Aib ungrateful?

[Changemymindchangemylife]

I am about to move to London to start a grad scheme. Have found some friends to live with and will be renting a houseshare as part of my salary. Was really thrilled earlier today when I found friends to share with and called my mum to share the news.

She criticised the decision a bit as she has very kindly saved a sizeable amount of money which she wants me to use as a deposit for a property. It is quite a lot of money and of course is only going down in value as the housing market in London rises. She is understandably anxious for me to get on the market.

Thing is, while I'm very grateful, I don't think she understands London is so expensive these days that I can't really buy somewhere just like that. Her logic is that I should just move further out.

I don't know! I feel ungrateful but I got a bit angry and upset that she wasn't feeling pleased for me at having sorted things myself. It's a long hours graduate job that I don't want to mess up and I don't feel like living far away will be beneficial for me. I also think I might as well live with friends while I'm in my early 20s as soon that won't be an option. She sees it as throwing money down the drain...

WIBU?

Depending on what you want to buy 200k is feasible in a commutable spot within the zones. There's nothing stopping you renting for a few months, assuring you like your job and then applying for a mortgage with that as a deposit too.

I live in a very very commutable area (very quick connections and multiple 'escape routes' as we call them) of zone 6. We've had a major surge in property prices, but 200k could still buy you somewhere small. I love it as its not too city like, there's proper countryside one way and proper city life the other both in easy reach.

Plus there's always the option of buying somewhere bigger with a mortgage and renting out the other rooms. Not to mention the option of selling up a tiny property in London and buying somewhere decent sized elsewhere later on.

StructkyMum - could I ask whereabouts?

ItslosnGreyhound - thanks for the advice but that's unkind. I'm not ungrateful deep down. For one, i would never dream of asking my mum to buy a property for me to move into. That wouldn't even be an option. The money is absolutely hers and it's up to her to lend it/give it to me. I'm just not sure what to do with it.

u can get a whole house for that in essex!

i understand where youre coming from maybe what others suggest buy somewhere and renti it out

I'd wait to see what happens with the referendum though. The potential economic instability of a Leave result is likely to bring down property prices at least for the next couple of years. In your position where you have a choice, investing in property is a bit of a risk.

You're not being ungrateful, you're being sensible and asking questions. You cant get a home for that money in London. You can't afford a mortgage. Commuting is more expensive than your Mum realises.
Buy to rent is one option, but the main problem landlords have is if they dont have spare cash behind them for repairs and emergencies. Who would manage a BTL? If you had to pay an agent you;d lose quite a bit in fees.

I'd talk to your mum and agree a time frame. You need to live in London and get to know the areas you like and where your friends are. It will also help you to decide if you want to buy a house that you could share with a friend and what commute you'd be happy with.
Use this 12 months as a chance to explore and enjoy yourself! London in your early twenties is amazing!!!

Hmmm, I'd stick to your flatshare now but look around for somewhere (either in central london or easily commutable) to buy with the money which you could rent out initially but move into yourself later on if you wanted to. Sometimes commuting can actually be quicker from outside london, for example East Croydon to London Bridge or Victoria is about 20 minutes, which might be better than a tube/bus over a shorter distance, if you see what I mean. Also if buying further out it is a good idea to check that overground trains run all through the night, as that makes getting home after a night out a lot easier/cheaper!

The main reason I say flat-share first is that you don't know yet how you will cope with very long working hours, or what late nights for fun or work you might have. If you are really burning the candle at both ends being able to get home in a blink might save your sanity. I do remember frequently being jealous of my friends v small room in a flat share that was within spitting distance of my office.

£200k is a sizeable amount. Some Buy to let mortgages don't look at your finances quite so closely if I remember correctly, so your mum could buy a house, rent that out, or you could rent it out, and then you're still free to choose another flat to share. But don't miss out on the opportunity. It's very generous and amazing of your mum to do that, that amount of money alone would take me about 50 odd years to save so just tell her you're very grateful and explain how you could work together on this?

Buy an investment property and rent elsewhere with your friends.

There's nothing stopping your mum from investing the 200k in property and renting it out so that it's "in property" for you while you enjoy your time in london

If you're moving there at the same time as doing a long hour job, I can imagine it could get very lonely commuting in and out of the suburbs as you'ld be left with very little time to socialise, and might end up resenting the job if you aren't enjoying your time in London outside of work. Renting with friends nearer the job sounds like the best quality of life for you for now. And if you're happy living nearer work with friends, and not feeling isolated out in the "sensible investment" suburbs, you'll do better at work.

It might be a false economy buying a house further out while you do this job because worse case scenario (and I've seen similarish happen to friends) is you end up not doing as well as you could, or even quitting, what was otherwise a good opportunity, because you are lonely and isolated and have a crap quality of life.

200k is more than my house cost!

Definitely buy, if necessary get a mortgage so that you have spare bedrooms which you can let out. You will therefore have the 'flat share' experience plus a property.

Enjoy your flat share. Build up 6 months in your graduate scheme and then the referendum will be over and it will be clearer what is happening to the markets. Then with a small mortgage you can hopefully get a decent one bed in London. You are young, have fun. It's amazing your mum has this money for you but it's not your responsibility to spend it for her right now.

How likely is it that you will stay with that company or working in that area long term?
I think you're being sensible taking time to weigh things up first.

I know some people who have done well buying early on, and some who have done badly. One of the main deciding factors is stability of work. Owning a property makes you less flexible. It's also expensive. One friend found himself buying a cheap property with a managable commute then his job relocated shortly after so he's bern burdened with long expensive commutes or difficulties in renting out a 1 bedroom house in a fairly impractical location- that was buying about 15 years ago! (Admittedly he's made other poor decisions along the way so his equity and financial status are in a poor position)

Buy and rent it out

This. Screw living in Reading and commuting - you have got the rest of your life to do that. Enjoy your flat-share and living in the city. But your DM is right that the value of the money will only go down if left in an account, so buy a house somewhere outside London & rent it out. That way you get the rental income, the value of the house will go up (as long as you choose wisely) and you can sell it to buy the house of your dreams when you get bored of sharing.

Also, can anyone advise me what they would do? The money is about £200k. Perhaps I should buy elsewhere and rent.

£200k!? That's a very large sum of money.

Take the house share, take a month to settle in, then start flat-hunting every weekend.

Which is the closest London terminal to your work? A deposit that size will give you lots of options.

Oh, buy, buy, buy. You will regret it hugely if you don't. Even if you rent out the property you buy.

I was going to say, rent but then I saw how much money you are being given, that is a HUGE amount. I would buy, you can go for outer London, forget Surrey thats expensive, but the Kent Sussex borders are not that far. We are always being told young people cannot get onto the property ladder. If you shop around carefully you wont even need a mortgage. The stamp duty and solicitors fees for your first property are a one off. A lot of Estate Agents have their own in-house service if the sale doesnt go through to completion, no fee. Buy your property,you can rent out some space to your friends!!!

Commuting in on one train can take the exact same length of time that fiddly journeys within London do. Did you realise that? I'm not sure whether that's pointing out the obvious.

Crikey, buy buy buy

If you want to live with friends still (which I think is a great idea while still young) then rent yours out once you've bought it

You will always have a roof over your head to come back to, no matter how old you get, or how far away you travel in the world.

That is priceless

You know gifts are meant to feel nice to receive, not cause you problems and feelings of guilt.

Whilst it is lovely of your mother togive you this, it's not lovely of her to try to control your life by giving it to you.

And it won't get you anything in central London, and you have no idea where you will want to settle down, and starting a new grad job is not the time to be saddling yourself with either a large mortgage or a long commute

Oh and echoing other posters, you don't need to buy in London.

Buy a good, rentable, family flat / house on the commuter lines, then it doesn't matter really where you buy if you don't want to feel "tied" down- plus you shouldn't need a mortgage

If you/ your DM is worried about the value of £200k decreasing as property prices rise the only option is to invest it in property now, thus protecting its value. Like PP have said, buy something and rent it out. You can still live in a house share in London until you're ready to buy for yourself.

Without wishing to sound patronising, do you actually understand how hard it is for most of the young population to get on the property ladder? It took blood sweat tears and a whole lot of sacrifice for us to save our high deposit and mean we really went without! You are being handed it on a plate...no wonder you're mum is getting annoyed, some people will never get out of renting and here she is offering you it. Take it op, seriously!