skipping a mortgage and buying outright

edited 20 October 2020 at 10:27PM in Mortgage-Free Wannabe
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  • chilswellukchilswelluk Forumite
    113 Posts
    Seventh Anniversary 100 Posts Combo Breaker
    £70pw rent is enough to support mortgage interest on around £150-200k anything around that price that would be more comfortable the the house share.
    I think there are a few problems with this logic.  For a start, I doubt I would even get a mortgage.  Due to personal circumstances, I have not worked for over 15 years and have only started work again this month.  Also, I have no credit history whatsoever, not even a credit card or mobile phone contract in my name.  I can't see lenders queuing for my custom!  Being realistic, it may take me a year to build up a credit history and prove to a lender I am secure in employment. Therefore, If I am ruffing it / committed to pay rent in a house share for at least a year, I may as well do another 2 years.    If I did miraculously get a mortgage in my present circumstances, then it's not going to be at a very competitive interest rate.

    Secondly, even if 70pw did cover the interest payments on a mortgage, I would still have other costs associated with any such purchase, such as maintenance, mortgage fees, legal expenses etc. Plus, it would not be the house I wanted and I would have to pay selling fees, legal expenses etc when moving again.

    Thirdly - What about if there is a crash in the market?  In that situation I could find myself stuck in a house I never wanted to buy in negative equity (my uncle lost a fortune in the 1980s on property).  Also, with my cheap house share, I can leave at any time (with 1 month notice) and may be able to use a crash in the market to my advantage if it coincides with a nice savings pot.  I know it's difficult to time the market, but I have been reading extensive financial opinion (from financial journalists much more qualified than me) predicting a downturn in the market.  In light of this, I think it would be a very brave person to buy a property that they plan to sell again in just a few years time. When stacked against these risks, is 11k in rent really much of a gamble?  Many people loose that sort of money in depreciation from a new car purchase after a few years and don't think twice about it. 

    Or am I missing something?
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