Best way to go with buying

NiceGhost

First post here.

I'm wondering what's the best path to take in a few years time (when I'll be late 40s) in regards to getting a mortgage/buying a property. I'll probably be buying in Oxford. I'll be a first time buyer but I have no idea how that will help in regards to each of the 2 possible situations outlined below.

Choice 1 is I get a deposit together and a mortgage on a flat of around 250k.

Choice 2 is I wait another year or so, and get a house of around 400k.

These are the sort of questions going around my mind.

1) Is it better to just get on the property ladder at the earliest possible point?
2) How much does my age in a few years time play into this? At what age, does age starting becoming a major limiting factor on going for a mortgage? So for example, would there be a huge difference between going for a mortgage at 49 as opposed to 52?
3) Are there are first time buyer schemes that I would be able to use? And would it be better to use them earlier rather than waiting until I'm a bit older?
4a) What would be the pros and cons of getting a property sooner, compared to waiting and getting a more valuable place a few years later? Is it better to be in a property that's hopefully increasing in value, as opposed to just hoarding that money to help get a larger property?
4b) OR would all the extra costs I'll be incruing by owning the cheaper property, mean it's better to wait until I could go for the more expensive place?
4c) OR would be it be better to get a cheaper place, and then upgrade a few years later? Would there be penalties doing that? (such as losing my first time buyer status)

Thanks for any guidance.

AdrianC

NiceGhost wrote: »

Choice 1 is I get a deposit together and a mortgage on a flat of around 250k.

Choice 2 is I wait another year or so, and get a house of around 400k.

Why do you think you will be able to afford a £400k property in a year, when you can only a £250k property now?

1) Is it better to just get on the property ladder at the earliest possible point?

If the market was rising rapidly, probably. Is it currently?

2) How much does my age in a few years time play into this? At what age, does age starting becoming a major limiting factor on going for a mortgage? So for example, would there be a huge difference between going for a mortgage at 49 as opposed to 52?

How long a mortgage are you looking at? Will it be repaid by the time you hit state retirement age?

3) Are there are first time buyer schemes that I would be able to use?

Are you a FTB? Would the properties you're looking at be eligible?

4a) What would be the pros and cons of getting a property sooner, compared to waiting and getting a more valuable place a few years later? Is it better to be in a property that's hopefully increasing in value, as opposed to just hoarding that money to help get a larger property?

4b) OR would all the extra costs I'll be incruing by owning the cheaper property, mean it's better to wait until I could go for the more expensive place?
4c) OR would be it be better to get a cheaper place, and then upgrade a few years later? Would there be penalties doing that? (such as losing my first time buyer status)

Are you wanting to buy as a short-term investment, or to get a home that you'll happily live in for the long term?

What sort of home do you want to live in, and are there any sorts of home you would not want to live in?

julicorn

Some counter questions:

a) would the house be your 'forever home', and the flat just a step towards getting there? Or are you seeing them both as 'stepping stones' towards another place? The cost of selling and the difference in stamp duty whether or not you're buying for the first time is something to bear in mind.
b) If you don't mind me asking, how are you achieving a £150k difference in budget in the space of a year?

If it's really how you're saying, and you'd have £250k in year 1, and £400k in year 2, I'd personally definitely wait that additional year.

xylophone

https://www.helptobuy.gov.uk/equity-loan/eligibility/

https://www.oxford.gov.uk/info/20106/finding_a_home/409/help_to_buy_scheme

Assuming that you are already over 40 you have missed out on the LISA.


You might be interested in a HTB ISA.

https://www.helptobuy.gov.uk/help-to-buy-isa/how-does-it-work/

NiceGhost

Thanks for the info so far.

To answer some of the questions.

1) I'm already over 40.
2) Any first property I buy wouldn't be until a few more years from now, or wait until a few more years after that.
3)I'm self-employed, hopefully within a few years I'll be able to get 250k mortgage, or a few years after that a 400k mortgage (with a larger deposit).
4) I'll definately be looking to get a larger property (4 bed house) at some point because I will want to have a granny annex for my mother.
5) I can't see the properties in Oxford decreasing in value anytime soon.
6) As long as a mortgage as I can get, to make it as cheap per month as possible (although I would still want it to be a repayment mortgage, not interest only).
7) I am a FTB.
8) If I were to get a 2 bed flat, it would be a stepping stone to a 4 bed house a few years after.

Overall the question is, is it better to own a property (any property) in the area you want, despite the costs that come with that, or better to wait a few more years, get a larger deposit and get something you would eventually want anyway.

AdrianC

NiceGhost wrote: »

2) Any first property I buy wouldn't be until a few more years from now, or wait until a few more years after that.

Then all bets are off as to what the market's going to do.

3)I'm self-employed, hopefully within a few years I'll be able to get 250k mortgage, or a few years after that a 400k mortgage (with a larger deposit).

Are you actually a sole trader, or do you operate through a limited personal services company? How many years accounts do you have now, and what level of demonstrable income do they show? If limited, what split of income and dividends?

How certain are you of your market going forward?

4) I'll definately be looking to get a larger property (4 bed house) at some point because I will want to have a granny annex for my mother.

Joint ownership with your mother? How much equity will she be injecting? What sort of timescale? What does she feel about this?


Four bed plus self-contained annex? In Oxford? With £400k? You need a time machine, I'd have thought...

6) As long as a mortgage as I can get, to make it as cheap per month as possible (although I would still want it to be a repayment mortgage, not interest only).

You didn't answer the question about state retirement age...

Overall the question is, is it better to own a property (any property) in the area you want, despite the costs that come with that, or better to wait a few more years, get a larger deposit and get something you would eventually want anyway.

Balance off the fees and costs, the ease of selling and the limitations of a chain, against the projected relative capital growths. Don't forget to roll dice and take a guess.

datlex

OP why are you deciding between a two bedroom flat (normally leasehold) and a four bedroom house (probably freehold). Assuming you are buying on your own?

ruperts

If you are renting now, are sure property prices won't go down (not sure you can be but let's roll with it), are able to get a reasonable mortgage deal, can afford the repayments, service charges on the flat are not ridiculous, and you're talking a sensible amount of time before you upgrade (say two years minimum), then I think the best financial decision will almost always be getting on the property ladder asap. With each mortgage repayment you'll be acquiring more equity, and you'll benefit from gearing ie despite only owning a fraction of the house you'll get to keep all the appreciation in its value.

steampowered

NiceGhost wrote: »

5) I can't see the properties in Oxford decreasing in value anytime soon.

I googled "average property prices in Oxford". The second result was an article headed "Oxford house prices falling faster than most of UK" !!!

https://www.oxfordmail.co.uk/news/16253928.oxford-house-prices-falling-faster-than-most-of-uk/

To be fair we are only talking about a drop of 1.3% over the last 12 months, so it is hardly a big change. But at least it means you don't have to buy a house "now, now, now".

If you are quite sure you could afford a £400k property in a year's time, it might be worth waiting. The transaction costs would probably outweigh the saving over renting if we are just talking about a 1 year timespan.

If you are not sure what you'd want to do, or it might take you longer than 18 months or so to save up for the £400k property, I would go for the £250k home now. You'd be building up a bit of equity while you pay off the mortgage. You might decide you quite like it and that there is no rush to move again.

AnotherJoe

The best path is to focus on the here and now, focus on building your business up and see what the situation is in ?3 years? 5 years? time when you have money for a deposit and income to support a mortgage. At that point some of your options may be ruled out or much clearer.



Deciding what you might do now, many years from now is pointless, you might change your mind, your mother might change her mind, circumstances might alter and change your mind for you.

Sanne

Re the age, I have bought with my husband (both of us FTB) who is 46 and we were able to get a 28 year mortgage (up to his 75th birthday). This required proof that he’s paying into a pension scheme and is the max some lenders will go, with varying requirements.

Now, for us it’s not an issue - assuming no major disasters - but going that far into retirement obviously means you need to be certain that you can pay the mortgage back once you only get your pension.