First Time Buyer - Assessment Needed

Mr_Mister

Me and the wife are considering buying a house. We dont know much about mortgages etc. Need to know if its worth buying now or waiting a year later when we will have more money to put towards a deposit. We have no kids as of yet and both are working. Living with the parents at the moment so no rent to pay.
Combined household Monthly Income - £2500
Savings - £7000
Credit Card Debts - £10000 (reducing monthly without spending)

Looking for a property around £200K

Thanks

maninthestreet

£2,500/month = 30,000 p.a - is that gross or net? If gross, you are looking at borrowing over 6 times your combined income.

Walter_J

I don't think you've really thought this through, have you?

You've got £7k saved up, but owe £10k on credit cards. What you should now - today - is pay off £7k of credit card debt. This will save you a fortune in interest.

Then you should spend the next year or so living as cheaply as you can. Living with parents is good for this. Pay off the rest of your credit card debt in the first 2 months and then aim to save £1500 a month. This should be easy on your combined wages.

Bear in mind that many, if not most people, now believe that house prices are likely to fall in the next few years. To buy now could be a very expensive mistake. I would urge you to bide your time and see your first home get cheaper by the day. It could well be 4 or 5 years before they stop falling in price. If you can't stand the idea of living with your parents for this long then plan to rent somewhere for a while. Rents are far cheaper than mortgages at the moment.

Oh, and do not use those credit cards again. Put them away somewhere safe and forget about them unless there is a genuine emergency. By that I mean something like a donor kidney or bailing your wife out of a Turkish jail!

Good Luck

abbecer

Sorry Walter J but i disagree. I think renting is dead money. In five years time they could be thinking about a family and money would probably be tighter then. I think definitely pay off debt first but then get a mortgage. Try to get a good price for your property and get a good deal on a mortgage and go from there.

Good luck

rebecca x

acooper_2

A quick internet search reveals that the cheapest 100% mortgage is at a rate of 6.19% (2 year fixed rate from Bradford and Bingley). This will cost 1031 in interest every month, you can rent much more cheaply, or stay with the parents for free and save the difference.

If your house doesn't go up in value (and many believe this is the best case scenario for the next few years - we may in fact see a downturn) then interest is dead money - you'll effectively be renting from the bank at a much higher cost! Far better wait and see how things play out in the housing market, and save yourself a decent deposit in the meantime.

olly300

abbecer wrote: »

Sorry Walter J but i disagree. I think renting is dead money.

Renting is not dead money if it gives you a roof over your head. If you have a choice of paying rent or living on the street what would you do? And lots of people only have that choice.

In this particular case the OP can live with their parents so should continue to do so and pay of their debt in full. Then save for a deposit and get a mortgage.

abbecer

Q

olly300 wrote: »

Renting is not dead money if it gives you a roof over your head. If you have a choice of paying rent or living on the street what would you do? And lots of people only have that choice.

In this particular case the OP can live with their parents so should continue to do so and pay of their debt in full. Then save for a deposit and get a mortgage.

Quite obviously they need a roof over their head. I wasn't insulting anyone who rents. I just personally think that whilst they have options which they quite clearly do i would buy rather than rent. I did also say that they should clear their debts first.

Rebecca x

macaque_2

Walter J gave sound advice but somehow don't think rebecca is going to be admitted to Mensa in the near future.

The phrase 'rent is dead money' was created by estate agents to close hose sales. Muppets but it every time.

The reality is that rent is payment for a service and is very good value at the moment. If house prices remain static at today's prices, you will make more money by renting and investing your money elsewhere.

If you really want to find dead money, then you need look no further than mortgage interest on an over priced home or a home that is falling in value.

macaque_2

Walter J gave sound advice but somehow don't think rebecca is going to be admitted to Mensa in the near future.

The phrase 'rent is dead money' was created by estate agents to close house sales. Muppets buy it every time.

The reality is that rent is payment for a service and is very good value at the moment. If house prices remain static at today's prices, you will make more money by renting and investing your money elsewhere.

If you really want to find dead money, then you need look no further than mortgage interest on an over priced home or a home that is falling in value.

abbecer

macaque wrote: »

Walter J gave sound advice but somehow don't think rebecca is going to be admitted to Mensa in the near future.

The phrase 'rent is dead money' was created by estate agents to close hose sales. Muppets but it every time.

The reality is that rent is payment for a service and is very good value at the moment. If house prices remain static at today's prices, you will make more money by renting and investing your money elsewhere.

If you really want to find dead money, then you need look no further than mortgage interest on an over priced home or a home that is falling in value.

Thanks for that kind insult. I still stand by what i said. If you have a different opinion then that's fine but please try and find a more charming way to present it.

Rebecca x

macaque_2

abbecer wrote: »

Thanks for that kind insult. I still stand by what i said. If you have a different opinion then that's fine but please try and find a more charming way to present it.

Rebecca x

Well I'm sorry but the the phrase 'rent is dead money' is stupid and dangerous. It wrecks lives. It encourages people to buy houses when they shouldn't. People have made money in the casino housing market in recent years but many will ruined over the coming years.