To buy, or not to buy...

hollyimo

My husband and I are in a dilemna! Would love to live and own our house, but don't know whether the considerable risk, time and money required is worth it - can anyone help?

My husband is currently in the Forces and we live in Army quarters, paying very minimal rent. We own a small house in Surrey which we let out, the rent just about covers our costs and mortgage at 700 pounds, 650 mortgage and about 100 pounds in agents fees and insurances. Since moving to our latest quarter in Yorkshire, I have been searching the housing market for a family home and think I may have found it. However... it needs work, and whilst my husband is very handy as an engineer, I think we would need about 30,000 to get it habitable, and many work hours too. This money would come from the 90,000 to 100,000 lump sum that we would have from the sale of the rented house and Surrey and our nearly new car. On top of this we would need the maximum mortgage available to us, I would need to get at least 10 hours teaching a week (I currently stay at home caring for two tots) and any monthly expendable cash would be spent on the house.

On the plus side the house is 2 minutes drive away, we could do it up whilst living in our cheap quarter, and I think it is a steal as the price has been dropped from 285,000 to 250,000 and there may be more room there (we need to get it for 230 or less) and most importantly it is a lovely, old farm house that would be a perfect home..........

HELP!

FaTB

May be these sites will help

http://www.housepricecrash.co.uk
http://www.firsttimebuyerhelp.co.uk/

Originally for the potential first time buyers, but relevant to everybody really.

My view would be, assuming house prices are on the way down :-

1/ Sell the place in Surrey if you can, as not much is selling at the moment.
( sounds like you are not making much on the rent, and there will be no
more capital appreciation )

2/ Bank that money in ISA, Premium bonds, High interest internet account.

3/ Pay off any debts, and Save like mad.

4/ As you have a cheap place to rent, stay there, and watch the market.

5/ Buy in 2 - 3 years time at maybe 25% - 30% less


But what do I know.

Do lots of your own research, as the property market has definately changed in the last year, the boom is over, what happens next nobody knows.

But if you do make an offer on the farmhouse make it a low one, its a buyers market.

Cheers and Good luck.

hollyimo

Good advice... definitely food for thought. Thank you.

Do you think that an investment of 70,000 placed in ISAs is better than a high interest account? If so, are there any recommendations?

FaTB

I'm no expert but you can only put £3k a year each in ISA's and upto 30k each in Premium bonds its tax free saving.

The remainder in an internet account because they generally offer a better interest rate than High Street accounts.

These are not the most exiting or rewarding investments, but they are low risk, which is I imagine what you want for a potential house deposit.

GingeG

Dont forget to consider why you have cheap housing.

Is hubby likely to be posted back down South again in next 2 or 3 years?? Are you willing to do the Married Unnacompanied thing?

eurows

Why pay out loads more money when the property you have is cheap.

Think of the livestyle once you move. The novalty of the new house will soon wear off. Your bank balance won't.

hollyimo

Yes we do have cheap housing and this is part of the package of being in the Forces and having a lower salary than equivalent civvy jobs.... but if you have had experience of the Forces life with constant moves, living on a 'patch' and always trying to make a new life and find new friends for you and children, you would understand why I hanker for my own home. The novelty would definitley NOT wear off! Would tread the bank balance for a home, if it was a safe option.

theGrinch

dont mean to sound obvious, but sit down and go through the figures. consider the deposit you have, the outgoings, the income you will have, the interest rate and general affordability. then agree the max you can offer for the property. visit the estate agent and tell them face to face. If you max is £230k then start at £220k. if £230k is your max then ultimately the decision is out of your hands.

there's no harm at looking at alternative investments or debt repayment and weighing it all up. of course, there may be reasons for the desire to settle down and stability i.e. starting a family or educating children and this "non financial" factor needs to be considered.

just out of you you say it needs £30k of work. what kind of work are you looking at?

ps buying a home is seldom a risk if you are prudent and see it not solely as an investment but a home for years to come.

hollyimo

Thanks for the reply. I have done a detailed budget and projection and know exactly what are max is and what we could offfer, as you say I would go in lower. And yes, we would be buying our family home, with two wee tots I am wanting some stability for them and would like them to start and finish the same primary school at least. Not so bothered about making money, wouldn't want negative equity obviously.

House needs new heating, new kitchen and bathroom moved upstairs and and some knocking of walls to do. Also damp proof work and one wall is structurally damaged. 30,000 was our rough estimeate but would have a builder to give the once over before we put a bid in.

Thanks again.