buy now or stay debt free?

ecleeconfused

hello everybody!

I found this fantastic site whilst looking for information on mortgages and home buying.

My plan was to get a mortgage for approx £75000, buy a place for around £80000 (£5000 deposit).
I earn £18000 and have no debts apart from £1200 overdraft (which is always at its limit).

However since reading people's stories on this site I am wondering if I should be considering a mortgage at all. The reason I wanted to buy is I am 35 this year, have no savings or pension and thought buying a flat would be a sound long term investment.

I currently pay £500 p/m rent for a studio. I can't afford to buy anything in this area so would have to commute from a cheaper area but could buy a (fairly rundown) flat.

I would be very grateful for any advice as you are all such a knowledgeable bunch!

WTF?_2

ecleeconfused wrote: »

hello everybody!

I found this fantastic site whilst looking for information on mortgages and home buying.

My plan was to get a mortgage for approx £75000, buy a place for around £80000 (£5000 deposit).
I earn £18000 and have no debts apart from £1200 overdraft (which is always at its limit).

However since reading people's stories on this site I am wondering if I should be considering a mortgage at all. The reason I wanted to buy is I am 35 this year, have no savings or pension and thought buying a flat would be a sound long term investment.

I currently pay £500 p/m rent for a studio. I can't afford to buy anything in this area so would have to commute from a cheaper area but could buy a (fairly rundown) flat.

I would be very grateful for any advice as you are all such a knowledgeable bunch!

A couple of things to consider:

(1) What would your monthly repayments be on a repayment mortgage be? If less than or very close to the rental costs then it's worth thinking about.

(2) Will you be planning to live in the place long term or looking to sell it on relatively quickly (<5 years) for a decent profit? If the latter, don't bet on it.


There's an old financial adage - 'Buy Low, Sell High'. Right now the indications are that the market has just peaked (ie. Is 'High'). Not really a good time to buy if you are into making money off of the deal.

lynzpower

However since reading people's stories on this site I am wondering if I should be considering a mortgage at all. The reason I wanted to buy is I am 35 this year, have no savings or pension and thought buying a flat would be a sound long term investment.

Welcome to MSE :wave:

Not being funny, but if you have no savings then could you really buy a flat anyway?

A flat is not something you can have INSTEAD of a pension, as clearly when you retire you need an income and a flat wont give you that if you re still living in it- so therefore youd have to sell it to get any money out of it...

IM not sure of your thinking!

But welcome to MSE, hopefully with some time spent on here, you can get your savings bumped right up!!

ecleeconfused

If I got a fixed mortgage now at say 6.3% repayments are about the same as rent.
I'm not looking to make a profit but would like to move up at some point to get a garden/ bigger flat.

I guess the issue is, if you wait for house prices to (maybe) fall...surely the int. rates will be higher and mortgages less easy to get?

lynzpower

where are you living and looking to buy?

ecleeconfused

Hi Lynzpower!

Yes I totally agree.....I suppose I was hoping over the years I would have upgraded to a house (white picket fence, flowers around the porch la la la!) which I could sell and buy a small retirement pad. Or that at least as my mortgage payments shrank I could also save for pension...

If not whats the best way forward...I don't mind renting for ever but have never figured out how you pay rent when retired and on short term leases???

ecleeconfused

live Brighton
Looking Hastings (yes snore...but from hastings originally!)

lynzpower

If not whats the best way forward...I don't mind renting for ever but have never figured out how you pay rent when retired and on short term leases???

If you dont pay any mortgage interest for the next 35 years, have a look at what you can save. this, along with a decent pension should be able to cover you to the grave.

We personally are looking more towards saving heavily now, with a view to paying 100% cash for a property later. im 30 almost and Im not concerned just yet.

lynzpower

Its only 2.00 more a month on the mortgage over 25 years than the rent on your studio flat. However, you will have to deal with buildings insurance, maintainence, life covers and the like. therefore I would anticipate that your costs will be more, somewhere about the 610 a month, maybe. Is tihs affordable to you?

However, I expect that your 5k will dissappear in the fees of buying and moving.

ecleeconfused

interesting...that what my boyfriend says...however he is lying on the sofa in his undies playing with an LED headlamp so not sure if I want to take his advice!

Seriously though....thanks for your comments...I have to say I have been fairly horrified by the state of the properties I can 'afford' at the moment...short leases, dodgy freeholders and crumbling walls so maybe saving a much bigger deposit would be the sensible option.

ecleeconfused

£610 p/m could do that now...just worried about where int rates would be after a fixed period...also agree with you re extra costs particularly getting hit with an unforeseen maintainence bill..