Anyone saving to buy a house for cash?

tara747

I'm currently renting, no hurry to buy as prices are still falling here (NI). My rent hasn't risen in 5 years and isn't likely to, my LL is lovely, I like the house (though I would like a bigger kitchen).

I have been reading the MFW diaries and, the more I think about it, the more I want to buy cash - or at least have as short a mortgage as possible. 5-10 years max. I just hate the thought of paying interest! My rent is less than the interest on my friends' mortgages - and those who bought during the boom are in HUGE negative equity.

Plus, if you buy for cash, you have more freedom of choice, you're not beholden to a bank, you don't need to worry about interest rate rises - EVER. Imagine!

To date, I have saved over £72,000 (expected to reach £75,000 by the end of the year), and I reckon that I can add at least £12,000 to that each year. So, in 5 years' time, I could have £135,000+ saved. That would buy me a pretty decent house here, but if I saw a really amazing house for a higher price, I could always borrow a small amount to top it up.

Anyone else in the same position?

BlueMoo

Hi

Congrats on all your saving so far.:T

Not exactly in the same position as have a 175000 mortgage myself, but looking to overpay and save as much as possible so on our next house (8yrs time) we can buy cash or as near to cash as possible.

I live in a pretty expensive part of Surrey so prices in my area are rising at around 3-5% at the moment (in fact, they have risen throughout the 'credit crunch')

Sounds like a very good idea, especially as NI financial climate seems like it is a better idea to hold off.

KolaKube

Tara we are also in NI - I don't get the impression prices here are going anywhere fast. We've just bought last month and got a lot of house for the money. Wouldnt it be lovely to be mortgage free

I guess the negative side is paying rent while you're trying to save - I would personally weigh up how much you're going to 'waste' on rent over the next 5 years vs 5 years interest on a smaller mortgage and see which wins. Pros and cons. While you rent your LL is responsible for things breaking etc too.

Good luck!

Kola

graspandsave

That's a great saving

I don't have any direct knowledge of the NI housing market, so take your word for it that in 5 years prices will remain same-ish. also have no idea about how much rental values are there.

However, have you considered- well costed out the difference between buying now and taking on a smallish mortgage on interest only basis, whats the value of the monthly payments for the next 5 years versus how much rent you'll be paying over the next 5 years.

Presumably you will continue to save at the same rate , and could pay off lump sums annually over the next 5 years also


Either way you will own you house outright in about 5 years, may also save a few £s in true MSE if the buying now vs 5 years time works out cheaper than the renting and the saving route.

all the best

tara747

Yes, prices here are still falling. Congrats on your purchase, KolaKube - where did you buy?

Beckyy

Hi and welcome!

Buying cash does give you so much more freedom, but you also need consider if it is cheaper for you on the whole to rent and save rather than own and paying a mortgage. For example, we bought our first house with a mortgage which cost us £340 per month roughly - to rent the same house would have cost more each month and given us nothing to show for at the end of it.

With the amount you have saved for a deposit now I think you could end up being better off for buying and having a mortgage than renting and saving as you should get a very good interest rate with a high deposit, however if house prices are still falling where you are then you're maybe best to wait around.

Well done on saving so much so far, you've done an amazing job and if you do go on to buy cash it will likely give you the upper hand on any sale.

tara747

Thanks Beckyy!

I will keep reviewing the situation, and have no problem taking on a small mortgage if I find the 'right' house. I just think that prices have further to fall here.

My rent includes rates (council tax), so that saves me about £90 a month. I don't need buildings insurance, I don't own any white goods or large furniture so I haven't had the depreciation on those, and I have never paid a penny in repairs. So renting is not all bad

marathonic

tara747 wrote: »

Yes, prices here are still falling. Congrats on your purchase, KolaKube - where did you buy?

I'm in Northern Ireland as well. Whether prices are falling or rising is debateable.

We have the University of Ulster house price reports, based on surveys of a cross-section of estate agents, as well as some reports from the UK mortgage lenders giving us guides to Northern Ireland prices.

However, these are from vested interests and don't include cash sales and/or reposessions. The most accurate report we have is the report that was introduced last year and is released on a quarterly basis. This is the report based on stamp duty receipts.

The report for Q3 2013 is going to be released on 20th November but the Q2 2013 report showed a quarterly rise in prices of 2%.

It's true that the Q2 2013 report showed an annual rate of decline of 3% but Q3 2012 showed a decline of 2%. This means that a rise of 2% or more in Q3 2013 will result in the first time that prices have been rising year-on-year since 2007. I imagine the media would be all over such a story.

The reports can be viewed here: http://www.dfpni.gov.uk/lps/statistics-and-research-publications.htm

marathonic

By the way, just so you're aware of my situation, I purchased last December with a 25% deposit.

To rent my place would cost £600 monthly, including £100 rates. My mortgage is over 30 years and costs £330 monthly.

prosaver

tara747 wrote: »

Thanks Beckyy!

I will keep reviewing the situation, and have no problem taking on a small mortgage if I find the 'right' house. I just think that prices have further to fall here.

My rent includes rates (council tax), so that saves me about £90 a month. I don't need buildings insurance, I don't own any white goods or large furniture so I haven't had the depreciation on those, and I have never paid a penny in repairs. So renting is not all bad

so how much is your rent then?
if its really cheap you might as well invest in something else

sKiTz-0

I started up around 7-8 years ago saving up a pot of cash with a view to paying for a house outright - I too wanted to get around paying interest - I have a big aversion to debt since my lightbulb moment.

However, I used to keep an eye out on rightmove to see what the market was up to and a nice house came along at the right price, so I took a look and snapped it up. At that point it turned out I had around a 33% deposit to put down so my mortgage is nice and affordable and I now throw all my extra cash at overpayments as I still want rid of it as soon as possible.

I don't see it as a failure though, it was right for me. I look at it this way - I have had my own place and independance for the last 2 and a half years, apart from the fact that is priceless, the most interest I have paid a month is around £150 (although now I am down to around £100 of my monthly payment going on interest) - now you tell me where you can rent somewhere for £150 a month? I was paying more than that in board to my Dad while I was living at home and saving up.

Now I'm kind of stuck on the first rung of the ladder as my current house/bills/overpayments etc account for every penny so the only means of getting a deposit I have is the equity in my place. Which isn't enough yet to take that next step. So it's a case of paying down the mortgage as fast as I can while rates are low, then see what my options are in a few years.