Getting onto the property ladder - any advice on the options?

wb237

Hi,

I've searched and can't find a thread on this topic but if I've missed it, please flag and I'll go read that info first.

I need to get onto the property ladder this year and currently reviewing my options, and hoping people will have some opinions/experience on some/all and can help me decide which path to take. If the question is too broad, please let me know and I'll refine.

For context, I am a 40yr old professional and have been renting the same house for years (I have a very good deal) but looking to buy. Please don't judge about being a first-time buyer at this age - circumstances prevented me from doing so earlier. I have a deposit of around £40k, though I could increase this to around £70k if needed. My annual salary is £82,000. I believe I could get a mortgage up to £400k. I am single and imagine I will be for the foreseable future lol. I live in Hertfordshire and property is expensive so I'm looking at all the following options to get on the property ladder:
- Buying a small flat/house locally (maximum mortgage).
- Buying land and doing self-build (maximum mortgage).
- Buying a buy-to-let flat/house elsewhere (lower/low mortgage).
- Buying a large house elsewhere and living in it but renting out some rooms (maximum mortgage). 

If anyone has any advice or knowledge to share, I'd really appreciate it.

Thanks.

Flugelhorn

- Buying a small flat/house locally (maximum mortgage). - seems most straightforward option
- Buying land and doing self-build (maximum mortgage). land hard to find and have you ever built a property before?
- Buying a buy-to-let flat/house elsewhere (lower/low mortgage). where would you live?
- Buying a large house elsewhere and living in it but renting out some rooms (maximum mortgage). do you like having lodgers  / living with strangers?

wb237

Hi Flugelhorn,

Thanks for your comment. Some replies from me below in caps:
- Buying a small flat/house locally (maximum mortgage). - seems most straightforward option BUT I'D HAVE TO MOVE OUT OF A DETACHED HOUSE AND PAY 3-4 TIMES MORE ON A MORTGAGE FOR SOMETHING MUCH SMALLER IN THE SAME AREA.
- Buying land and doing self-build (maximum mortgage). land hard to find and have you ever built a property before? I'D BUY THE LAND AND THEN PAY FOR THE BUILDING, I'D MAYBE PROJECT MANAGE AND NO DOUBT GO FOR A 'KIT HOUSE'.
- Buying a buy-to-let flat/house elsewhere (lower/low mortgage). where would you live? STAY LIVING IN MY CURRENT RENTED ACCOM.
- Buying a large house elsewhere and living in it but renting out some rooms (maximum mortgage). do you like having lodgers  / living with strangers? WOULDN'T BOTHER ME, HAVE HAD FLATMATES BEFORE.

Albermarle

 Buying a buy-to-let flat/house elsewhere (lower/low mortgage). where would you live? STAY LIVING IN MY CURRENT RENTED ACCOM.

This is a completely different option from the other three, as it does not change your living arrangements, and is basically an investment decision, rather than a housing issue.

In the case of someone earning over £80K and with no BTL experience, investing in a pension and getting 40% tax relief is almost certainly a better and easier way of investing for the future.

BUT I'D HAVE TO MOVE OUT OF A DETACHED HOUSE AND PAY 3-4 TIMES MORE ON A MORTGAGE FOR SOMETHING MUCH SMALLER IN THE SAME AREA.

You said 'have been renting the same house for years (I have a very good deal) but looking to buy. '

I suspect you are paying way below market rental rates which have shot up, so making the comparison difficult.

Bigphil1474

OP, from what you've said, I'd buy to let somewhere as the property will (usually) go up in value, and the income from that may well cover your rent. How long will your very good deal last would be the big question though? If it could end next year, then maybe not such a good idea. The other downside is, do you know somewhere good to buy a BTL that you can afford?

Why can't you BTL locally? - as long as the rental income covers your costs and the rent you are paying for your home, you are getting a great deal. It doesn't have to be a property you want to live in , just something worth investing in. 

All your options appear to max mortgage apart from the BTL. Is there no option to buy somewhere without maxing your mortgage? 

From the EA's I've spoken to recently, the market is really picking up, here in Yorkshire at least (don't know about Hertfordshire), so now is probably as good as it'll get on purchase prices.

RHemmings

wb237 said:

For context, I am a 40yr old professional and have been renting the same house for years (I have a very good deal) but looking to buy. Please don't judge about being a first-time buyer at this age - circumstances prevented me from doing so earlier. 

I just bought my first house, and I'm 60. The average age of a first-time buyer in the UK is currently 34. You're older than 34, but from my perspective, not that much older. 

If anyone wants to judge me for not buying earlier, I will be asking them to loan me their time machine so that I can go back and change things. 

lincroft1710

wb237 said:

:
- Buying a small house locally (maximum mortgage).
- Buying land and doing self-build (maximum mortgage).
- Buying a buy-to-let flat/house elsewhere (lower/low mortgage).
- Buying a large house elsewhere and living in it but renting out some rooms (maximum mortgage). 

I have emboldened what I believe is the most suitable option

annetheman

A - Buying a small house locally (maximum mortgage).
B - Buying a large house elsewhere and living in it but renting out some rooms (maximum mortgage). 
C - Buying land and doing self-build (maximum mortgage).
... absolutely no other options remaining in the known universe...
Z - Buying a buy-to-let flat/house elsewhere (lower/low mortgage).

Option A is ideal in every way. I live in Herts, too, and find it boring but stress-free and some beautiful spots.
Option B is actually on par with option Z to me personally, but you say you are not as appalled with the idea of housemates as I am, so this would be a good way to build equity and have an income stream, however small, to help with the mortgage.
Option C seems like maximum aggro and hassle, but if you have time to kill and a high stress threshold, I imagine you might enjoy a self-build.
Option Z - I cannot see the appeal of being a landlord and renting, and actually have a principled stance against it if it can be avoided so other people who need them can buy live-in homes, but that's just me. Plus the usual: periods without tenants, bad tenants, maintenance, changing regs, poor returns, etc etc.

Grumpy_chap

wb237 said:

- Buying a small flat/house locally (maximum mortgage).

This.
I previously lived in Hertfordshire and there is a good choice of houses within the budget you suggest.
Though, of course, Hertfordshire is a large area with a big variance.  Where in Hertfordshire do you prefer?  That could make a difference to the answer.

spoovy

There's a strong argument in my opinion that becoming a landlord at the moment is immoral, as you would be participating in, and profiting from, a broken market. I couldn't do it personally.

Self build always looks interesting but I always end up ruling it out. The cost of land with residential planning permission, plus the build/prefab cost, temporary accommodation etc is usually about the same as just straight up buying.  And it would be stressful for sure.

As you're happy to have lodgers that seems like the best bet to me. A good friend did this, had the same lodger for about 12 years, helped pay off the mortgage much faster, and they became close friends too.

[Deleted User]

When do you want to retire? A 30 year mortgage would see you working until 70. I know they are talking about everyone doing that now, but realistically... Something to consider when looking at massive mortgages.