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

AndyPK

Having said that I don't understand mortgages and managed to buy a nice house without one.

Dan-Dan

what to do ?
Have the week of your life in Vegas :beer::D

duchy

As you are young and haven't made any definite future plans with what to do with your life eg you have not immediate plans to settle down with a partner etc perhaps it is better to think about keeping your options open.

A two bedroom property would get you on the property ladder but still enable you to save without compromising your single life -so if in a years time you decide to travel, take up a fantastic job opportunity in another city (or country) start your own business......whatever you wouldn't be saying "I can't do it because I have a large mortgage"

If you were older -or more settled - say planning kids in a year or two the answer might be different - but where you are now - there's no good reason to stretch yourself financially too far in a economic climate that in the short term isn't offering stability or growth.

If everything went pearshaped tomorrow -you'd have a decent investment , savings and a spare room you could let out ....if you went for the three bedroom option, you'd have a larger monthly commitment , and significantly less savings. A third bedroom that you have no current use for (unless you are planning to take in lodgers to pay the mortgage-always an option) possibly at the expense of compromising your future portability -considering your age and current circumstances doesn't make a lot of sense to me.

You'll get a variety of opinions -some based purely on financial grounds, some based on the assumption property will always be a good investment ...........none are especially right or wrong - just differing views-only you will know which suits you, your personality and future plans and aspirations.

Edit The one thing I'd add about buying a bigger house is to consider if you are prepared to invest the money and time on an ongoing basis to maintaining and improving the property. All houses are money pits to one degree or another -the larger the house the more attention they will need. Cost that in to any calculation.

pinkteapot

Get a mortgage that you can comfortably afford to pay.

We bought in 2010. We had a large deposit and bought very sensibly, taking about a quarter of the maximum mortgage we could have done.

I regret it and we're now looking to move to somewhere nicer.

Being sensible is all well and good but we're currently putting £1,500 a month into mortgage overpayments or cash savings that are earning a pittance in interest. If we'd got a nicer house three years ago we'd have already made a good dent in paying off its mortgage.

The first few years with a mortgage are the hardest. In theory at least, your salary increases over time. Even if it increases by less than inflation, it should still increase. Your mortgage debt is fixed and therefore takes a smaller percentage of your salary over time. Yes, it can go up if interest rates go up, but it's still unlikely to increase faster than your wages.

Get a house that you at least have the option of starting a family in. Get a mortgage that lets you make unlimited overpayments and overpay as much as possible. In three years we've knocked seven years off the length of our mortgage and reduced the interest we'll pay over its life by £11k, by overpaying. Although we now want a nicer house, we'll still be buying one where our budget won't be too tight and will again be making decent overpayments.

Tirian

citricsquid wrote: »

... if you're tied down with a mortgage (and renting out your property is rarely a solution) you're going to be stuck.

Agree with a lot of what you've said here, but not this.

If you have £150k equity in a £210k property then I can't see any difficulty getting agreement to let from the bank. Rent would easily cover the mortgage payments, and the rental market in Reading is going to be pretty decent.

Another factor that hasn't been mentioned so far I think is the possibility of taking a lodger under the rent a room scheme.

In a three bed property this would give you a bit of company and some tax free income to offset the cost of the mortgage. Given the relatively low level of mortgage, you could probably even cover the whole amount with the rental income ... and have a bit of company to boot.

Personally I'd be very tempted to go for this option at your stage.

Tirian

Tancred wrote: »

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.

This.

As for quitting/reducing work at 40 ... well, good luck. But take a thought about a few things here. First, you are likely to live longer and get less in pension than your parents' and grandparents' generations. Do you think you will have sufficent resources by 40 to sustain you for 60+ years? If not, then forget this.

Also think about your parents. Sounds like they've helped you out a lot. They are going to be around for a long time too, and it is reasonably likely that may need long-term care at some point of their old age. You may want/need to help them out ... if you've put your feet up for the easy life, that's going to be tricky.

I know you probably don't want to think about that now, but better to have it in mind if you really are making long-term plans.

duchy

My biggest question would be - If you retire at forty - what would you intend to do with the rest of your life ? Some people have consuming hobbies or passions but many people whether they retire early or later often find retirement isn't all it's cracked up to be and they are frankly bored ! You might be better to find a career that inspires and satisfies you so that going to work isn't just about racking up money in the bank (often those kind of jobs don't pay well so been mortgage free can liberate you and enable you to take that path)

Tancred

Fraise wrote: »

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 am sure the OP 'saved' in the broadest possible sense, i.e. parents, grandparents and uncles/aunts 'saved' on his behalf! :rotfl:

Tancred

duchy wrote: »

My biggest question would be - If you retire at forty - what would you intend to do with the rest of your life ? Some people have consuming hobbies or passions but many people whether they retire early or later often find retirement isn't all it's cracked up to be and they are frankly bored ! You might be better to find a career that inspires and satisfies you so that going to work isn't just about racking up money in the bank (often those kind of jobs don't pay well so been mortgage free can liberate you and enable you to take that path)

Retiring at 40 is impossible unless you become a very successful entrepreneur or win the lottery jackpot. The earliest you can claim a pension pot is now 55 and the vast majority of people the same age as the OP will be retiring at 70.

hellzbellz

id try to find a house for less than 150k to buy outright and keep the rest in savings