Benefits of "starter" home?

Have a think about this. Although you would take a salary cut it isn't the amount that you are paid that is important it is the difference between what you are paid and what it costs you to live in any area of the country. So for example £30K a year where cheap housing starts at £250K is not as good as £25K a year where cheap housing starts at £80K. What you have to work out is the disposable income after travel costs and housing costs and other bills.

bobobski wrote: »

The starter home would be worse than where I am currently living and about £150 more per month on the mortgage. That's why I've been avoiding this idea so far - although I'm paying more than 30% of my net salary on rent (and another 7% on bills), my current home is perfect except that it's small. It's also worth about £200 more in rent per month than I'm paying because I got lucky. A starter home would be about 4x further from work time-wise (cycling instead of walking), in a less nice neighbourhood, and would probably require some work which would eat into any overpayments I'd want to make on the mortgage.

So back to the calculator it is! I've called upon a friend who studied maths at university to help me on this one...

From the sound of it you are better off staying put - much as i like cycling I'd prefer to walk to work than cycle and location trumps size any day of the week as you can make more efficient use of space but you cannot change a neighbourhood. However moving closer to work would not be so good if the work place is not such a nice place to live - my workplace is out on a suburban business park near the ring road and the nearby houses are nasty barratt style hell holes!

Planet_Switzerland wrote: »

Round where I live you could buy a 3 bed for around £325k around 5 years ago. Now these properties sell for £500k+ and some 1 bed flats cost more than £325k now.


So basically if its going to take 5 years to be in a position to buy somewhere for that price, you may find you can still only afford a starter home anyway.

A 50% increase in price over 5 years, when salaries have been increasing by % per year. Do you think that trend is to continue at the same pace?

I think that from your original post it sounds like your plan isn't working, the property prices are going up faster than it seems that you are able to save to get your ideal house. Is the 5 years still a realistic timescale taking this into account? If so then keeping with your current plan seems reasonable, but if the rise in house prices means that you are never getting closer to achieving your goal then you need to look at other options.

If you are currently renting then a starter home will enable you to 'save' extra money as you are gaining equity rather than paying rent. If property prices continue to rise, as an owner you are also benefiting from this as well. Obviously there are costs to home ownership compared to renting you have to deal with repairs etc and the costs of buying and selling. I think you need to work through the maths on this, to see what your best options are.