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?

I would either buy and rent out the whole thing if it's not in an area you want to live or live in it and if you have spare room rent it out. If you get a flat mate you get the best of both worlds.

Definitely invest it! My dp and I worked on cruise ships & with little expenses were able to save enough for a deposit to buy a house on our return, once in we started saving again and a few years later bought our second home whilst renting out the first.
Wise investments and sensible decisions completely went over our friends heads at the time but now still not 30 we are in the process of selling both to buy our dream house. It really does pay off in the long run , we have no regrets as we are both so grateful we are comfortably on the property ladder and enjoying our children.

I live in zone 4 and my flat is worth less than that. Tube station is 5 mins away

I'd buy elsewhere and rent it out. The return may not be as good but you'll have what you want - UE living with friends and enjoying your youth. Don't under rate that - time flies by at an alarming rate.

I don't quite agree with the commonly touted phrase "rent is dead money" - if you have a mortgage, then often the interest to the bank is equivalent to rent - which is dead money to the bank! And you pay home maintenance etc - hopefully in the end the capital growth pays you your profit - but along the way interest is dead money just as much as rental money is.

The things I would consider
-do you know the area you want to buy in? If you decide a year down the track that this area isn't "you" then selling and moving is a costly exercise. Renters can change until they find the best place for them/their work etc.

• will you end up with a mortgage? Can you even secure one, if you're newly graduated and employed.
• can you invest the money until you feel ready for the commitment of home ownership? Either in property as an investment property or something else that protects the capital.

I would definitely say buy, but don't be panicked into it.

Your mother may not realise just how expensive London is for property. She may also not have factored in that you probably currently have very little track record for credit, if you are a recent graduate and this is your first full time job. You will need to build this up over the months ahead with your regular salary.

I would rent in the short term in order for this to happen. Say for six months to a year anyway. Use that time to both enjoy yourself with your friends and to fully investigate the property market in areas you might be interested in buying (being realistic about where/what you can afford). Tell your mother that you are doing this, and tell her why. She will hopefully then see that you are grateful for the help onto the property ladder, taking it seriously and biding your time to make the right investment with the money she is intending to gift to you.

I would agree that renting isn't necessarily dead money if you are using the time as an opportunity to make a properly considered decision. I would not want to rent long term though if I had the option not to.

It will be interesting to see what does actually happen to property prices after the EU referendum. All financial markets are quite jittery at the moment.

You can get a really decent house in Kent for 200000 with an hours commute to London

You are very lucky to have this option and I'm sure you realise that. The longer you leave it to buy the less you will get for your money so clearly there is sense in buying now.

Having had a similar graduate position though, I would be wary of living too far away from work as my experience was that you were often required to work quite long hours (or miss out on the chance to work on the biggest projects) as well as studying. If you have a long commute, you will end up with a very long day. In addition, there is a very good social life and a long commute home will limit how much you can enjoy this. Having said that, many graduates who choose to stay in London do move further out after their training is completed/when they get a partner and want to settle down. I'd suggest you either agree with your mother to buy at the end of your training (say 3 years), see if you can get a mortgage to buy something fairly close to London now that will not be your 'forever home' but that you will be able to either sell or let out easily if you want to move further out or buy somewhere further out and let it out for a few years.

The other side of this is that if you are new to London it may be less lonely to share with others for a while whilst you get to know your way around. If you buy something could you perhaps let a room to a friend to get the best of both worlds (and a bit of extra cash)?

Certainly get some of that cash in a help to buy ISA!

DH was in a similar situation before we met, he was mid 20s and got a six figure sum. He didn't buy until we had met and married a few years later as he wasn't ready to settle down and wanted to meet people - house shares are a great way to meet people, it was how I met him, so yes he could've made a killing on buying earlier but we would never have met, there is more to life than money.

I also agree that £200k isn't a lot in London, we have a deposit of nearer £300k and can't afford a house in our outer London borough. And buying is expensive in itself so making an error can set you back, it's much better to make the right decision a year or two later than be stuck in a property you don't like - and if you are new to London you'll have no idea where you'll want to buy, much better getting to know different areas first. I heard that staying for five years was the minimum to get a decent rise in price to help move up the ladder, although some areas will increase in price faster than others. Buying a property is a very considered decision and you need time to make sure it's the right one for you.

Urgh, nothing worse than someone thinking because they have set a gift aside for you, you have to do what they want with it.

With my parents, they got pissy that I saved a deposit and bought a flat to share when I was heading to uni. They had a plan to gift me a deposit when I graduated, as a lovely surprise. They sulked for quite a while about it!

But, it's a tricky situation when you have different ideas on what the next step is. I would suggest you sit down with your mum, explain what your goals are and your future plans and see if you can come up with a solution that meets the sensible thing to do but still allows for you to do the 20s fun thing.

I will say, I was glad I bought so young, it meant when I was looking for a family home, we had money available from the sale of properties to buy what we wanted. Not sure I'd have been so good at saving deposits for bigger properties.

And do all the right stuff to get your credit rating up and budgeting your spending - the banks look more into personal finances these days. I would aim to be in a position to buy a two bed in an area popular with young professionals so you can get a flat mate.

I'd buy asap. You don't need to get a massive place. Look along where crossrail is going because those places are still cheap at the moment and will go up in value - and will soon be very well connected.

Our house went us about £50k in 6 months. If we hadn't have bought when we did, we would have been priced out by now.

I think you should buy and get a housemate in to pay rent to you - get a mortgage and use 200k as large down deposit.

You really are very lucky;most people our age dont have a hope of buying. I had to scrimp for my rental deposit when leaving a flat share, never mind deposit for a place of my own.

Find a commuter town with property prices on the rise- invest in a property and rent it out.

Live & rent in London and when you're ready to leave, you'll have gained on your investment. You can sell & move on, or move in and commute if you're still in London. Time is of the essence, OP and the sooner you can get on the ladder, the better.

Invest the money, but not in property - you may make money on it but you also have the responsibility of it. If you're looking long term before you want to realise the investment and buy a property (day 10 years), put it in an Index Fund (which tracks the stock market and is very low cost) and forget about it.

Why should you feel bullied into buying in London? Who knows what will happen to property prices there? I don't live in London and am not young (unfortunately) but it's ripe for a 'correction', aka price crash. You may end up living somewhere completely different, in a different art of the country, or a different country altogether.

Buying property should be about buying a home, not an investment. The fact that it's usually a good investment is secondary.

Maybe tell your Mum that you'd like to take up this flatshare for a year or so just while you settle into your new job. Then see how you're feeling then?
Good luck with everything!

Should have previewed.

say 10 years

A different part of the country

I think you have the right idea. It is amazing that Mum has £200k for you ,but at the moment ,you need to be near work and also enjoying life with your mates. If she is adamant that you buy, find an area you like further out ,and see what the house/flat prices are like, with a view to moving there within the nest 2 years or so .

i think there are a few things to note here:

1. im sure your mum was pleased for you, but like us all she has her own agenda to pursue, in this case you buying a property. maybe say something like, i was hurt when you didnt seem pleased on my new job...see what that opens up in your mum.

1. even if you buy a property in london, and even with the very fast property market, you will still need somewhere to stay. but i would suggest opting for the shortest rental period you can (or being up for the idea of getting someone else in to cover your place if you do move out).

1. like others have said, you still can enjoy london even if you buy a property (i dont think the two are mutually exclusive). options are to a) buy a property and rent it out and you live with your mates or b) buy and live in the property. i would think either way, you will probably be ok financially.

1. although it might not be sensible to do, i would look to buy a property (and maybe ask your mum as a way to bond and show her how things work in london?) you can scope out new areas, and look to maximise how much you can get for your money..and maybe use some of it to pay for extras such as stamp duty, estate agent fees etc. there are lots of resources on teh internet to help determine the best place for you to buy

i hope that all was helpful and best of luck with everything!

As a 26 year old mum & business owner, I wish I had the option to buy. But as a young mum & business owner, there is no chance I will be buying anytime soon. I recommend following your mum's advice and buying, even if once you do and you'd still prefer to live closer to work, rent it out and flat-share. This means you can also start saving up and when you're ready to settle, you'll have that option one day. Good luck and wishing you the best.

I'd be interested to know how many of these people saying buy have ever been a) a landlord b) been on or involved in a top graduate scheme?

I meet both criteria and I'd urge you not to under estimate the hassle and commitment required to be a landlord, nor to underestimate the expectations and flexibility required of a role on a competitive grad scheme.

I think you may find yourself restricted from pursuing some opportunities you might otherwise have gone for.

Waiting for a bit will do no harm. £200k is a vast sum but if you're on a top scheme you could be earning similar as your annual salary in a few years time if you put the time in now.

I think a lot of people are focusing on what they would do and not what might be best in your particular circumstances. Totally understandable of course.

Congratulations OP for having a place on a grad scheme, and how wonderful your Mum has saved up for you.

Echoing a lot of what has been said

• if you buy far out you are likely to be missing out socially. If you have little intention of partying or staying more than an hour for drinks after work this may not impact you.
• If you are flatsharing with friends, this may be a really positive experience you don't want to miss out on (may go horribly wrong, but may be something you really enjoy)
• depending on your personality, the economy and the field you are entering, starting work may be an insecure stressful time. Until you feel settled you may want to put off having a mortgage
• buying far out with a long commute may make a miserable life, especially if you have long hours and come home to an empty house each night. You need to ensure you have time each day not spent commuting, working or sleeping.
• you may hate your job, city culture and decide to move else where
• if you are working for a consulting company they may decide to send you to Bangalore for 6 months so having a house is unnecessary (I know someone this happened to).
• house prices might be about to drop...

but

• if prices go up waiting six months to a year may limit what you can buy

Personally I would wait 6 months to a year, build up a credit history and payslips and then try and buy a two bedroom place with mortgage in East or South London (depending on where your family/friends/life are) and rent out a room (hopefully to someone you know, maybe at slightly mates rates so they are not bitter they are paying off your mortgage). Hopefully you could afford this. If you have a friend up for it, you could buy one of the areas with far more distance to come up, and hopefully realise a greater medium term profit (East Ham, Upton Park, Canning town). However, even if your salary is such as to afford this now, it may not be in 6 months to a year.

I would be wary of the buy to let concept, unless it is something near your mum and she is happy to manage it.

Good luck. With current crazy house price increases it is not clear cut.

I don't think you sound ungrateful. You sound grateful, but aware that this is not necessarily practical at this time.

Oh, and is there a potential Mr ChangeMyMind about? If there is anyone who you might be considering living with in the next year or so, that may be a game changer.

You could rent till you have a good idea of where you want to be and save a little to add to the 200k to cover the costs of purchasing this will reassure mom your taking things seriously about getting on the property ladder whilst giving you some space to party be wild and wreck I mean enjoy the benefits of someone else's property with friends X