Buy now, or save some more?

Jaffa_cake

Hi all,

We are about ready to buy our first house.
It will be a modest, small house, costing between £65,000 and £70,000.

We currently rent, at £400.00 per month - dead money I know.

We have £30,000 saved up, and we add about £1800 to that every month.

The choices I see we have are.

1/ Put all the £30,000 down, and borrow £40,000 over 5 years, and repay over and above the required monthly payment, finishing it off in 2 years or so, thus saving the £400 rent money, and aiming that into the house repayment.

2/ Continue to live in this rented property for another 24 months, giving us about £43000, and then hope that house prices haven't gone up, faster than our savings pot grows.

The advantages and disadvantages please.
What would you do?

JC

egoode

Firstly how long are you planning to live in the small house? If it's less than 5 years I'd maybe keep saving and look at buying a bigger place in a few years time. The main costs of buying are in the solicitors fees, EA fees if selling and moving so moving within a few years is not usually very economical and unless there are massive increases means you are likely to just break even or sometimes even lose money.

Also given you have a very sizeable deposit for the house price you are looking at I'm not sure saving anymore will give you a massive advantage. You will already get very competitive interest rate offers with the deposit you have. Personally I would start looking and keep saving while you are looking as finding the right place and then being able to complete on it can take a long time.

Suarez

Personally i would buy now if you are planning to stay there for a while. You are in a great position, house prices are rising and mortgage rates are rising.

Jaffa_cake

Thank you both for replying.

We (myself and wife) have been looking again on"Rightmove" and have seen a couple of interesting properties.

We would stay in the new house for 5 years minimum.

I guess we should approach a few lenders, and get a feel for the rates on offer.

JC

somethingcorporate

Renting isn't any more dead money than the interest on a mortgage. It's paying for the roof over your head.

If I were you I would still go for it now, you're in a decent position.

egoode

As you are planning to live there for at least 5 years I'd start looking immediately. Speak to a broker about how much you could borrow but I think you will have no issues for the amount you are looking to borrow.

London18

I also vote buy sooner if you can. At the very least start the process of getting a mortgage agreed in principle and doing some proper viewings.






You have to go and actually see properties, the internet is not enough to really get a feel for places. Some look great in photos but are hopeless in reality and sometimes initially less desirable properties end up being much nicer once you see them. You might also find you can afford to borrow more or less than you think and can revise your search accordingly.

smifffy1989

+ 1 for buy now.

The mortgage is likely to be half your rental cost and your paying off the mortgage.

Also it will build your credit rating and there is potential for the house price to rise.

Jaffa_cake

nancytrip wrote: »

Use our buy now or save calculator to compare options.

.
Hi Nancy,

Where is it, I can't find it.

JC