What should I buy?

Uriziel

I am really confused on what kind of property I should buy.
My options are:
1. Use my savings to buy a 2 bedroom flat.
2. Use a small part of my savings to buy a studio.
3. Use my savings and a mortgage and buy something significantly bigger.

I live alone but if I picked the first option I could rent out the spare room.
But I also wonder if I should just get the biggest property I can with my savings and mortgage since you can only get the stamp duty first time buyer benefit on the first property you buy for up to £425K.
Does anyone have any suggestions?

gwynlas

Two bedroom property as you state gives you an option to let room 

Studio is a no.

Freehold property or share of saves on large service charges

Type of property depends on where in the country you are buying

ReadySteadyPop

Why would you rent out a room?

Mark_d

I would rule out the studio flat.  Virtually everyone wants at least a 2 bedroom place even if the second bedroom is used as a study/office...so a studio flat will be an issue when it comes to selling it.

I'd go for place that big enough for realistic future needs but not something big just because you can.  If my partner and I were looking to move soon, we'd be looking to upgrade from a 2 bed flat to a 4 bed house, so that we'd have a study/office each and we'd be able to get a dog.

As a single person I think a 2 bed flat would likely be best for you.  It would be efficient in terms of energy, maintenance and security.  You could probably find a location that better suits you - you would't find a nice house in the middle of a city centre (if that's your ideal location).

In terms of financing the flat, you could possibly pay 5% mortgage interest whilst earning 10% rate of return on your investments.  Or you could cash in you investments, but the flat outright and not have mortgage payments eating away at your take-home pay.  I've opted for the former but there are advantages and disadvantages to both.

Uriziel

ReadySteadyPop said:

Why would you rent out a room?

Because it allows me to make money while owning a property and living in it? You can get £7500 a year tax free. If I just live in it on my own I would not make any money from the property besides not paying rent.

FreeBear

Uriziel said:

ReadySteadyPop said:

Why would you rent out a room?

Because it allows me to make money while owning a property and living in it? You can get £7500 a year tax free. If I just live in it on my own I would not make any money from the property besides not paying rent.

And that (up to) £7500 can go a long way in helping to pay the bills and fund maintenance of the property.

ButterCheese

It depends on how stable your income is and how much of a mortgage you could afford.  In my experience, people seem to grow into a house and fill it up no matter how big it is.  A small house would arguably be easier to sell if you wanted, and would provide more room if you still wanted to let out a bedroom. 

Remember that if you let out a bedroom, the person might not want to stay in their room all the time so could potentially share all of the living space lots of the time.  Also as a general rule, houses often come with a garden, garage, driveway, parking etc which is a huge bonus for some but not others.  These are very good selling points as our roads and housing estates become ever more choked with cars.

But if you're not fussed about space then I'd go for a flat as it would be cheaper to buy and run, so you'd have more money to play with

ReadySteadyPop

Uriziel said:

ReadySteadyPop said:

Why would you rent out a room?

Because it allows me to make money while owning a property and living in it? You can get £7500 a year tax free. If I just live in it on my own I would not make any money from the property besides not paying rent.

Around £20 a day? Is that worth the potential hassle and lifestyle compromise of a lodger, an extra hour at work covers that for most people? In a 2 bed flat that is going to be cramped, you won`t have a room for friends to stay the night or a study if you want to WFH sometimes, and say the lodger wants to play music while you are trying to read or watch TV in another room? I really wouldn`t got the lodger route in a property that small.

RHemmings

ReadySteadyPop said:

Uriziel said:

ReadySteadyPop said:

Why would you rent out a room?

Because it allows me to make money while owning a property and living in it? You can get £7500 a year tax free. If I just live in it on my own I would not make any money from the property besides not paying rent.

Around £20 a day? Is that worth the potential hassle and lifestyle compromise of a lodger, an extra hour at work covers that for most people? In a 2 bed flat that is going to be cramped, you won`t have a room for friends to stay the night or a study if you want to WFH sometimes, and say the lodger wants to play music while you are trying to read or watch TV in another room? I really wouldn`t got the lodger route in a property that small.

An extra £600 a month seems quite attractive to me. That would cover my energy bills and pay for my groceries. 

ReadySteadyPop

RHemmings said:

ReadySteadyPop said:

Uriziel said:

ReadySteadyPop said:

Why would you rent out a room?

Because it allows me to make money while owning a property and living in it? You can get £7500 a year tax free. If I just live in it on my own I would not make any money from the property besides not paying rent.

Around £20 a day? Is that worth the potential hassle and lifestyle compromise of a lodger, an extra hour at work covers that for most people? In a 2 bed flat that is going to be cramped, you won`t have a room for friends to stay the night or a study if you want to WFH sometimes, and say the lodger wants to play music while you are trying to read or watch TV in another room? I really wouldn`t got the lodger route in a property that small.

An extra £600 a month seems quite attractive to me. That would cover my energy bills and pay for my groceries. 

Would you ask the lodger to contribute to energy bills or would 600pm rent cover their share?

Silvertabby

If you do go for the 2 bed/lodger option, then do both of you a huge favour and buy a 2 bed/2 bath.