Studio flat in london, to buy or rent

other

£180,000 guide price leasehold apartment in W6, London. To live in rather than BTL.

I could attempt to buy with a £10,000 loan from parents to pay deposit, and around £4500 a year for 2 years for topping up the mortgage of 850 interest only.

The benefit of this is that I would have my "own" place to live, and after I start work after 2 years, i can safely cover the mortgage and also pay off the capital. This only seems worthwhile if house prices are going to go up in the 2 years, and by more than the mortgage interest?

If i rented, I would rent for less and then 2 years later can still ask for the same parental assistance for the deposit and would still be able to afford a similar house if prices haven't increased too much?

IveSeenTheLight

other wrote: »

£180,000 guide price leasehold apartment in W6, London. To live in rather than BTL.

I could attempt to buy with a £10,000 loan from parents to pay deposit, and around £4500 a year for 2 years for topping up the mortgage of 850 interest only.

The benefit of this is that I would have my "own" place to live, and after I start work after 2 years, i can safely cover the mortgage and also pay off the capital. This only seems worthwhile if house prices are going to go up in the 2 years, and by more than the mortgage interest?

If i rented, I would rent for less and then 2 years later can still ask for the same parental assistance for the deposit and would still be able to afford a similar house if prices haven't increased too much?

It's not really a good idea to get an interest only mortgage if you have no plans to generate the mortgage payment at the end of the mortgage.

I would recommend you rent for less and save the difference towards a deposit

This way you have more money as a deposit and as you will not be starting work for another two years, will allow you flexibility to move somewhere convenient for your new job

You will be able to see from the attached links how the London boroughs faired in Q3 2007. This does not mean it will continue to be the same for 2008 though

http://www.nationwide.co.uk/hpi/historical/q3_2007.pdf

lynzpower

Studio flats, sigh.

they are really just *not that good*

Dont bother! they are flooding the rental market around my way where they scratch in aroun 550 a month all in.given WHAT they are, I wouldnt personally buy one as Im not convinced theres enough to sell on when you eventualy will want to swing a cat!!

Additionally, getting a loan for a deposit ( even from parents) isnt the best idea. i know, I did it!

other

The equity will be paid off by savings gained during work, or by remortgage to a repayment one when i start work, estimated gross 30-33k pa.

London boroughs have increased by at least 10% generally, i'm looking at hammersmith and fulham and there have been 20% increases (of course no guarantee of continuing). Since mortgage is around 7%, wouldn't it make sense to buy, if one assumes grow will continue at 10-20%?

Studios are going for £150+ at university subsidised accommodation, i have seen quite a few advertised in this area for £200 so if need to move/rent somewhere else for work, much of the mortgage is covered by rent (assuming tenancy) anyway.

moneysavinmonkey

if you are going to be a student how are you going to be paying the mortgage, service charges, bills etc? Are you going to borrow money off your parents for solicitors fees and furniture too??

your plan is to start paying off the mortgage when you get a job in two years... have you got one lined up in the area already!!

moneysavinmonkey

I forgot to say my main point!!

Unless there are some special circumstances by far the last thing you should be worrying about as a student is 'having your own place'.

I made some of best friends for life house sharing a university and wouldn't miss it for the world! Their support during the hard times was invaluable too. No way i would swop that for going home alone to a studio flat even if it was 'all my own'

Presuming you are young you have plenty of time to buy a house, don't worry about all this bo****x about getting on the housing ladder while you still can, i'm pretty sure that's all cooked up by estate agents, mortgage lenders and kirsty and phil types to keep them in the money!

I'd be more worried about starting your working life with huge debts and a studio flat you can't sell.

carpetbelly

moneysavinmonkey wrote: »

I made some of best friends for life house sharing a university and wouldn't miss it for the world! Their support during the hard times was invaluable too. No way i would swop that for going home alone to a studio flat even if it was 'all my own'

absolutely! top paragraph! :T

other

moneysavinmonkey wrote: »

I'd be more worried about starting your working life with huge debts and a studio flat you can't sell.

student loans are tied in to salary. otherwise i'm just loaded down by a mortgage, which would be covered by salary. of course, no job is guaranteed before you start it, but it doesn't stop people from buying.

I am a student and obviously still paying rent, bills etc etc, so there won't be much changes there anyway. basically they would buy it for me, and the rent etc i would be paying would go to them (to chip in for the mortgage) instead.

I take your point about the social aspect of sharing with friends, but currently I haven't found any potential sharing friends yet. I finish term in june 2008, and start again in july 2008. and then 100 weeks of straight teaching. Most people would be moving out in summer, making renting together difficult anyway.

Since studios are so useless, would this scenario be better with a 1 bed flat, with someone living in the reception room?

All i would need is a deposit from parents, and a tennant ( i know, not easy) and the amount i would be paying per month (repayment) would only be about £100 more than subsidised uni accomodation now (which i can't get again).

moneysavinmonkey

other wrote: »

student loans are tied in to salary. otherwise i'm just loaded down by a mortgage, which would be covered by salary. of course, no job is guaranteed before you start it, but it doesn't stop people from buying.

.

I'll think you'll find that not having a job does stop most people from buying! What are the mortgage company going to base the amount they will lend you on?

The other thing to worry about is whether when you finish uni you'll be staying in the same area.. you may have to move because of your job of if you have met someone? Almost everyone i know ended up doing something compmletely different when they finished uni than they went in with the idea of ending up as.

I think there are just too many big 'ifs' in your plan. You'd be much better buying in a few years time. I really doubt you'll loose out by doing things this way.

As to the friends thing, from my experience when you live off campus and by yourself sometimes find it difficult to get to know other students really well. Why not try putting up a ads on campus notice boards to see if you can find some flatmates. Quite often people are looking for an extra person to fill a space in a house share - they may even be some adverts already there?!

other

I'm doing medicine, so hopefully at the end of my course i will get a job, and in west london, which is why i am here in west london in the first place. I understand that some lenders would be happy with this kind of agreement, if my parents act as guarantors. 1.5xparents income, 3.5x mine as a general guideline.

Professional development loans up to £20,000 are unsecured and are offered to people in my situation (maybe not be buy a house)

Many people buy with the assumption that their salaries will go up, and that they will be stretched at first, of course there are those who are not like this i admit.

my uni does not have a campus, and by living this particular area, i am actually only 20mins away from the union bar and socialising. Yup, i've had a look at the adverts this sept/oct and most are in excess of £100 in a good area. 2x£100 a week would just about cover the IO mortgage on the said property.

Basically the housing market in this area of london, while overpriced will always remain in demand due to the students here. as overpriced as they are, they have still managed to grow by 20% last year (if i am reading the nationwide report correctly). Even if things are slowing down, then this will be a buyers' market and properties could actually go for less than the asking price. If house prices do go down massively, i will just rent that out, or just live in it myself. There is no need to sell it as far as i can see.

I can really see the london house market crashing, unless all the students and workers boycott the capital and live elsewhere. There is no more room here!

moneysavinmonkey

other wrote: »

I'm doing medicine, so hopefully at the end of my course i will get a job, and in west london, which is why i am here in west london in the first place.


This is by absolutely no means guaranteed!! Did you not see what happened with the governments computer scheme for junior doctors placements last year!! My sister studied physiotherapy at university and when she started was told she could virtually walk into an NHS job when she graduated. three years down the line and although the demand for physios is massive the NHS has not been given the money to employ them and many PCTs have actually had to put a freeze on recruitment. She was an excellent candidate and did manage to get a job albeit 200 miles from where she wanted to live so both her and her boyfriend upped sticks. Many of her friends from uni were not so lucky.

You will I understand that some lenders would be happy with this kind of agreement, if my parents act as guarantors. 1.5xparents income, 3.5x mine as a general guideline.

But you don't have an income at the moment or even a firm job offer so in the eyes of the mortgage lender your salary is £0? The mortgage markets have tightened dramatically since northern rock and the kind of 'creative' mortgage will only be available with a hefty premium or not at all

Professional development loans up to £20,000 are unsecured and are offered to people in my situation (maybe not be buy a house)

Professional development loans are exactly that - you will need to show the bank what you are spending the loan on - white coats and stethoscope or professional courses. That aside - and given that it will hopefully be at a preferentially rate it will be even more debt around your neck that will have to be paid off eventually.

Many people buy with the assumption that their salaries will go up, and that they will be stretched at first, of course there are those who are not like this i admit.

True, a mortgage at first is usually a stretch (perhaps beyond breaking point in your case!) - surely this is all the more reason to enjoy your uni years and a bit of financial freedom while you can??

my uni does not have a campus, and by living this particular area, i am actually only 20mins away from the union bar and socialising. Yup, i've had a look at the adverts this sept/oct and most are in excess of £100 in a good area. 2x£100 a week would just about cover the IO mortgage on the said property.

so we know that renting would cost 50% as much? without even considering the additional cost of buying

Basically the housing market in this area of london, while overpriced will always remain in demand due to the students here. as overpriced as they are, they have still managed to grow by 20% last year (if i am reading the nationwide report correctly). Even if things are slowing down, then this will be a buyers' market and properties could actually go for less than the asking price. If house prices do go down massively, i will just rent that out, or just live in it myself. There is no need to sell it as far as i can see.

Are you going to be a doctor or a landlord?? I guess the two aren't mutually exclusive but your setting yourself up for a whole heap of trouble for little or no reward. Even if they grow by 20% a year (and I don't think even the most optimistic estate agent is forecasting anywhere near that even for london!) you are likely to be earning a good enough salary to catch up once you have been working a little while! Just think what you could buy in a couple of years with a doctors salary if house prices went down!!

I can really see the london house market crashing, unless all the students and workers boycott the capital and live elsewhere. There is no more room here!

Sorry to be so negative but I'm just really against you doing this!! Aside from market fundamental and fluff it's just seems like a really dreadful decision for you personally. please please please go out and live you life fully, make the most of being a student - you will kick yourself later in life if you don't! and stop worrying about house prices until you at least graduate:rotfl: !!