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First time buyer - Looking for some advice

Medihv
Posts: 49 Forumite

Hello all and thank you in advance for any help that you may be able to offer.
My wife and i have recently decided to look at buying. I am a member of the Armed forces and we currently live in a house provided by the Military for married couples. We have decided that whilst the house we currently live in gives us many benefits, such as low rent and cheap bills etc, it doesn't place us on the "ladder" and i my biggest concern is that i could live like this for most of my career and end up leaving with no property to go to!
Now the question i am really struggling with is this. What would be financially best?
1- Buying something near the upper section of our budget, a 3 or 4 bed house for £255k and then selling it when i get posted to another base in 3-5 years time.
2- Buying something cheap like a 2 bedroom flat for around £120k and overpaying the mortgage buy quite a large amount and then renting it out when i get posted to another base in 3-5 years time
Here is a little information on us if this makes any difference
Me- 26 years old and on £29,668 with a good credit history
Wife - 25 years old on £38,000 with a good credit history
Deposit currently - 35k
We have no kids
Area is Swindon and house prices here are cheap
Thank you for taking the time to read this!
My wife and i have recently decided to look at buying. I am a member of the Armed forces and we currently live in a house provided by the Military for married couples. We have decided that whilst the house we currently live in gives us many benefits, such as low rent and cheap bills etc, it doesn't place us on the "ladder" and i my biggest concern is that i could live like this for most of my career and end up leaving with no property to go to!
Now the question i am really struggling with is this. What would be financially best?
1- Buying something near the upper section of our budget, a 3 or 4 bed house for £255k and then selling it when i get posted to another base in 3-5 years time.
2- Buying something cheap like a 2 bedroom flat for around £120k and overpaying the mortgage buy quite a large amount and then renting it out when i get posted to another base in 3-5 years time
Here is a little information on us if this makes any difference
Me- 26 years old and on £29,668 with a good credit history
Wife - 25 years old on £38,000 with a good credit history
Deposit currently - 35k
We have no kids
Area is Swindon and house prices here are cheap
Thank you for taking the time to read this!
Great things are done by a series of small things brought together.
If you cannot do great things, do small things in a great way.
The greatest good you can do for another is not just to share your riches but to reveal to him his own.
If you cannot do great things, do small things in a great way.
The greatest good you can do for another is not just to share your riches but to reveal to him his own.
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Comments
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My advice is always to stretch as far as you can realistically afford. As prices go up the percentage increase will be best on a higher value property.
Also, would you need to sell when you move? If you converted to a buy-to-let mortgage when you need to move you have a pension pot.
That's my opinion, others may of course disagree0 -
which is fine when house prices go up, but the same percentage loss when they crash, higher value properties arent as easy to shift or rent as quick as lower end - if u need flexibility consider this part too0
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Plonk yourself somewhere in the middle. Get a 2/3 bedroom house in a reasonable working class area (but not a council estate). There will always be demand for these type houses and you would be able to rent it out easily. Somewhere you can easily afford and pay off the mortgage and look for a house you can make improvements, ie a garden for an extension etc. Give yourself lots of options in the future.Changing the world, one sarcastic comment at a time.0
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Thank you all for the advice.
May i throw another question up into the air?
I know that mortgages come attached with high repayment costs, for example a a £100,000 mortgage will leave almost £170,000 repaid after the time due to interest.
I know that its a very tempting ideal to strive towards having a more expensive house because if house price where to raise then you would be far better off. A 2.5% rise would be much higher if you owned a 300k house over a 120k flat.
But.... Does having the ability to overpay a mortgage and clear it off in perhaps 9 years as apposed to 25 years beat this effect? Ie saving up to 70k in interest alone as apposed to the difference you would make having a more expensive house should the prices rise?
Pretty heavy stuff.....Great things are done by a series of small things brought together.
If you cannot do great things, do small things in a great way.
The greatest good you can do for another is not just to share your riches but to reveal to him his own.0 -
You'll pay a lot less interest if you can pay it off in 10 years or so and give yourself a lot more options for the future. If in 10 years time you have no mortgage, you'd find it easier to start your own business, or go on an extended holiday etc.
Since young people are struggling to get on the property market at all, I don't think prices will sky rocket as they have in the past. Personally I don't think of your first house as an investment, it's your home. You'll need a home until you die, so most profits will remain on paper and not be realised. (unless you sell it to pay for care home fees etc).Changing the world, one sarcastic comment at a time.0 -
The advice used to be to stretch yourself and buy the best house you could afford, as buying and selling is expensive so it's best to minimise the number of times you do this. However stretching yourself is fine when a couple of years of payrises will mean you are no longer stretched. However most of us aren't getting payrises and other bills are increasing more so people can be worse off a couple of years later. Also what happens if one of you loses your job for a while or you get pregnant and need to pay for childcare or have a reduced income? So depending on your circumstances I now believe that while you should buy the best house you can afford and that will meet your needs for at least five years, it should be at a mortgage repayment level that is affordable each month with a safety margin.
However this advice is only the case if where you are now is somewhere you would like to stay long term and you want to buy a home for yourselves. If your priority is to buy an investment property to let out then you need to think differently. What type of property is popular with renters, what gets the best rent for the money you invest, what property is easiest to maintain when you are not in the area, where is near family perhaps who will pop round should tenants have an emergency, etc. This property might not be somewhere that you want to live and might even be in a different area, but it's a business decision and should be treated as such.
So are you looking for a long term home or an investment property, don't try to mix the two?Don't listen to me, I'm no expert!0 -
1- Buying something near the upper section of our budget, a 3 or 4 bed house for £255k and then selling it when i get posted to another base in 3-5 years time.
2- Buying something cheap like a 2 bedroom flat for around £120k and overpaying the mortgage buy quite a large amount and then renting it out when i get posted to another base in 3-5 years time
Here is a little information on us if this makes any difference
Me- 26 years old and on £29,668 with a good credit history
Wife - 25 years old on £38,000 with a good credit history
Deposit currently - 35k
We have no kids
So you'd be looking to raise £85k for the flat or "push the boat out" to £220k for the house? Yet your combined income is currently £68k, with low fixed outgoings...
I don't see why you can't do both, in effect. 3x joint should not be a problem, so the house is well within your reach. You're going to have enough spare salary to overpay that, then rent it out when you get posted.
Buy the flat, and you could easily have paid the mortgage off by the time you're posted, if you push yourselves. If you're happy to live there for the interim, then buy two, one with a BtL, and rent that out now, then overpay as hard as you can.
One question - when you're posted, will your wife move with you? What will happen to her income when she moves? If she isn't, then won't she still be living in the place you're talking about renting out?0 -
I would also bear in mind that interest rates are really low at present, but likely to go up at some point, so safety margin is, for me, really important0
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It seems you haven't considered the third option of remaining where you are and saving money for a property after leaving the armed forces?
Will the savings you make & flexibility outway an increase in house prices?
What about the number of months required to selling a property? Would you be asked to move at short notice?"No likey no need to hit thanks button!":pHowever its always nice to be thanked if you feel mine and other people's posts here offer great advice:D So hit the button if you likey:rotfl:0 -
The fact that you're so unsure about what to buy at the moment suggests to me that you're not quite ready to commit to buying a house. You're both on very good wages and already have a decent deposit - Why not continue saving and make it even bigger? If you're living in military housing you should be able to save a pretty big chunk of your income, and the bigger your deposit the broader your options when you do decide what you want.0
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