To buy (a house), or not to buy (a house)...

sw1tchbl4de

Hi all, hope you've all had a nice weekend

I'm 25 (nearly 26), have a secure job paying £30k, and now have a lump sum of £30k at my disposal.

I've been thinking of buying a property, and have been approved for a £150k mortgage by the Halifax, giving me £180k to buy a place. I'd plan to live in the property for 12 months, and then rent it out whilst I go travelling. I live in London, so the rent should cover the mortgage.

I'm wondering if you think this would be a good investment, and if there are any alternative investments out there that would suit the £30k sum I have. I don't want to take any risks - not major ones - so I'm just looking for advice and ideas really.

Just looking for a property is a bit stressful, so I can only imagine what buying one would be like!!

Thus, I'm open to suggestions!

CLAPTON

superficially it would seem perverse to buy somewhere and then go travelling; who would manage it for you? would your travels depend upon the rental income?

however, I did that myself a few years ago to considerable critism from family and friends
however in my absense, house prices started to rise and so it was a good decision for me.

sw1tchbl4de

Heh, yeah, I know what you mean. The rent wouldn't finance my travels, no. It would hopefully finance the mortgage.

I want to buy somewhere BEFORE I go travelling for a few reasons:

1. I'm sick of paying rent.
2. I have the money to invest in one way or another, and property seems a common way of doing that.
3. I want something here whilst I'm travelling... rather than just leaving and then coming back to nothing.

Lokolo

Your mortgage will most likely not let you let the property out....

ViolaLass

You say you don't want to take any major risks but you propose putting all your money into one thing (a house) and then handing that thing to a stranger and hoping that they look after it and pay you rent on time/at all every month.

sw1tchbl4de

ViolaLass wrote: »

You say you don't want to take any major risks but you propose putting all your money into one thing (a house) and then handing that thing to a stranger and hoping that they look after it and pay you rent on time/at all every month.

So what would you suggest?

zcrat41

Lokolo wrote: »

Your mortgage will most likely not let you let the property out....

Mine did. Shouldn't be a problem if you are a good customer. £100 fee and job done

guitarman001

Property as an 'investment' is dead for the next decade IMO as house prices will stay flat (read: get wiped out by inflation). Don't buy into the 'property myth'. Look what it cost 8-10 years ago and if more than double, I'd hold out until prices come down.

For such a massive decision (and the biggest loan you'll ever take in your life) I suggest you do some serious research - don't listen just because your folks bought in or whatever. Right now we're in a down market and personally, I think it would be a bad move to buy in, especially if the mortgage is 5x your salary... I'm on £30k too and would never consider 5x salary. Rent dead money? Ridiculous! Go enjoy yourself. I might even move to the Fatherland for a bit - owning a house (not the posh 'property') isn't the be all and end all. It should be a HOME and not an investment IMO.

I never understood how folks can just decide to get on the property bandwagon, but I suppose the majority of the British public have been brainwashed by it (to the detriment of many who bought in the last 4 years especially, of which I know many - OUCH!)

sw1tchbl4de

guitarman001 wrote: »

Property as an 'investment' is dead for the next decade IMO as house prices will stay flat (read: get wiped out by inflation). Don't buy into the 'property myth'. Look what it cost 8-10 years ago and if more than double, I'd hold out until prices come down.

Do you mean as a way of making money? I'm actually not too fussed about that. My aim would be to just cover the mortgage with the rent, leaving me with a house at the end of it, having paid just 30k.

Is that unrealistic? I'm not thinking the price of the property would go up, but as long as the rent covers the mortgage, I get at best a £175k house for £30k...

EDIT:

Just read your updated post guitarman. I work for one of the property portals, so I guess with it being in my face 8 hours a day, property is always in the forefront of my mind. My parents never invested in anything to my knowledge...


So, I guess I'll change my original question:

I have 30k. What would you do?

guitarman001

It's a tough one. I can see why some WOULD invest in property as inflation is ripping away at your savings and bank rates are poor. The stock market is a blood bath right now IMO. Many say 'stick it in gold' and while I think it will hit $2000 I am not risking my own money. RIght now I have half of mine in NS&I index-linked, one quarter in savings accounts, and the other quarter sitting at a 70% loss in shares.

If you think this house is going to be for long-term and not to make money for it, and you are OK with it losing 10%+ of its value, which it may do, who knows... then I say buy as long as you are 100% certain it's what you want. Personally, I am just keeping my money in savings accounts for now. Too much volatility elsewhere.

guitarman001

My girlfriend used to own a detached house which cost £98k 10 years or so ago. Now it is 'worth' £245k - RIDICULOUS. With soaring student debt, global debt, UK debt, low wages, no jobs, and banks slashing mortgage lending, I don't fancy the chances of the UK housing market. It's a con - When that same house comes down to £140-150k then I'll say things are at fair value.

EDIT - this does no constitue proper financial advice yadda yadda...