What to do with 60k — can’t buy a house

[Schmapples]

Dad has generously put this amount into a pot for me to one day buy a house. The problem is that in London that’s just never going to happen!! We earn ok salaries but London house prices are just mad and I need to be in London for work.

My idea is that dad should get a financial adviser and put the money in a low risk investment fund so that it is safeguarded for the future. It’s been in a bog standard savings account for about 15 years now 😵 so was worth considerably more when ddad acquired it in the first place and now is becoming worth less every year. I’m just aware that even with this money and our own savings it’s going to take us maybe 10 years or more to buy our first place, and i’m worried about the value descreasing so much that home ownership will just be forever out of our reach.

Ddad is a curmudgeonly and risk averse sort so I think will balk massively at the investment idea. But am I right in thinking that this is potentially the only way to future proof this pot?

I have lots of rich mates and they wouldn’t dream of having this amount of money in the bank, it’s all in low risk investment portfolios.

Really clueless about all this stuff so any advice massively appreciated.

For £250K - maybe even £200K - you could buy a freehold 3 bedroom house in Southend-on-Sea. That's not too far to commute to London and it's not a bad place to live.

Schmapples I'm really surprised at that, I'm in the middle of getting a new mortgage at the moment and they worked off 5x my yearly salary as the affordability criteria so it seems odd that they're essentially only giving you 2-4x! But even with £250k you could still find something within London, though it might not be that big...

Stratford (with Foxtons so probably massively overpriced too)
Hither Green
East Ham

Best of luck with it all!

Can you buy just outside London and travel in?

TBH, I think all you need is a reality check. Of course you can’t get a freehold house in zone 3. So it’s to approach it from the angle of how much you can afford and what that buys you and choose the best option for you.

If you’re keen to stay in London, you might be able to get a studio or a one-bed closer to central London or a nice one bed or a two bed in outer London.

Or 3rd option, carry on renting and whinging that you can’t afford a house in zone 3. That will keep you whinging for a long time as those houses cost cost several times over your budget so sounds unlikely that you’ll be able to get one anytime soon/ever if you carry on renting.

Alternatively, you could just choose one of the hundreds/thousands of flats available within your budget in London. Then you can pay the mortgage down, save up etc + with a possible increase in salary or value of the property, in 5 or so years you could take stock and possible find that a small house will them be within your reach.

jojo have you actually tried looking for a 250k flat anywhere near London? There are very few and those that are tend to be 1. Retirement properties 2. Cash buyers only 3. Auction, none of which are an option for us. If you come across any of these mythical flats, please do let me know!!

I know 250k seems like a brilliant first time budget literally anywhere else in the country, but in London it’s just not enough.

So my options seem to be: leave London, move miles and miles away from my friends, my work, all the things I like doing to live somewhere I haven’t chosen and know no one, but I can own the house I live in. I don’t think I’m being spoilt to hesitate at the idea of our quality of life going down so much.

My one hard line is that I cannot live with dp in a studio flat. We would be so so unhappy and it would cost us our relationship if we couldn’t get away from each other occasionally and go sit in a different room (not kidding).

I have thought that we could ask one of our parents to be a guarantor to push the value of the property we could get up to £300k, which would be brilliant and we could definitely find something for that, but wonder about affording the replayments...

No need to be so dramatic OP. The problem is that you don’t want to make any changes in your lifestyle but buy your own house as well in your chosen area. You probably don’t need me to tell you that is unlikely to be possible. And if your dad is risk averse it’s also unlikely that you will be able to future proof your investment as the type of investment he will be agreeable to will probably not keep pace with inflation.

1. People have gone to the effort of posting links to several properties in London for under £250k so they do exist, stop whingeing they don't.

2. Instead of just inputting some details into MSE why don't you make a bit of effort yourself and make an appointment with a broker. You will almost certainly be able to find a mortgage which will give you a budget of £300k.

3. Or do nothing and rent for the rest of your life.

Come down my way! www.rightmove.co.uk/property-for-sale/property-60794713.html

This is around the corner from my place, and fast trains from Norwood Junction get you to London Bridge in less than 15 minutes, non-stop.

Just to add, we bought our place for £265k last year with a 10% deposit and a joint income of £63k - and our broker could have got us quite a bit more. Try London and Country, ours was sorted all over the phone one gloomy weekend afternoon.

You have options, promise

Where do you live & work now (both you and DP)? What would your ideal scenario be?

I have been where you are (some many years ago, mind) and we did it, and it was hard for a while, but it was worth it in the end. You do need to choose wisely. I agree that it's nuts to move somewhere/anywhere just to get a place if you'll be miserable there. We actually swapped area to a more expensive part of London as we just didn't feel comfortable buying in a place we weren't sure about.

I like a challenge - where would you live if you could, where do you & DP work, and what is a dealbreaker on what you're looking for?

You're being gifted £60k.
You want to buy a property.
You don't want leasehold.
You don't want a studio flat.
You don't want to live further than zone 4.
You want to buy before starting a family in a few years.
You'll potentially be earning higher in a few years.

I'm afraid it's very unlikely that you'll find a property that meets all of your criteria.

I think it's clear that you either have to earn more (wait until your earnings increase), compromise on location or compromise on property type.

We moved to outer London in our 30’s out of choice (much nicer for starting a family) but it actually is not that bad even if you’re in your 20’s and still going out a lot. To use our area in zone 5 as an example, there are places to go out locally + direct trains into Victoria, Blackfriars, London Bridge + the city. There are night buses from Trafalgar Sq or the last tube stop at Morden.
In your budget, there are flats like the one below - very spacious, in a private, well-maintained block with the station and high street 3 mins away.
www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=STATION%5E8918&minBedrooms=1&maxPrice=250000&minPrice=210000&radius=0.5&includeSSTC=true&dontShow=retirement#prop49063110

Other areas, eg Croydon are a bit rough but they’ve got Box Park and a Westfield shopping Centre coming soon. There are some very fast trains into central London too (from 15mins).
Some friends just got a flat in zone 6 in the Borough of Bexley: earn less than you so a slightly lower budget (and saved for their own deposit). Theirs is a 2-bed with a large private garden and parking.

So yes, you are being a moany princess as there are options available to you even if they aren’t a penthouse in Chelsea.

Have you looked into help to buy? A £400,000 flat would mean you only have to cover £240,000 with deposit / mortgage which gives you more options.

Ooh thank you squirrels!

I work in Waterloo and DP works in Shoreditch. No dealbreakers apart from: not a studio flat, and not ‘in need of modernisation’ as the estate agents often put it! It doesn’t have to be really fancy or anything, just not needing lots of work in order to be habitable! We wouldn’t know where to start with all the work that would require and doubt we could afford it anyway. Being closeish to a tube, any tube would be good (though happy to walk say 20/30 mins) and kind of a fun area would be great, though I know this may not be possible.

Gazelda yes you are right. I think a leasehold will be ok (no other option really for flats). We could wait until earnings have increased but i’m worried about the value of the gift decreasing in that time.

If you google Zoopla and put in London, and max £250 there are 2779 options available to you.

OK, those are good areas for transport connections to lots of places. Start by exploring the Overground - loads of areas not on the 'tube' but easily accessible.
I shall have a RightMove trawl.

To all the sort of moany 'poor you' comments, I do understand why you're getting them but don't take it to heart too much - it's OK to have different priorities when you're young, in London and no DC yet. Lots of people are posting from the point of view of seeing your fantastic large deposit and thinking you're asking for the moon on a stick. You might be, but it's fine to start high and then negotiate down!

15 years ago 60k would have been a sizeable chunk in an area like lewisham or crystal palace- i bought a flat there for under 150k in 2002 ish.

I’d buy if you can. You will maybe have to adjust your expectations, move out a bit, small or studio flat, but it’s always worth it, especially near london.

I have a friend did the same, had 100k deposit, nearly bought a flat near me for 185k at the same time, decided not to. Decided she wanted to wait and buy a house with a garden. Same flat has just sold for nearly 500k, and my friend still hasn’t bought a house, and can’t afford a flat now either.

Biwi if you do that search but exclude retirement properties, shared ownership etc it reduces the number massively. Believe me, I’ve been searching! Everything that looks promising at first turns out to be cash only, auction, really really run down or a bloody houseboat!

I have just been on Rightmove, and while on there put in your budget. Absolutely loads of perfectly decent properties available.

Thanks squirrels, that’s very kind of you.

Reallyanotherone I know it would have bought a lot more back then dad has been saving this for me for years from an inheritance from his own parents. He’s always been a low earner and is very nervous of doing anything even slightly risky with money ever, for my sake I think. I’m never, ever going to have this sort of money again so I really need to get it right and i’m worried about wasting this one chance I have. Dad wasn’t always able to be the parent he wished he could have been (single parent, low earner, MH issues) but it means a lot to him to give me this one spectacular gift, for which I realise I am amazingly lucky, but to everyone I promise I’m not some sort of spoilt princess!

New Cross/Surrey Quays/Peckham

www.rightmove.co.uk/property-for-sale/property-62816509.html

www.rightmove.co.uk/property-for-sale/property-60931597.html

www.rightmove.co.uk/property-for-sale/property-63000868.html

www.rightmove.co.uk/property-for-sale/property-57707149.html

Lewisham/Hither Green

Lots of 2 beds in the £275-300K bracket

www.rightmove.co.uk/property-for-sale/property-68486015.html

www.rightmove.co.uk/property-for-sale/property-68769800.html

Cheaper, closer to budget:

www.rightmove.co.uk/property-for-sale/property-62615398.html

www.rightmove.co.uk/property-for-sale/property-67417616.html

www.rightmove.co.uk/property-for-sale/property-61339693.html

www.rightmove.co.uk/property-for-sale/property-51262563.html

Sydenham/Crystal Palace/Gypsy Hill/Norwood

www.rightmove.co.uk/property-for-sale/property-50599191.html

www.rightmove.co.uk/property-for-sale/property-45934848.html

www.rightmove.co.uk/property-for-sale/property-66379076.html

www.rightmove.co.uk/property-for-sale/property-62794018.html

www.rightmove.co.uk/property-for-sale/property-69526979.html

www.rightmove.co.uk/property-for-sale/property-46361502.html

Search up to £275-300K. With a decent mortgage broker I would be surprised if they couldn't get you closer to 4 times joint salary with a 20% deposit.

Also remember that the London market is REALLY soft in some places - it isn't rising fast - if at all - and price reductions are happening but a lot of sellers haven't accepted that reality yet. So there may well be opportunities to get a fantastic bargain...

If I were you, I would go and get a feel for a lot of these areas that are just about affordable for you now (looking SE primarily), and monitor the areas you like for the next 3-6 months. You want to buy somewhere with as much flexibility as possible, so a 2 bed is what you're aiming for, but if it means a one-bed with extra living space, or split level, or outdoor space then that is all good.

I absolutely wouldn't buy a small one-bed in a slightly off area at the moment. If the market really is soft and stays that way for a while, you don't want a property you are "trapped" in.

Don't worry about leasehold - most London properties are. It's not that scary. Your bank won't lend a mortgage on a dodgy too-short lease anyway, so you're protected in that way.

If you really don't want to move areas, I would look at buy to let properties, which don't need to be anywhere near somewhere you'd like to live yourself.

Eventually when you want to buy, if you'd been paying down the mortgage with any surplus from the rent, you'll have a lot more equity, so then sell that and buy your family home.

If your dad is risk adverse and you want to put the money to work, property is probably your only option.

🙏🙌 thank you so much squirrels, some of these look brilliant!

www.rightmove.co.uk/property-for-sale/property-61425079.html

You can buy a whole house where i’m from with that kind of money

Also, don't be put off by the "needs modernising" or the odd dodgy bathroom or kitchen. It's really not that hard or expensive to update a bathroom, say.

The closer in you are to town, the more you may need to compromise on space/decor. The further out you'll get better space and decor, but less lively areas.

In my area (zone 3, popular) there are a lot of properties not selling and being reduced. Families moving to next size, buy to let landlords cashing up.
As first time buyers, you have a lot of clout to negotiate on price.