1st time buying a flat - and so so sorry for this!!!

bitsandpieces

In the short-term, you'll find it pretty expensive to back out now. Because you have exchanged contracts, the seller can come after you for their losses. Get advice if you're considering this - it may be that being in the US makes it harder for the seller to extract money beyond your deposit on the property from you, though I don't know how things would work in these circumstances - but pulling out is an option with lots of downsides.

In the medium- and long-term, can you get advice on investments? You say that you want a relatively low risk investment, but you've put all your savings into a single asset in a foreign currency. You may have your reasons for doing this, but it's worth thinking about whether a portfolio of other investments would be a better fit with your goals.

bitsandpieces

jumperabv3 wrote: »

Forget about cancelling it.
I have the money for the flat sitting in the bank now.
Should I convert the GBP to USD or buy an option to protect myself against further declines of the GBP - or like the guy above said I have issues with meaningless numbers?! (Perhaps $40,000 is meaningless because it's not really $40,000 but it's hard for me to understand it's not until I sell it back ...)

It sounds like you're talking about currency speculation - you could gain by moving the money if the US $ rises, or lose if it falls and you have to convert back to sterling. This is a high risk way of investing.

If you're leaving the money in UK banks, there's details of where to get the best interest rates here https://www.moneysavingexpert.com/savings/savings-accounts-best-interest Also info on UK government protection for savings https://www.moneysavingexpert.com/savings/savings-accounts-best-interest

jumperabv3

ILW wrote: »

It's not a new build is it?

It is, why?

jumperabv3

Am Am

bitsandpieces wrote: »

It sounds like you're talking about currency speculation - you could gain by moving the money if the US $ rises, or lose if it falls and you have to convert back to sterling. This is a high risk way of investing.

If you're leaving the money in UK banks, there's details of where to get the best interest rates here https://www.moneysavingexpert.com/savings/savings-accounts-best-interest Also info on UK government protection for savings https://www.moneysavingexpert.com/savings/savings-accounts-best-interest

I am not so sure there is high risk buying dollars tody at all costs, I didn't know it before but we all know the situation with Greece, it's completely screwed, there are bank runs in Greece and Spain, I don't think buying USD at this price is a bad idea, the way things move we might get to PARITY between the GBP and USD sooon.

i

ILW

jumperabv3 wrote: »

It is, why?

In the UK it is generally accepted that new builds lose around 10% of their value the second anybody move in.

Has the friend that advised and helped you with this investment, got any financial interest in any of the parties involved?

jumperabv3

U

pinkteapot wrote: »

It only matters because I would assume that it's a new-build property, not a second hand place, based on the amount of time between exchange and completion?

Builders do pursue people who pull out after exchange. You would definitely lose the deposit and any costs you've incurred so far. The builder could then also sue you for the costs of re-marketing the property AND any shortfall if it subsequently sells for less than you agreed to pay.

See this thread if you're buying a new-build:
https://forums.moneysavingexpert.com/discussion/1966021

If anything, the builder of a new-build is more likely to sue if you pull out after exchange than the seller of a private property.

I understand I cannot back off.
I understand I cannot cancel the deal.
I have 90% of the property price in GBP sitting in the bank.
The GBP is collapsing (1000 pips in 1 week is not a joke).

What should I do with the 90% of the money for the flat until it's completed? Buy USD and take shelter against Greece exiting the Euro and Spain defaulting on its debt???

This is my question....
The other option is to wait 5 years minimum until all this mess is fixed and I'm not sure it will be fixed.
Maybe the UK will be like Japan, never thought about it but looking at things now I am not rullin this out.

Am I thinking correctly or not???

jumperabv3

ILW wrote: »

In the UK it is generally accepted that new builds lose around 10% of their value the second anybody move in.

Has the friend that advised and helped you with this investment, got any financial interest in any of the parties involved?

Are you serious??
In this case I'd rather lose the deposit and back off.
No, he hasn't told me this but he also invested in a new building as a uy to let and he's happy with it.

If it's true what you're saying I really should back off, it would be a waste to buy it if it loses 10% of its value.

He said Wanstead has no new builds and almost no places to rent, so I thought it's a good investment.

Thinking about the GBP crashing with extra 10% loss right when someone moves in sounds so bad, should I back off????

pinkteapot

Hang on, don't pull out because of what happens to new builds.

If you try and sell a new-build within say 2-3 years of buying it then yes, you will lose out on what you paid for it. You pay a premium for buying brand new.

But, in the long term, it evens out. My parents had a new-build house for more than 20 years and made a lot of money on it. Over the long-term, due to the effects of inflation, the fact you paid more for a new build will make very little difference to your profit.

SternMusik

Just out of curiosity, is it this development here? http://www.rightmove.co.uk/new-homes-for-sale/property-36860882.html

You left it a little late to do your research! A rightmove search will tell you what the asking price is for pre-owned two-bed flats in the area. Not that it helps you as the ramifications of pulling out of a deal after exchange of contracts can be quite serious, I believe. (Legal costs? Deposit lost? The developers can probably sue you for breach of contract or something.)

bitsandpieces

jumperabv3 wrote: »

Am Am

I am not so sure there is high risk buying dollars tody at all costs, I didn't know it before but we all know the situation with Greece, it's completely screwed, there are bank runs in Greece and Spain, I don't think buying USD at this price is a bad idea, the way things move we might get to PARITY between the GBP and USD sooon.

i

The problem is that - if you're going to go ahead and buy the place - you'll need to move the money back into sterling again. I don't know where the £ will sit against the $ in three months but - as you've found out - things can move up and down a fair bit. Much brighter and better-informed people than me fail to accurately predict short-term currency fluctuations.

I've never changed that amount of currency, but is there much of a cost to each transaction?