Another "shall I buy now" thread

[tashka]

Just looking for opinions from someone owing a house and more knowledgeable

Facts:

1 - I own a small one-bed flat in north-east London which I currently rent-out because I want to be nearer friends in south-west London (the rent I receive just covers the repayment mortgage payments).

2 - I currently rent a flat near my friends and I have a decent job and some saving I could use as a deposit for a house.

3 - I know roughly where I think I will ultimately want to live in a family house (or, rather, I know where I can just about to afford to buy a house now, and where I would be OK to live at some point), but I do not want to live there now (too far away from central London plus I do not need a house right now).

So what do I do? I could theoretically find a 10% deposit and buy a house in that area on the outskirts of London, and then rent it out until I need it. Looking at mortgage calculators, the "interest-only" repayments would be slightly lower than what I would be able to rent that house for. But then there are maintenance costs, possibly times without tenants etc

Part of me thinks I should buy now because the house prices are rising so quickly that I do not think I would be able to buy the same house in the same area in 10 years' time when I think I will need it (I am 33 and my salary will not rise significantly, nor will I able to save that much more to be in line with the rising house prices).

But at the same time buying house now when I don't really need it and just paying all that interest to the bank And I have no idea how much house maintenance is my small flat cost me around 2K a year for maintenance but I haven't done much to it yet, so no idea how much will it cost when everything starts falling apart And I do have that small flat so theoretically sorted for retirement, so may be I should just rent all my life in the area I want to live and the size of property I need at a particular moment in time But then all this insecurity with renting and not being able to choose the kitchen I like and the bathroom I like, and that for all my life until I retire

Just really don't know what to do and looking for your opinions on all this! Thanks a lot!

[SolomanDaisy]

I think you'd need at least a 25% deposit for a buy to let mortgage, wouldn't you?

[tashka]

Oh, yes, I keep forgetting about it! Stupid me, I think even the calculators I checked were showing me the monthly repayments based on the 25% deposit, not 10%...

Well, I can sell my small flat, then together with my savings it should give me a 25% deposit for a house, although I might have to go for a slightly cheaper house then.

[SolomanDaisy]

Is there any reason why you don't just buy a flat where you live now?

[tashka]

Yes - it is a small one-bed perfect for me right now, but not suitable as a family home. I have one small flat already, don't really see the point in buying a second one.

Also, I can't commit to one location at least for the next several years (have to travel for work a lot, just came from 6-month placement in Switzerland). So I am either buying something which would be a "forever home" and renting it for now, or not buying anything and just keeping the money in the bank. Just concerned that these money will not get me much in terms of a deposit when I will finally settle down in 5-7 years.

I was considering the same thing 5 years ago and decided it wasn't a good idea to buy a big house when I only needed a small flat. So I bought that flat and now think I've made a mistake - I could have bought a house and rented it in a better located than I can afford to now The flat has risen in value but the houses have done too, and even selling the flat now will not give me enough deposit to buy in the area I could have bought when I chose not to and bough the flat instead.

So faced with the same dilemma again now. May be if I sell the flat now I can at least get some house, although in a worse location than I could have bought previously And if I just wait until I am able to settle down and actually live in the house, I am worried to find myself in a position that I cannot buy in Greater London at all

[beaglesaresweet]

imo you should buy a house! at 33 you may need it sooner than you think but in any case it's a great invesment. Just buy one in good condition or not very old if you don't mind the style, to save on maintenance.

OR buy a bigger flat in london which may grow in value more than a house on outskirts (but depends which area - also be careful with choosing area of london if buying a flat - I mean it should be ok or good, don't gamble with 'up and coming' unless it's half way there).

[stonehairbrush]

Sell your flat and buy a home suitable for your wants and needs op.

You talk about a family home - do you have a DP and kids? What does DP think?

Don't over stretch yourself. But if I were in a position to buy now rather than later I would.

And I would go for the nicer home not what will 'earn' you more money. It doesn't sound like you are rich enough to take risks with multiple property investments so just focus on a home to LIVE in.

[SolomanDaisy]

It sounds like what you want is to buy a home for you and a future partner/DCs, as you may not be able to afford one when you need it. But in your circumstances I don't think you can choose that home - what if your partner doesn't like the area, or your children need to be close to a specific school? If you want to invest in property you'd be better off deciding where the best area to buy now with the expectation of a profit in ten years time and buy something that will rent well. Then you can sell both properties when you need to and use any profit towards a family home. But that means you need to feel very certain that property prices are going to continue to rise.

[tashka]

Many thanks for the replies! Yes, I think I probably need to put my flat on the market, sell it and start looking for a family home which I can then rent out

Although SolomanDaisy described my situation quite right - I want to buy a home for myself and my future partner/DCs, because I am worried that I may not be able to afford one when I need it.

My other problem is that I have a boyfriend, but we do not live together and he doesn't want kids (and I do). I am really not prepared to break our relationships now, I just can't imagine not being with him, but I am 33 and I don't have that much time left to have kids, so I have given myself time until the New Year. If nothing in our relationships change, I am preparing myself that I will have to break them down

So with regards to the house purchase, I am going to ignore "what if my future partner doesn't like the area" thing, as I can't predict nor change that anyway. And to be honest I don't really want to buy a bigger flat in London as an investor, with a hope to then sell it and buy a house on that money, I just don't think I can pick the right area/flat for that. I am also not very much liking that whole idea of property speculation and buying/selling all the time thing I have only started thinking about the house now as the property pricing are rising so ridiculously that I feel I really don't have much choice if I want to ever own a house, otherwise I would have left all this until I am actually ready to settle down I one area in a big house.