FTBs looking for balanced opinions on our options

milliondollarman76

Long time lurker on the boards and have learnt a lot, thanks to all the regular posters.

We are at a cross roads in looking for accommodation at the moment; after leaving our rented accommodation we are staying at my parents house which is very cramped.

I’m 26 with an annual salary of £27,000 (about £1550 a month after tax) which should increase over time; my girlfriend who I’ve been with for 9 years is looking for work although she has a First from a good university and should be able to get something quickly.

We have £50,000 in savings and are looking at a very large 2 bed period flat in Folkestone (i.e. possibly long term for us) that we should be able to get for £135,000, with a 5 year fixed mortgage at 5.49% £95,000 mortgage over 20 years (£662 monthly repayment plus £40 service charges, £250 travel costs), £35,000 deposit (26% LTV) and keeping back £10,000 in savings for emergencies.

I guess we really like the town and seaside compared to the smog of London and are sick of moving rented accommodation, estate agents, greedy landlords etc and coupled with the potential to be mortgage free over 12-14 years it's very tempting. The alternative is to sign up to renting in Southeast London a small one bed in a sh*thole area for £750-800 a month with my travel costs £120 a month.

As i'm seeing things through rose tinted glasses would appreciate some opinions and any advice for our situation as my family does not have any experience of home ownership.

Ps we’re after a long term home not capital appreciation

Curv

I think you have answered your own question, and rather nicely too.

Option 1 - Lovely, affordable, suitable for your long-term plans, leaves you some savings.

Option 2 - 'sh*thole' of a cramped flat, carry on renting when you don't want to, live somewhere you don't want to live.

It's a no-brainer for me, mate. Option 1 would win hands down, every time. You've obviously done your research and thought things through... they way you write makes me think you've already made your mind up. Trust your instincts.

ETA - Just make sure the price is reasonable for the current market in that area. I'm in Yorkshire and know nothing about house prices in your neck of the woods. That sort of money will get you a three bed terraced round here.

fimonkey

Just as well you're not after capital appreciation... if you're a long term lurker on these boards you probably know the consensus would be "if you're buying a home as opposed to an investment then you'll be able to ride out any potential drops in the market esp if you're in it for the long term!" ... Be interesting to read if anyone else has any other opinions.

btw 135K for a 2 bed house? Yes please, I'll take two! I've jsut been to see a "2 bed flat with share of freehold and own private garden". I got there and it was a 1 bed flat with box room, the garden was three bus stops away and a very sizable development of "new and affordable" home was happening right next door..... the asking price was £159K!!! .... (Bournemouth). .... It's a no thanks from me but bet some poor sucker will go for it!

milliondollarman76

thanks for the reply just edited my post to say i was seeing things through rose tinted glasses and thats why i'm after unbiased opinions as all i get from friends is houses only ever go up

17Dave

What's the problem...this does not seem like a difficult decision

sh*thole in London rented = wasted money
OR
invest in a seaside property - stroll on the beach to reduce stress.

Only downsides - commuting - some additional costs of running a home (decorating etc - presumably the actual building will be maintained for you)
Double check your budgeting (eg council tax costs in Folkstone) and if affordable GO FOR IT.

dolce_vita

You have a decent deposit which is always a good thing.
As well as giving you access to the best mortgage deals and protecting you from falling into negative equity it also suggests financial dicipline and prudence.

I would suggest taking your time and having a good look around before buying somwhere that you might not like in the long run.

Personally, I would not buy a flat though. A tidy, 2 bed house in a decent area would be a much better option. Find a place at around the 170k mark and negotiate heavily.

Have you looked at any of these places on rightmove?
http://www.rightmove.co.uk/action/publicsite.PropertySearch

pinkshoes

If you're looking at buying it as a long-ish term investment, then I'd say go for it and buy the flat! Life is about being happy now, as well as planning for the future, and the 2nd options sounds miserable!

carolt

You sound very sensible and few bears would wish to put you off. Suggest ideally your GF gets a job first so you have a better idea re location and future finances, but other than that, it sounds affordable and sensible. Would agree with dolce vita re a small house being better than a flat long term - nicer if you did decide to start a family, may be easier to sell on etc.

Yes, house prices may well go down but you're not just looking for a short term investment but a longer-term home - and remember, that if it does happen, the next step up on the ladder will be cheaper too, so you will benefit either way. As you have a large deposit, your risk of negative equity is much lower, so don't worry!

milliondollarman76

pinkshoes wrote: »

If you're looking at buying it as a long-ish term investment, then I'd say go for it and buy the flat! Life is about being happy now, as well as planning for the future, and the 2nd options sounds miserable!

[FONT=&quot]Really agree just wanted to know if our circumstances and the choice of costs between the two options allowed such optimism (usually posters are told to forget their dreams)[/FONT]
[FONT=&quot]
It’s a very large 2 bed flat but you can get a 2 bed terraced for not much more which I agree would be a better investment, we just preferred the feeling of space with the period flats and they’re closer to the sea.

It’s cheap as it needs updating but more than liveable. My dad’s a builder and we would do it over time pretty cheaply.

We really like the flat but don't need to rush in for this particular flat. I’ve been keeping an eye on property in Folkestone for a while and it seems prices/sales are stalling around there and are probably about to drop.

We will take on the advice and be looking at more properties this weekend. Taking on board my girlfriends job the only thing pushing the decision is that my present living conditions are a bit of a nightmare, we could rent and wait for 12 months but we just want to settle somewhere without the downsides i mentioned in my OP.

FWIW I think renting and interest payments to banks can both be dead money depending on the circumstances.[/FONT]

fc123

the right time to buy is when it suits you......however...if you are commuting to london daily, I would rent down there for ONLY 6 mnths BEFORE committing to a mortgage.
see how the commute is plus you will get a really good feel for the area actually being based there....thn 6 mnths on go for it.

JonnyBravo

fc123 wrote: »

the right time to buy is when it suits you......however...if you are commuting to london daily, I would rent down there for ONLY 6 mnths BEFORE committing to a mortgage.
see how the commute is plus you will get a really good feel for the area actually being based there....thn 6 mnths on go for it.

sound advice!

plus......

will you really be mortgage free in 12-14 yrs? So you won't want to get a bigger place before then for a family, to have more room, to keep up with the Jones' etc etc.
I'd say it's pretty rare that a first property is paid off before you want to move!