What would make me better off in the long run?

bp5678

I'm 24, living at home and have been saving up for a property. I've always been against the idea of renting and for the idea of buying as you'll actually own an item of value eventually.

I'll have over £20k in the summer next year.

I'm now thinking, if I moved out in the summer next year and chose to rent instead of buying, I'll then have over £20k to use for some other sort of investment. I'm wondering if this opportunity cost is more valuable. Not too sure whart sort of investment would give me the best returns etc but it's just come to me that I may make more money in the long run if I chose to do it this way.

Could anyone shine some light on my situation please?

keithdc

bp5678 wrote: »

I'm 24, living at home and have been saving up for a property. I've always been against the idea of renting and for the idea of buying as you'll actually own an item of value eventually.

I'll have over £20k in the summer next year.

I'm now thinking, if I moved out in the summer next year and chose to rent instead of buying, I'll then have over £20k to use for some other sort of investment. I'm wondering if this opportunity cost is more valuable. Not too sure whart sort of investment would give me the best returns etc but it's just come to me that I may make more money in the long run if I chose to do it this way.

Could anyone shine some light on my situation please?

NO!

Too many unknowns in what you have written and no one can predict the future.

What is your salary (current and future projected)?
How long do you want to stay in a house?
What is your attitude to risk?
Is Brexit going to totally or partially screw the economy?

bp5678

keithdc wrote: »

NO!

Too many unknowns in what you have written and no one can predict the future.

What is your salary (current and future projected)?
How long do you want to stay in a house?
What is your attitude to risk?
Is Brexit going to totally or partially screw the economy?

Salary is only £27k (I do very well at living frugally and saving). Expect it to rise to £35k in the next 4-5 years. Maybe £40k-£50k at the peak of my career but hard to say.

It's hard to say how long I want to stay in a house. I'm quite spontaneous but if I'm in an area I like, I may be happy to settle. Hard to say.

I don't mind risk if I have enough capital to keep me going in case an investment doesn't work out.

Brexit will definitely screw the economy. To what extent is so hard to say imo.

Nobbie1967

bp5678 wrote: »

Brexit will definitely screw the economy. To what extent is so hard to say imo.

As you are so confident of that, I would suggest using your money to short companies with a big UK exposure. When their share prices collapse after Brexit you will be quids in and can buy a mansion.

AdrianC

bp5678 wrote: »

I'm 24, living at home and have been saving up for a property. I've always been against the idea of renting and for the idea of buying as you'll actually own an item of value eventually.

I'll have over £20k in the summer next year.

bp5678 wrote: »

Salary is only £27k (I do very well at living frugally and saving).

4x salary would see you borrowing £108k, 5x £135k. Add £15k of your deposit, keep the rest for fees. Is that enough to buy something worth owning, wherever in the country you are?

It's hard to say how long I want to stay in a house. I'm quite spontaneous but if I'm in an area I like, I may be happy to settle. Hard to say.

When you say "area I like", do you mean within your town/city, or would you be likely to relocate?

What about a life partner?

I'm now thinking, if I moved out in the summer next year and chose to rent instead of buying, I'll then have over £20k to use for some other sort of investment. I'm wondering if this opportunity cost is more valuable. Not too sure whart sort of investment would give me the best returns etc but it's just come to me that I may make more money in the long run if I chose to do it this way.

Don't ever view your home as an investment. It's your home. If it outstrips inflation in the short, medium or long term, then that's a bonus.

Investments:
https://forums.moneysavingexpert.com/forumdisplay.php?f=17

Could anyone shine some light on my situation please?

Only you can make decisions...

bp5678

AdrianC wrote: »

4x salary would see you borrowing £108k, 5x £135k. Add £15k of your deposit, keep the rest for fees. Is that enough to buy something worth owning, wherever in the country you are?

When you say "area I like", do you mean within your town/city, or would you be likely to relocate?

What about a life partner?

Don't ever view your home as an investment. It's your home. If it outstrips inflation in the short, medium or long term, then that's a bonus.

Investments:
https://forums.moneysavingexpert.com/forumdisplay.php?f=17

Only you can make decisions...

I will be looking for a property in Newcastle (pretty cheap round there). I will be relocating (renting for 6 months to start with to get a feel for the place). I think I could find somewhere for £150k which isn't too bad.

I'm currently single. If I had a girlfriend/wife and I owned the property we would work something out that is fair in terms of her living there.

I'm not looking at my future house solely as a property... more as an extra point to consider but not the main focus.

getmore4less

A starting point is the costs of renting against the costs of owning.

With owning because the way mortgage tends to be structures there is a cost element(interest) and a forces saving element capital payments)

the starting point is does the cost of renting(where someone else pays for the maintenance) stack up against the cost of owning interest on the debt + maintenance.

Ideally at the entry point you want the latter to be ahead to have a bit left over to pay for some of that capital.

if you really believe you can better the mortgage rate then borrow on a long term(I/O if possible) and direct the cash into other investments.


One of the real benefits of owning is long term you rent(interest) drops to zezo and you only have maintenance to pay, that reduces the need generate the income to pay rent from elsewhere once that happens.

quantumlobster

Newcastle is a great city and one I always enjoy visiting.

There's a veritable smorgasbord of property at what must look, to Southerners, absolutely crazy cheap prices, for example:

https://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=REGION%5E984&maxPrice=130000&minPrice=80000&sortType=1&propertyTypes=semi-detached&secondaryDisplayPropertyType=semidetachedhouses&includeSSTC=false&dontShow=sharedOwnership%2CnewHome%2Cretirement

Note that I'm not particularly au fait with the suburbs of Newcastle, and therefore cannot comment on whether or not any or all of these are in horrid places.