Terrace mortgage free or Semi with mortgage?

Jigglebiz

Looking for some advice.

We have sold our property and are due to complete soon. That property is in a city we used to live in and we have relocated elsewhere for work. We are renting a semi detached house in a really nice area (similar to option 3 below). The house we're in is OK for the time being but rent eats up 33% of our income and we are keen to buy something now.

We have two main choices:
- Buy in cash for £215k
- Buy with mortgage for up to £295k

Have been looking seriously for the last 2 months, scoping out rightmove for about a year :rotfl:

All of these are based on being in a very small area, within catchment to certain schools and near amenities.

Options at present:

1. Buy a 'fixer upper'mid- terrace mortgage free, typically about 950 sq ft, small back garden, vacant and previously rented out. Great location with short walk to school, bus stop, shops etc. Neighbours likely to have rear access. £190-210k and there are a number on the market now.

2. Buy a completely done terrace. None of these currently available and they get snapped up quickly. Otherwise similar to above. We might need to wait until Feb when the market gets going again so longer renting. £220-230k.

3. Apply for the biggest possible mortgage - would work out about 20% of our income. Buy a semi detached property that is likely to need work but have no spare cash to do any renovations. More desirable area, but still very close to that with the terraces. Fewer links to local amenities and not as good bus service. Only a couple on the market and a lot of competition for these. £295k+.

I understand that generally 3. is advisable to maximise future gains, but the place we rent is a bit of a 'doer upper' (original 30s layout, poor insulation, single bathroom etc) and I'm rather sick of not being able to make changes. That influences my thinking I guess.

Thoughts?

D_M_E

Another option - if you like the place you are renting, have you considered asking the LL about selling it to you?

Jigglebiz

D_M_E wrote: »

Another option - if you like the place you are renting, have you considered asking the LL about selling it to you?

Yes, we've asked and are waiting to hear. Think it's unlikely they'll want to sell though, and if they get it valued I'd expect it to be around £310-320k.

Jigglebiz

Bump?:cool:

middleclassbutpoor

Option 3 would only be recommended if you could do the work - doesn't sound like an option to me if you are buying to do up but can't afford to do that.

Go with option 1 - do something up that has potential and sell for option 3 when you have the money to do that and repeat..

Red-Squirrel_2

Excuse me saying so, but if you can only borrow 80k between you, you aren’t on very high earnings, so you need to consider ongoing costs as well as upfront ones.

Marvel1

Option 1 for me, depending on what the upper fixer involves:
Urgent - no.
Can live in for now - yes.

Jigglebiz

Red-Squirrel wrote: »

Excuse me saying so, but if you can only borrow 80k between you, you aren’t on very high earnings, so you need to consider ongoing costs as well as upfront ones.

That's right - I'm in training at the moment and in 3 years will have a salary of £30-40k, but only earn £15k a year currently. Partner on a low wage and PT.


These factors make option 1 (buying terrace with cash) most practical, as we would have no rent or mortgage to pay. This would significantly reduce the pressure we currently have on our budget.

Jigglebiz

middleclassbutpoor wrote: »

Option 3 would only be recommended if you could do the work - doesn't sound like an option to me if you are buying to do up but can't afford to do that.

Go with option 1 - do something up that has potential and sell for option 3 when you have the money to do that and repeat..

Thanks, this is what we're leaning towards.

Jigglebiz

cjdavies wrote: »

Option 1 for me, depending on what the upper fixer involves:
Urgent - no.
Can live in for now - yes.

Thanks. I think we'd probably try and have 1-2 months between leaving rented and moving in to a property, as we may need to get messy work like an extension, rewiring, new windows.

Red-Squirrel_2

Jigglebiz wrote: »

That's right - I'm in training at the moment and in 3 years will have a salary of £30-40k, but only earn £15k a year currently. Partner on a low wage and PT.

In that case, I would probably look for one of the terraces to rent for now to reduce your costs, and look to buy in 3 years time when you will have a lot more options.