Young Couple Weighing up Buy or Rent...

Thanks4UrHelp

Hey guys, I just got my UK passport in March after moving here in January so my girlfriend and I could be together, she has lived here her whole life. Before that I had been living in Canada since the age of six(moved from the UK at that age). We are currently living with my girlfriends parents.

I start my new job on Wednesday and she has been employed for 6 months. We are looking to buy or rent in January but she really wants to buy "cause she doesn't want to pay someone else's mortgage". I'm trying to explain to her that there is A LOT more to factor in here and thinking like that is being a bit narrow-minded... We are both 28 years old, first met in 2016, were together six months and then did distance relationship for most of 2017 until January 2018 when I moved to the UK

We have roughly a combined monthly income of $2450 before taxes and $1,941 after taxes... And a combined yearly income of 29,400 before tax and 23,373 pounds after tax. No debt, she has a car payment done by june next year, 196 pounds a month.

By the time January hits I will have 6000 pounds saved up of my own funds and an 11,500-pound deposit in my savings courtesy of my Mom and Dad.
She will have approx 4000 pounds of her own funds and a 3000-5000 deposit from her mom and dad if we buy.
Just want us to start things off right in the new year and not take on to much to soon. I also have no credit history here and will only have three months employment to show. Any advice would be amazing, thank you so much.

ian1246

To get a mortgage they will want at least 3months of pay slips - so the earliest you can get one will be January 2019.

My advice? Stay living with her parents until then and save as much as you possibly can - if your still both doing well living together then, take the plunge and buy a property. HOWEVER: Ensure you have an agreement on how you will split the property in the event you separate.

Myself and my partner met in March 2015. We lived seperately with our respective parents and in August 2015 we decided to buy a house rather than move in and rent - she contributed 40% of the deposit and I contributed 60%. We also then split the mortgage payments 40/60 when we moved in. We had our solicitor draw up a deed of trust outlining that she owns 40% of the property and myself 60%, which is how it would be split should we have seperated. We got married in August this year.

In terms of risk - you ll have the costs of hiring a solicitor to buy your first property. If you then seperate you ll have the costs of hiring a solicitor to sell it as well as Estate Agent Fee's - you will also potentially have a early mortgage repayment charge (depending on how far into a fixed mortgage you are). You would also need to factor in your mortgage payments, specifically the part of the monthly payment which covers the interest (the part covering the repayment will be boosting your equity, so will not be "lost").

Mitigating those risks, you ll have what is likely the increased property value (provided the market keeps rising) at the time of sale should you sell. You'll also need to factor in the costs of renting over a similar time-frame, since every £££ paid on rent is "lost", compared to just part of your monthly mortgage (the part servicing the interest).

Only you 2 can make the decision - you don't have to rush things, the longer you stay living with her parents (providing they are happy with this?), the more you can presumably save? The larger the deposit, the better the loan to value rate and the lower the interest you ll pay. When you decide to buy - if everything seems right, I'd say go for it - the potential benefits (getting on the property market) outweigh the risks, especially the longer you are together in your house (Increased market value). But if you have your doubts, then don't buy together.

In the meantime, get a cashback credit card (i.e. Natwest give you 1% on supermarket spending, 0.5% on everything else) & pay in full each month - you ll get some cashback on your everyday bills whilst building up a credit history. Alternatively, get a small mobile phone contract or something to start with a credit history...

Thanks4UrHelp

Thanks a lot ian, very sound advice... I actually do pay as you go for my phone(only have to top up 15 pounds every four-five months) but I have monthly car insurance as of a month ago so that's something.

Pixie5740

Have either of you lived away from home (i.e. without parents) before? We see a lot of threads on this board from young couple who went straight from living with parents to buying because "rent is dead money*" only to then find themselves having to sell within the first 2 years, sometimes even sooner than that, because they've split up. I'm not sure what causes it, the stress of purchasing a property or the realisation that other than wanting to buy somewhere they have nothing else in common or that they actually hate living with one another.


*Rent is not dead money it pays for the roof over your head. I know you won't see the money back but you won't see mortgage interest back either, or the money you spend on food which you only crap out later.

steampowered

It depends how much you can afford.

On a combined income of £30k you might be able to borrow perhaps £140k at a push. It sounds like you could scrape together a deposit of about £20k.

That gives you perhaps £160k as the most you could afford, assuming you can save a bit more over the next few months to cover moving costs.

Is that enough to buy a property? It is worth having a look to see what is available in your area at that price range (if anything).

PasturesNew

It's a new relationship, you're both young .... go by the "two Xmasses" rule. Don't make any life-changing choices until you've survived two Christmasses together.

Convince her to rent until "two Christmasses".... then buy.

davidwood681

You're not married and it's a new relationship so just rent.

NaughtiusMaximus

Agree with the previous comments, rent a place together for a year or so before deciding to make the huge commitment of a joint property purchase.