To buy or not to buy....a 26 year olds question!!!

brummie_boy

Evening all....

After advice really...

I'm 26 in a secure job earning total package of £35.5k, out of which I have to pay for my car with an existing loan of £265.month.

Only have £2k saved after travelling and student debts etc....although am still paying student loan off (minimum amount) - around £8k left.

Find myself able to save around £1k per month, barring any exceptional costs.

Living with parents at the moment, not too much of a problem as its a huge house and spend at least 3 days a week at my partners house. Not really ready to move in with her for a while.

So.....it seems I have 3 options - any comments gratefully recieved!

1 - buy somewhere with 100% mortgage in next couple of months. I will only buy a place if I can see myself being happy there for at least 7 years - absolute minimum cost for this will be c. £130k in my area. I'd save my £1k per month until completion to help pay legal costs etc

2 - rent somewhere cheap (alone or house-share) and limit my monthly savings, but have a bit of 'freedom'; feeling a bit old to be living with the folks!

3 - stay here for a set amount of time and save at least £10k; and hope the housing market stays level or dips.

Side note - I could downsize my car and reduce outgoing for car loan to around £150k per month and still have a decent enough car not to upset my employers!

HELP!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

alant1000

to be honest i'd stay put at the parents and save up... and with that 1k you are saving a month at the moment i'd use that to pay off the student loan, if you could have that finished off in 8 months it will be a big burden got rid of.

Then again having a deposit will put you in a better position to get a slightly better mortgage. The rates are pretty high at the moment and the general consensus seems to be that they will drop a little over the next couple of years (maybe room for 1 more rate rise soon, but in say a year they should be lower).

I reckon at 26 there is no major hurry and i wouldnt risk a 100% mortgage at the moment in case house prices drop (which is a possibility) and then you are instantly in neg equity. Remortgaing in a couple of years if you shop around for rates at the time could then be a bit of a problem. I'd definitly save for a while longer and keep an eye on the markets and rates, and concentrate on saving up a bit and paying off that 8k loan.

meanmachine_2

If you had a deposit I'd say buy, but as you don't I'd suggest you stay at home and save the minimum of 5%.

All three options have their merits to be honest - renting can be worthwhile if you're moving into an area you later hope to buy in. Plus it can give you an idea of how much living away from home really costs, the hassles that are involved.

I wouldn't recommend a 100% mortgage, but there are others on here who'd scream at you to "get on the ladder before it's too late" regardless of your personal circumstances.

brummie_boy

Thanks both...trying to avoid jumping in like the proverbial 'headless chicken'...despite almost everyone I know telling me I should - but then again they have all bought as part of a couple so it's a bit more affordable!

Uncle_Rico

Stay put dude. Stay put!

brummie_boy

Any ideas on sensible monthly saving levels based on my income? I do spend a fair amount on petrol going to see the gf (she lives 40mins away), and probably go out more than I would do if i had my own place - I feel too old to get mates round to sit in my bedroom!!!!!!

IamNotOneOfTHEM

If i have learnt one thing in my life, nothing IS secure. :sad:

I think you should wait for couple of years, save for a deposit in the meantime and then make your move.

cundall

Yep.. same boat as me... but you are earning more

I am 25 and save 1k per month only 18k a year (then i do lots of other jobs to boost my income). Saved £25k and i am still saving, living with my father to save more money so i can put a big amoung down.. don't like the 100% thing.

cundall

brummie_boy wrote: »

Any ideas on sensible monthly saving levels based on my income? I do spend a fair amount on petrol going to see the gf (she lives 40mins away), and probably go out more than I would do if i had my own place - I feel too old to get mates round to sit in my bedroom!!!!!!

I put all mine into an Icesave account (6.2%) and then i also use the halifax account (6.2%) for my everyday use. For fuel i use the ASDA credit card as i get 2p off every L of fuel!...

brummie_boy

Must admit - one thing I need to sort out is my current account - still got a basic HSBC account now that my graduate account has ended (too old!)

Have the offer from my parents of putting some money down for me (c. £40k)....but they are fast approaching retirement and I don't feel it would be a good investment for them at the moment....

alant1000

brummie_boy wrote: »

Thanks both...trying to avoid jumping in like the proverbial 'headless chicken'...despite almost everyone I know telling me I should - but then again they have all bought as part of a couple so it's a bit more affordable!

I was in a pretty much identical situation as you, and have now just bought my first place at 28, but managed to save up a 23k deposit, the differerence in the deals for those with no deposit and a 10-15% deposit was pretty substantial, in fact i'd be struggling to take out a mortgage now without a deposit. I borrowed £158k, interest only (its all i can afford without living the life of a pauper) and am paying £695 per month. Zero deposit and i would be looking at about £1350 a month. Maybe a few years ago a 100% mortgae would have been a result as rates were low and prices were shooting up, but those days are not so rosy anymore. My salary is around 46k which sounds great but when you live alone it really isnt all that much, council tax add £100, petrol, car loan, etc etc it all adds up. Buying with a partner is much more sensible once you are ready.

Deffo save up - it makes no sense to leap into a 100% mortgage with the market in the shape it is now. Then you and your partner can buy together further down the line, split the cost and live happily ever after. :rolleyes: