What would you do with my money?

csgohan4

buying a house is based on affordability crtieria, so you can generally borrow x4.5 of your gross earning combined.

Use some online lender calculators to see how much you can borrow and if you can afford the monthly payments

Cakeguts

This is what I would which is basically what I did anyway to get my first property.



You earn £28k a year between you. You don't have a car and you don't have children so that means that you should have some savings? Renting is cheaper than buying so what you haven't spent on repairs to the property you should have been able to put into your savings. If you haven't been doing any saving now is the time to start because owning a property is more expensive than renting one because if anything breaks you have to pay for it. You also have to have a lot of savings if you own because there are no benefits to pay a mortgage if you lose your job.



So this is what I would do in your situation. I would start saving like mad. This means carry on not having a car, cheapest mobile phones, no eating out and no holidays. When you have got the deposit for your a home that you could get a mortgage on now without using the £50k that will give you practice at doing the sort of saving that you have to be used to doing as a home owner.



Then I would use the £50k to get a better home than your savings and mortgage alone would buy. Owning a home is not cheaper than renting if you have a mortgage it only becomes cheaper once you have paid the mortgage off but to start with it is much more expensive so you have to be good at saving.



What I wouldn't do is to use the £50k to buy a home without any other savings because this puts you at risk of losing your home if you aren't used to saving money from your earnings. If you imagine someone who spends every penny that they earn and even has a small amount of debt on their credit cards they would be at seriously high risk of become homeless if they bought a property because they don't have any safety net if something goes wrong and they can't pay the mortgage and they aren't used to saving rather than spending.



Start concentrating on how much you can save rather than the fact that you are going to get this sum of money because once that money is in a house you can't get at it to use it in an emergency unless you sell the house.


Forget about the buy to let. Your first priority is to buy something for you to live in if you want to be rent free in retirement.

AnotherJoe

Cakeguts wrote: »

Then I would use the £50k to get a better home than your savings and mortgage alone would buy. Owning a home is not cheaper than renting if you have a mortgage it only becomes cheaper once you have paid the mortgage off but to start with it is much more expensive so you have to be good at saving.

That is not the case where i live, where the rent for, for example the house next door to me is more expensive than a mortgage on it with (AFAICR when i looked year ago) a 20% deposit.
Plus, your mortgage payments are a factor of what you borrow and the interest rate, so they tend to stay steady whereas rents tend to rise. So in say 10 years time your mortgage payments will be the same but rents will likely have risen.
And of course, as you point out, when the mortgage ends, that it apart from maintenance whereas rent goes on forever.

AdrianC

Owning a home is not just about the mortgage payments.

Remember, the average landlord is looking at yields of <5% before tax.

zagubov

If you move out, like others say, you'll need a car.

As for owning multiple properties, I think the best you might manage is a property big enough to have a lodger.

diggingdude

I reckon you should put it all on Red and hope

Could you use some of that to retrain and increase income? May make buying easier by looking more long term

Marvel1

AnotherJoe wrote: »

That is not the case where i live, where the rent for, for example the house next door to me is more expensive than a mortgage on it with (AFAICR when i looked year ago) a 20% deposit.
Plus, your mortgage payments are a factor of what you borrow and the interest rate, so they tend to stay steady whereas rents tend to rise. So in say 10 years time your mortgage payments will be the same but rents will likely have risen.
And of course, as you point out, when the mortgage ends, that it apart from maintenance whereas rent goes on forever.

Just to add, my house and next door sold the same time. Next door is rented out.

My mortgage is currently £207 a month, rent next door is about £400.

comeandgo

You and your husband are on the lowest of wages which could lead to problems later when you reduce your hours, could you afford a house with such tight margins.
Would you or your husband be able to retrain to get a better paid job? You could use the money to live on for two years while you retain.

DestinyGamer

Thank you everyone for your honest feedback. What we will probably end up doing is using 20k-30k for a deposit and get what we can afford mortgage wise. The rest of the money will be saved for emergencies.

It’s important that we get on the ladder because as AnotherJoe said...

AnotherJoe wrote: »

your mortgage payments are a factor of what you borrow and the interest rate, so they tend to stay steady whereas rents tend to rise. So in say 10 years time your mortgage payments will be the same but rents will likely have risen.
And of course, as you point out, when the mortgage ends, that it apart from maintenance whereas rent goes on forever.

and we don’t want to be worrying about how to pay rent when we are retired.

My OH is very good at saving and will buy a car if we end up having to move further afield but I prefer to rely on public transport for work. We haven’t been on holiday in years, and we don’t spend frivolously. I think it’s possible to use the money wisely enough to get our first home.

The dream of a buy to let will have to stay that, a dream.

DestinyGamer

comeandgo wrote: »

You and your husband are on the lowest of wages which could lead to problems later when you reduce your hours, could you afford a house with such tight margins.
Would you or your husband be able to retrain to get a better paid job? You could use the money to live on for two years while you retain.

I appreciate what you are saying however there isn’t anything I can think of that I’d like to retrain to do. Here all the jobs are either healthcare, teaching or retail related. I’ve worked in retail all my life and have a Higher National Diploma in Textiles. I have student debt already from this which I currently don’t pay anything towards due to my low income. Retraining would mean more expense with no guarantee of a better job at the end.