Deposit of £150k, what would you do in my situation?

DRP

would buy the more expensive house, which will have more room to grow into.

A small mortgage of <100k is entirely manageable for someone who has managed to save 150k!

Tancred

dave_100 wrote: »

I live at home with my parents happily in Reading
I have £150,000 saved and am looking to buy my own place also in Reading. The options are either a 2 bedroom place for about £180k which with help from parents I would not need a mortgage. Alternatively I could stretch to a 3 bed place at £210k or so, with a mortgage of £60k.

At the moment I'm in a relationship but not at the stage of moving in with her and would like my own place.

I'm trying to take best advantage of the money that I have saved and not sure what is best, is it to buy somewhere cheaper but not quite big enough for a family home with no mortgage (2 beds), or go for the 3 bed place which I could start a family home in (though we might outgrow it, the third bedrooms at this price range tend to be small) with a mortgage. The 3 bed option would get me higher on the property ladder, but I don't like the whole prospect of borrowing so much money in the form of a mortgage and how much of the repayments are interest! Also I'm not sure it would be big enough for a "home for life".

House prices in Reading have stayed stagnant and possibly slightly rising over the last few months. I'm in a job where I bring home £1.9k a month and at the moment am saving about £1500 of it a month. I'm not in a rush to move out but at 25 feel I should and do want to grow up soon!

I'm looking for the most sustainable plan, ideally one that I can use my savings to my advantage that I can lead a life where I can even retire early due to my head start in life savings wise.

If anyone has any advice on the above or alternative suggestions on what you would do in my situation, they would be gratefully received.

I'm also from Reading and prices are most definitely not stagnant - they are rising. You are very lucky to have £150k at a very tender age! We have £170k equity but we're in our 40s.

My advice would be to go for a more expensive house - it will increase in value more over the years. Flats tend to go up in value much more slowly because of the more limited market - families don't tend to like flats. And you'll have to pay a service charge, which could be as much as £2k a year - not small change.
You can get a very decent house for £250k - at the stamp duty threshold there are bargains aplenty to be had. Many houses on for £270k will accept £250k. Go for it.

Tancred

ReadingTim wrote: »

With your income and deposit you could be looking at a mortgage of £200k, giving a potential purchase price of £350-380k, so looking a places in the £400k asking price range, which isn't bad for Reading, and could well be a "forever home".

The OP appears to be on about £30k or so - a mortgage of £200k?? Doesn't make sense. £120k is the most he could borrow, surely.

Poppy9

Not sure how old you are but a few other ideas

1. Stay living at home and buy a house and rent it out until you are ready to leave home. This way you will probably get better return on your £150k and you can still save money each month
2. Buy a 3 bed house with a mortgage and take in a lodger to help pay the mortgage

Fraise

dave_100 wrote: »

I live at home with my parents happily in Reading
I have £150,000 saved and am looking to buy my own place also in Reading. The options are either a 2 bedroom place for about £180k which with help from parents I would not need a mortgage. Alternatively I could stretch to a 3 bed place at £210k or so, with a mortgage of £60k.

At the moment I'm in a relationship but not at the stage of moving in with her and would like my own place.

I'm trying to take best advantage of the money that I have saved and not sure what is best, is it to buy somewhere cheaper but not quite big enough for a family home with no mortgage (2 beds), or go for the 3 bed place which I could start a family home in (though we might outgrow it, the third bedrooms at this price range tend to be small) with a mortgage. The 3 bed option would get me higher on the property ladder, but I don't like the whole prospect of borrowing so much money in the form of a mortgage and how much of the repayments are interest! Also I'm not sure it would be big enough for a "home for life".

House prices in Reading have stayed stagnant and possibly slightly rising over the last few months. I'm in a job where I bring home £1.9k a month and at the moment am saving about £1500 of it a month. I'm not in a rush to move out but at 25 feel I should and do want to grow up soon!

I'm looking for the most sustainable plan, ideally one that I can use my savings to my advantage that I can lead a life where I can even retire early due to my head start in life savings wise.

If anyone has any advice on the above or alternative suggestions on what you would do in my situation, they would be gratefully received.

First off, well done you on saving so much money and at such a young age too! Any tips on how you did it please?

I have always been told that in terms of investment it's better to buy bigger or better , as long as you can comfortably afford it, as when property prices increase you'll get a bigger slice of the cake sharewise when your property goes up in value i.e 10% of £100k is £10,000 while 10% of £200k is £20,000 and so on.

You're also wanting to marry and have a family one day and moving does cost a lot of money so buying bigger now, and you can easily afford to, sounds a good idea. A £60k mortgage is not very much at all for you and you can always make overpayments. With your saving skills you'll probably clear your mortgage very quickly.

Interest rates on savings are shockingly poor so investing in a property will bring you much greater dividends and you can always take in lodgers for extra income or if you want to go backpacking you can rent the whole house out. While you're away backpacking, say, your investment is growing but if you keep the money in the bank you won't be topping it up if you're not working so it will be just sitting there maybe even dwindling if you have to use it for funds.

To make a decision look at the time it took you to save £150k and how much you put in each month, add up the interest you've earned since you started saving, then go back to the date you started saving and have a look at how much this property you like was worth back then and how much your repayments would have been, and how much you would have made in terms of profit i.e. savings.

System

Move to somewhere cheap, buy the same type of house for £100k and leave £50k in the bank!

cwcw

dave_100 wrote: »

I have £150,000 saved
..............
I'm in a job where I bring home £1.9k a month and at the moment am saving about £1500 of it a month. I'm not in a rush to move out but at 25 feel I should and do want to grow up soon!

Saving £1,500 a month since before you'd even reached your 17th birthday is pretty impressive.

Any tips? I thought I was a hardcore saver but you take it to another level! :money:

puregeordie

Your young, great deposit, Get as high mortgage as possible that you feel comfortable with (personally <= £100k) and the biggest property you can in an upcomming area. You have many years to pay off and the rewards would be greater later in life, and having a house that can grow with you and your family. House prices will only start to rise and they are IMO bottomed out somewhat over the past year or so.

Good luck.

AndyPK

Don't forget to Allow at least 10k for furniture.

Money for buying house process.

You need to pay parents back.
With no mortgage you can save well.

You don't know where the relationship is going.
If its a nice 2 bed you could still have a kid there

People seam to think house prices will increase more than the payment on interest for a mortgage which surprises me.

Why pay interest for a loan when you don't need to?

AndyPK

Once you have a kid that will be money gone though.