Buy a house or sit on the money?

gazfocus

I’ve mentioned before that my wife and I are in the process of selling our house. We are quite near to completion and although I’ve had cold feet about selling, decided to proceed with the sale in the end. 

The house we were buying has fallen through so now we are left wondering whether we should stick the money in the bank or pursue our idea of buying a smaller house mortgage free (that we intended to use as a holiday let/investment). 

The thing is, we are likely to want to buy our forever home in 3 or so years when our credit ratings are better so if we were to buy a house now, we would be looking (and perhaps struggling) to sell it in 3 or 4 years time or mortgaging the investment house to keep it alongside our forever home. 

I’m aware now is probably not the best time to buy an investment property anyway but really don’t know what to do for the best. 

GDB2222

I’m afraid that the right answer is to disappoint your buyers. It makes no sense to sell your house without a plan to move somewhere else.

If you feel bad about your buyers, pay some or all the fees they have spent. But, don’t make yourselves homeless just to please them.  

It’s impossible to say what will happen to house prices in the next three years, and they could race away from you whilst you have your money in the bank.

Mr.Generous

I'd buy somewhere. Then whatever happens you are in the game, rise or fall.

But Crashy might be along shortly ...

gazfocus

GDB2222 said:

I’m afraid that the right answer is to disappoint your buyers. It makes no sense to sell your house without a plan to move somewhere else.

If you feel bad about your buyers, pay some or all the fees they have spent. But, don’t make yourselves homeless just to please them.  

It’s impossible to say what will happen to house prices in the next three years, and they could race away from you whilst you have your money in the bank.

Sorry, I should have said, the house we are selling is not our ‘home’. It was once our home but we currently rent in another area so we won’t be homeless. 

My worry is that house prices could keep climbing to a point where our money in the bank will technically be worth less, so you have a valid point. 

gazfocus

Mr.Generous said:

I'd buy somewhere. Then whatever happens you are in the game, rise or fall.

But Crashy might be along shortly ...

To be honest, that’s why we decided to buy a house when we had an offer accepted on ours, the fear of not getting back on the ladder. 

babyblade41

Property inevitably rises over time and the longer you are off the housing ladder the harder it can be to get off.. I would forget the holiday/investment property for now 

MultiFuelBurner

I would suggest you don't leave the property market for more than a few months a year at most unless you never intend to return. 

MFWannabe

If you are currently renting why not buy somewhere to live in the area you currently rent in? 

lookstraightahead

What in real terms is the difference between what you can afford now mortgage free, and what you would buy with a mortgage? If you're renting now you can buy with no chain your end which often is a good negotiating point.
could you buy a do-er upper that you could turn into your 'forever' home?

I don't agree with the 'buy now whatever' theory but as you're mortgage free its a great position to be in - it's lovely not having a mortgage especially if you've struggled financially.

arthurdick

We recently sold our house(Oct 22), and this is the first time in 36 years that we have not been on the property ladder and is a little bit worrying that if we don't get back on by next year, we may have to settled for much less than we could get now and in a worse location, we aint  ready to take that gamble, so we are looking as much as we can to find somewhere.  
We have the money from our house in the bank earning interest, but if the property market shoots up soon, the interest won't keep up with the jump and even though it is nice to have the money cash in bank, the feeling of getting back on the ladder outweighs the feeling of having the cash, so I would say to you, if you don't want the regret of maybe missing out, get back on the ladder as soon as you can. Nobody knows if we are at the bottom of the fall in prices yet, but why take the chance. If only Crashy could let us all know when the bottom of the market has been reached.

ManuelG

I would buy somewhere mortgage free, and put into savings the money you would otherwise be paying on a mortgage / rent, to increase your buying power whenever you next choose to move. If prices go down, they'll go down for your next house too and you'll have saved. If they go up, they'll go up on wherever you've bought too.