Icesave ISA or Council Home - which would you choose?

sho_me_da_money

Hello guys,

My question is - should i put my money (£4.500) and now £700-800 per month hereafter into Cash ISA's such as Icesave (one for me and partner) or should we put it into buying our council home?

We are currently entitled to a £26K discount under the RTB (right-to-buy) scheme, which would mean that our house would probably come down to £70K if not a little less.

Which is the better of the 2 options to go for for the future?

Bare in mind that house prices are likely to take a slump this year and/or next.

Would it be wise to go with a Cash ISA for now and perhaps reconsider the option when the house market slows? or should i jump on the property wagon now?

Thanks for the read and any responses!

knights

I would have thought if you feel house prices are going to drop as you say then there is no point in buying at the moment is there?

I think you would be better off at the moment putting your money in the best savings account for you and biding your time.

I am assuming you will not lose the option of RTB in the meantime.

sho_me_da_money

Thanks for the reply dude.

I think it would be wise for me to hang fire.

So i guess the bes option is to to set up 2 accounts with IceSave - one in my name and one in my partners. Ill get 6K in by April 5 or 6 and then ill do the same year after with them or keep an eye out for a better ISA rate and play the "transfer" game.

When i hear the buzz about house prices slumping, i may aswell just get out the savings and use it as a good deposit for the house.

Ill play the patience game.

Win/Win (god willing)

knights

sho_me_da_money wrote: »

Ill get 6K in by April 5 or 6 and then ill do the same year after

£7200 from the start of the new tax year.

sho_me_da_money

Oh yea! allowance goes up to 3.6K

gravy baby!

sho_me_da_money

Ok wait a second, ive been working this out.

So im going with an ISA with ICESAVE - and that makes me on my 3K about £180.00 interest.

So basically the question is - if i bought a council home, will it be worth more than £180.00 from its original price in one year.

Off course it will right?

So the house is clearly the best option damnit!

But ill just wait for a slump in the market - iof it doesnt happen by June, ill exercise the RTB and go for the house!

morg_monster

It will def be worth more in a year if you are buying for £70k and is worth £96k!!! If there's no rush to buy now (is there?) then you could wait... but I dunno, I'd probably put it towards the house. It isn't quite the usual first time buyer situation here. If you wanted more detailed advice maybe ask on the housing board,

Bogof_Babe

Would you get an even bigger discount if you hang on for a year or so?

dag_2

So basically the question is - if i bought a council home, will it be worth more than £180.00 from its original price in one year.

Off course it will right?

Personally I wouldn't be sure, but then again, you're not the usual first-time buyer.

I'm no expert, but I suspect that the lean times are prompting people who are currently in rented accommodation to move to cheaper areas. This means that areas where property is significantly cheaper than average are more likely to see a rise, and less likely to see a big slump, than areas where it's already a bit pricey. I suspect this applies to your council accommodation.

Plus of course you're getting it at a discount. But how long can you hold out for before you lose the right?

Speaking personally, I live in rented accommodation in an area that I'd prefer not to move out of. However, if I were to try to buy the cheapest flat of roughly the same size in roughly the same area as the flat I'm already renting, and I were to get the cheapest mortgage for it, the interest would be higher than my rent.

In fact, even if I had the cash to buy the flat without the mortgage, I could still earn more than my rent, even after deduction of tax, by putting it in a high interest savings account.

Moving out of rented and into owner-occupied accommodation is a very bad idea indeed under such conditions, unless you are very sure that the prices are going to go up quite significantly in the future, which looks rather unlikely right now.

But it may well be very different where you are.

sho_me_da_money

Hi dudes,

No i wouldnt get a bigger discount in a year or so.

But the way im thinking is like this - Right now the house is prob worth about 90-100K.

The discount we get no matter what is £26K.

Now based on the comments and buzz, the housing market is about to take a slump. So if i take out a mortgage now when the house is 100K, then i would have to pay back £74K.

BUT if the market drops later this year, then the valuation will be affected - meaning the valuation may come down from 100K to say 90K. If that happens, then id be paying £64K

So do i wait a little to see if this slump comes about or do i dive in now?

And if i wait, ill obviously just hold my money in the IceSave ISA until im ready to use it towards the house.

Steve_xx

When you have bought the house from the council you will be prevented from selling it for x amount of years, otherwise you will have to pay something to the council. So you need to consider this and think about how long you think you want to stay there.

What if you wait a year or so and meanwhile the council decide to modernise it, thus jacking-up the overall cost of you buying it?

Also, as you say, the current maximum discount is 26k for you. What if the government move the goalposts and reduce that discount?

I'm not saying that in the face of reducing house prices that you should buy now. However, you do need to give due consideration to the three points I mentioned.