To wonder if buying a house is worth spending all our savings on....

[Ilovechocolate87]

Last year my dad sadly passed away, and I have some inheritance money in savings of £30,000.I have never had anything much in savings....I've spent most of my life living in debt or month-to-month off my monthly wage, with a credit card to get by for unexpected expenditures.If I/we have ever come into abit of money it has often soon got snapped up by things 'waiting to be paid for' paying off debts, or general living costs (topping up our income).
DH and I aren't high earners...and i only work 2.5 days at the moment due to having 1yo DD2.But we both get to work weekdays, daytime only so plenty of time together as a family which means more to us than having a higher income and not that benefit (I would probably work 3/3.5 days if i had the choice, but its either 2.5 or 5 full days which I feel would be too much time away from baby til she is older)

DH and I have always had it in the back of our minds we would like to buy a house one day...I stupidly missed the boat years ago really as I moved out of a shared ownership flat into a rental property with DH, and gave the money I could of used to put a deposit on a house back to my parents so I didn't feel 'indebted' to them (ironic really, as it would now be their money I would be spending anyway! 🤦‍♀️)
So when I got this money I was fairly certain I would want to spend it at some point, on a house deposit, something lasting I guess.

However I'm wondering if buying a house with the money would really be the right decision, or if i should keep it aside to use as a ' family back up fund' for us.The deposit and costs of buying a house would be ALL the savings gone, and there's no guarantee we would be able to save much at all again in future.
Also, we really like the house and the area we live in currently, but it looks like even when we could afford to buy (not til i'm working full time- probably 2026 when DD2 is at school) we would still struggle to afford anything similar size wise to our rented 3 bed semi to afford to buy here or even in the neighbouring town.Our 2 DDs are/will be at the local primary school, which is really good, so i wouldn't want to move them, and I like the fact they can walk to school too.
Our ND neighbours are the loveliest neighbours we could wish for! (had 2x lots of awful ones at our last rental next door during the time we were there) I worry we wouldn't ever get anyone as nice to live nextdoor to, and it makes such a difference.

Everyone says how expensive rent is compared to mortgages, but we get a very good deal where we are (£675 per month for a 3 bed semi) I think we would easily be paying afew hundred more a month on mortgage payments, which is in turn less money each month for everything else.I feel like although your 'getting something back' through buying rather than renting there would be alot of money sunk into interest, and the general costs and fees of moving or possible necessary renovations/repairs etc.Our current home is fairly modern, in VGC and obviously any major issues the landlord would foot the bill for.

Finally, I am now classed as 'part owner' of my mum's home (she asked me to take over my dad's share) so whilst I OF COURSE hope she is around with us for many more years yet, I guess it's relevant to mention for future considerations in terms of my available assets later in life.

Opinions please....

Given what you’ve said, you’d be crazy not to.

Buy somewhere to live. Rents are likely to increase. What happens when you retire?? Don’t guarantee any inheritance £, it may be spent on care home fees etc. You said yourself that you regret giving up your shared ownership. Trust me, if the £ is sat in an account it will get eaten up within a few years. That holiday you “need”, that new car you “need” etc. Invest it long term in a property asap.

Have you looked into buying a rental property? If you could buy something where you'd be certain rent would cover the mortgage after your expenses and tax and so on. Including allowing for interest rates going up.

Definitely buy. You've already regretted not doing it once...

What's your annual income after tax?
What's house prices in the area you'd like to live like (with the number of bedrooms you'd need?
What are your plans for retirement living?

Could you let your landlord know that you’d love to buy the house you live in? Just put the offer on the table - say you are not looking to buy anywhere else but if they were ever thinking of selling…

The thing with not buying is that private rental is insecure. Whilst you live in a lovely house that’s perfect for you with great neighbours, what happens if your LL decides to give you notice? Then you’re in the exact position you were trying to avoid - all the upheaval - and with the added issue that rental prices only ever go up. Whereas with a property you’re buying on a mortgage, yes interest rates fluctuate etc but the longer you pay it off the cheaper your housing becomes, proportionately, as you’re building an asset (equity in the property).

We lived in a great rental by a wonderful primary school with amazing neighbours - cheap rent comparatively as the LL was great and didn’t put it up much each year. We couldn’t afford to buy in that neighbourhood though - no way. So we did put off buying because we didn’t want the upheaval. But rents in the area kept going up massively, our LL was interested in selling within the next 4 years … the writing was on the wall.

Your buying decision is a while off, it sounds. Invest your deposit money wisely, make your career plans, research secondary schools. Don’t write off anything yet.

If you aren’t careful that money will go on unexpected bills etc. I’m not sure where you are but here 300,000 would buy you a three bed semi outright.

If I were in your shoes I would probably buy a house. Even if it were buy to let and I didn’t want to live in it.

If you claim universal credit, you may find it stops as you have savings.
I would buy a house.

If you can get a mortgage I think you should. It's true that the mortgage is likely to be more than the rent in the early years and you do have all your own house repairs to pay for. However, rent money is totally lost to you. When your mortgage is paid, in a way you still have your money. It's not list to you in the same way as rent money.
In our case this means that, although we live in the house, so won't be getting the money back to spend, w have no rent/ mortgage to pay in our old age and can leave an inheritance to our daughter unless, of course, it all ends up going in car home fees. 🤔

On the other hand, if you are unlucky enough to lose your job, there is very little help in paying a mortgage whereas if you rent the rent would be paid until you worked again.

OPs inheritance/savings is 30K not 300K.

Oh lord. Misread that! Thank you.

In that case OP it’s up to you. I still think it’s better invested in something so it can’t be spent as easily.

It's ways worth buying a house. I bought one as a single mum and have just paid the last mortgage payment.
I've got 7 years before retirement which gives me plenty of time to boost my savings with no mortgage to pay and I now have this investment which I can use take money for me in retirement.
I can downsize to a one bed flat if I need to and release money or rent a room out, there are lots of options. I won't have to find money for rent on a pension. It's win win.

I’d also buy, you’ll have more options later in life. You could downsize and help your DC, you’ll not have any mortgage or rent to pay when you are older. You may be able to leave an inheritance to your DC.
It is good to look at the bigger picture and the long term.

Going against the grain somewhat but from everything you've said I can see why you might not want to buy right now. House prices are still really high, as are mortgage rates. With the situation part owning your mother's house would you also be classed as a second home owner if you bought another home?

Doesn't mean that buying within the next few years won't still be the best overall option - bearing in mind your dc will move from primary to secondary, your rent could go up at any time or your house be sold by the ll, neighbours could move etc. Pps are right that to have it as back up funds it will get spent- I'd put it in a fixed rate account so you physically can't access it and you get a higher interest rate (although still technically depreciating in terms of purchase power).

You need to ring fence that money if you don’t buy, act as if it isn’t there.

Just a point, and perhaps someone can advise, if OP is already part-owner if a house (with her mum), Would buying a house therefore attract increased stamp duty on purchase, as it would perhaps be a second property?

I bought my first house and sold it 4 years later for about 17k more than I paid for it.
A mortgage is like a savings account, when you sell you get your monthly payments back, I ended up with about 50k in my bank after I sold that house... easiest money I ever made! Definitely buy a house if its an option, you're just paying someone else's mortgage when you could be paying your own!

I understand the advantages of your rented house.

Until your landlord decides to sell. For example.

Your money will not hold its value in cash savings, plus there is the temptation to eat away at it.

However, you will be hit for higher stamp duty as you are a joint owner if your Mum’s house.

Why not talk to a mortgage advisor? No commitment or cost but you might find a way forward that is affordable and beneficial.

If it is left to you after a death (bequeathed in a will) then you have 3 years where you are exempt from the second home stamp duty rate.

If you don't buy now at least ring fence the money somewhere so you could in the future if landlord decides to sell etc
Maybe even see what a mortgage would cost and then see if you can save that extra to see if you could afford it
But then you said you wouldn't be able to get a mortgage for a couple years anyway, so therefore keep the money to one side and see where you are then
Hopefully house prices and mortgages might of steadied by then

Sorry to be so slow replying but thanks so much for all the helpful responses!
I think the best thing to do is to 'ring fence' the money as others have suggested until we are actually in a position income wise to be able to afford to buy a house that meets our needs (unless it was needed for something essential like to pay the bills if one of us lost our jobs for example) and then see where things are at with the housing market, cost and availability of properties in our area etc and our mortgage entitlement.Currently our combined income is around £40,000 and the amount that we could borrow for a mortgage would barely get us an apartment! I really don't want to use it for anything else tbh...I know it's not money we can ever save again, and a house is a lasting investment unlike for example a holiday which is over in a flash or a nice car which is desirable one day but soon devalues and ages.
I have thought that if we are ever in a position to buy our current house it might be worth approaching the LL to ask, so might consider doing so at that point.
Not sure about the stamp duty thing...I know the solicitors are currently in the process of transferring my dad's half of the house into my name, so will ask them when I go to sign the documents.
I have said to my mum that I would never want her to not use the full value of the house if she needed to for care home fees etc, and whilst she said she wouldn't need/want to, I'm not taking inheriting the house as a given, and hopefully she can live there for many more years yet :)