ideas or suggestions would be most welcome... we don't really know where to start!

Thanks for reading

I suspect that all you are going to get on here are personal views so good luck with that.

My view is that property is always a good investment in the longer term. The fact that you are paying such a high rent would lead me to believe that you bring in a decent income and even if you went for a mortgage of £150k at the current available rates of, say, 4.5% 5 year fix, then you would well afford the repayments. In addition I would certainly suggest that you fix for a couple of years at least (but probably more if your personal situation allows) so that you can be sure that what you can currently afford doesn't become unaffordable if interest rates rise high and quickly (although that's quite unlikely).

You'll need to allow a couple of thousand for arrangement and legal fees too I expect.

Good luck.


PS If prices go down in the near future (I personally am not expecting much more to go off) then you need to be aware that its your £50k its biting in to and not the £150k loan - that might hurt but you need to look long term and houses only ever go up IN THE LONG TERM.

AliceJenkins

Waiting for the house market to crash?

Contrary to the scare mongers on this forum, prices are rising not falling.

http://www.housepricecrash.co.uk/graphs-average-house-price.php

atush

Well, last I checked there had already been a crash lol.

Where do you live? Will 40K be enough of a deposit for you to buy there? Will your mtg be less than your current rent?

What other savings do you have? Debt? Pensions? Any bg expense coming up that you would have to borrow for (holiday, new car, etc).

If you are in a good sound financial condition, and you can afford to buy in your area, it could be a good idea. But will depend on the answers to Qs above. There are expenses with buying and furnishing a home, plus ongoing costs from rates, to Buildings ins to maintenance that will have to be afforded as well as any mtg.

doire_2

littlebearbeer wrote: »

Hi all,

Sorry if there are other answers or discussions already in the forum but didn't really get anything out of the search function!

My partner has been left some money from his grandmother, approx £50,000 and we are wondering whether to save this money whilst we still rent (£850pm) or go straight into getting a new house/mortgage?

Savings seem pretty rubbish but is there also a chance of waiting out for house market crash?

Any ideas or suggestions would be most welcome... we don't really know where to start!

Thanks for reading

One of the biggest decisions of your life and you come on here for answers? Good luck with that!

reweird

Buy now or forever be locked out the housing market as prices are soaring >1% each month.

HAMISH_MCTAVISH

littlebearbeer wrote: »

we are wondering whether to save this money whilst we still rent (£850pm) or go straight into getting a new house/mortgage?

Savings seem pretty rubbish but is there also a chance of waiting out for house market crash?

As a national average, mortgage interest is around 3.5% and rent is around 5.5%.

Rent prices are soaring, and mortgage rates are likely to stay ultra-low for many years.

House prices are basically stagnating, with the Nationwide index slightly positive year on year, and the Halifax slightly negative.

The crash already happened, this is the "bump along the bottom" phase. No credible observer or analyst expects significant further falls, and small falls usually aren't worth waiting for given how expensive rent is getting to be.

But all of the above is based on national averages. Local conditions can vary immensely. If you're in one of the few areas still seeing significant falls in actual sold prices, like Northern Ireland or the North of England, then waiting makes sense.

If you're in an area of higher than average rental yields, or where prices are outperforming the average, then buying becomes a bit more urgent.

So overall then, for most people in most areas it makes more sense to buy than rent. But check your local conditions very carefully.

Graham_Devon

Do whatever is best for you, based on finding a house you really like, in an area that you like, vs any renting blues you may or may not have.

Take no notice of those on forums (any forum) who tell you the future direction, or even attempt to second guess it. They have been wrong and will be wrong again.

In your position, my theory would be to examine how happy I currently am renting, vs what i can get if I save. Especially if I hadn't found the "perfect" house as it were. I'd just continue saving. If I found a house I relaly liked, I'd probably buy and get on with it. Any correction in the markets is going to be an extremely long drawn out affair if politicians around the world have anything to do with it.

Crash or no crash, I can't see anything that is going to propell prices upwards to an extent that you will be worse off in the long run waiting. not trying to second guess a market, just can't see anything out there thats going to increase prices by thousands. Point to note...I've also been wrong several times thinking prices would be lower now than they currently are. So think about it yourself

Mallotum_X

As well as the house price considerations (and all you will get on house prices are the long held views of the posters as you can see), you need to consider your personal cicumstances.

Are you happy to stay in the area you are buying, if you buy now and need to move in 18 months then this is likely to cost you serious money. Prices may be up or down a little in 18 months, but the costs of moving, solicitors, estate agents, mortgage penalties etc are likely to be significant. If there is any serious chance of you needing to move in the short term then selling your home will cost. In many parts of the country houses are taking a lot longer to sell than they have done previously, so if you needed to move fast then significant price drops may be required.

Buying will give you some extra security, whereas renting gives you much more flexibility.

As to price changes, then whilst I do think prices will continue to fall, I doubt there will be a big crash any time soon (unless something serious happens with Europe/Banks), in which case any savings by waiting will be erroded by rent. It really depends on how much you want your own place.

Of course local conditions are everything, most of the country is not seeing price rises, so theres no need to rush into anything as you wont miss the boat. Research your own local prices, check the trends on the types of houses you are interested in, as well as the wider maket. Then do your research on the actual houses you like, check what the last sales price was for it or similar, and do not overpay, a reasonable number of houses currently for sale are on at peak prices, rather than current, so make sure you are well armed with the local info.

Good luck on whatever you decide.

abaxas

It will depends where in the country you live.

Some parts are crashing, others booming, some stable.

Ie it depends.

Pimperne1

Oops, having read the rest I very clearly missed out a very important part. Of course don't buy in places like where prices are continuing to fall by a significant amount (ie NI or the North East).