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£200k inheritance, property ladder or not?
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jem1276 said:Thanks everyone for your replies! The majority seem to say buy, which is what we expected. It was great to read the reasons too.We are currently paying £1400 a month to rent in Devon. We've looked at mortgage options with putting down a deposit of £150k, which leaves us with monthly mortgage repayments of between £1,800 and £2,200 a month, depending on the house price. So not cheaper than renting and quite a stretch each month, plus pressure to stay in the job that provides the salary this mortgage would be based on. If I had to take a drop in wages...scary.So I guess the options are to put in the whole £200k to bring down the mortgage repayments, or compromise on the house and go smaller/less desirable area. At 49, I doubt a mortgage lender would allow the length of the loan to increase to reduce payments that way.0
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tealady said:As the quote goes " buy land, they have stopped making it"
For me the security of a home of my own was paramount, not being at the mercy of the rental market meant a lot (but I am "risk averse"0 -
We have just bought our first house, and borrowed into retirement age to make the monthly payments more manageable due to also being older and needing a family home with 2 children. I was a bit worried about the longterm implications of doing so, but then figured that over the years that monthly amount will seem less due to inflation and earnings going up so can hopefully start to overpay, and the alternative was to keep renting. If we kept renting, that monthly rent would have increased steadily, we wouldn't have the security of our own home, and we'd be paying rent for life rather than maybe a few years into retirement.1
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If you don’t know what to do with the money then buy a home. It’s that simple really.0
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Myci85 said:We have just bought our first house, and borrowed into retirement age to make the monthly payments more manageable due to also being older and needing a family home with 2 children. I was a bit worried about the longterm implications of doing so, but then figured that over the years that monthly amount will seem less due to inflation and earnings going up so can hopefully start to overpay
Her courage will change the world.
Treasure the moments that you have. Savour them for as long as you can for they will never come back again.2 -
Myci85 said:We have just bought our first house, and borrowed into retirement age to make the monthly payments more manageable due to also being older and needing a family home with 2 children. I was a bit worried about the longterm implications of doing so, but then figured that over the years that monthly amount will seem less due to inflation and earnings going up so can hopefully start to overpay, and the alternative was to keep renting. If we kept renting, that monthly rent would have increased steadily, we wouldn't have the security of our own home, and we'd be paying rent for life rather than maybe a few years into retirement.0
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ReadySteadyPop said:Myci85 said:We have just bought our first house, and borrowed into retirement age to make the monthly payments more manageable due to also being older and needing a family home with 2 children. I was a bit worried about the longterm implications of doing so, but then figured that over the years that monthly amount will seem less due to inflation and earnings going up so can hopefully start to overpay, and the alternative was to keep renting. If we kept renting, that monthly rent would have increased steadily, we wouldn't have the security of our own home, and we'd be paying rent for life rather than maybe a few years into retirement.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.3
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Worth bearing in mind that even though your mortgage payments will fluctuate if you choose not to fix, rents will only ever go up. You really don't want to be hauling all your belongings between rentals as a pensionerGather ye rosebuds while ye may1
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Anything you invest runs the risk of devaluing if the markets go in the wrong direction.
On top of that, any investment returns will have to outpace Property Price Inflation AND whatever your rent works out to in annual yield.
I.e. £200,000 achieving an 8% return is £16,000 - if your rent is £900 a month, that's £10,800 in wastes cash, so your net gain is only £5200 - 2.6% - barely above normal Inflation, let alone Property Price increases.
On the flip side - use £150,000 as a 50% deposit for a £300,000 house - Yorkshire Building Society, as an example, would do a 4.59% (fixed for 2 years) repayment mortgage over 25 years at £841 a month, which i would bet is probably near to or less than your monthly rent! On top of that - £573.75 of the £841 payment would be servicing the interest, whilst the rest would be increasing your equity (gradually increasing every month as more capital is paid off). £573 will almost certainly be far less than your rent!!
Once your on the property ladder, any subsequent increase in house value likely also applies to your house - so if ever you plan to move/upgrade, that's at least half the battle!!2 -
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