Advice on buying in current market...sort of

[cornerstone75]

This is a bit fiddly, I have asked the money expert lady as well but thought the resident MN property experts may have an idea as well!!

We are currently renting the house we live in, and we own a flat which we let out. The flat is going to be sold pretty soon and we aren't sure whether to buy immediately or to stay where we are and stick the money in the BS (having used a sizeable chunk to clear some debts)

The second option is the most likely, as we havent seen anywhere we like/can afford yet, and would mean we could have a load off our minds re: debt. But does it sound like a bonkers idea? Should we be looking to absorb some of the debt into a remortgage, rather than blowing a big proportion of our deposit?

Not sure if this is money now rather than property... sorry

I don't know how much you are currently paying towards your debts and how much rent you are paying - if buying the house would be roughly the same as current amount of rent and the money from the sale of your flat would give you a very large deposit, I would be tempted to pay off debts and take on larger mortgage as that will be much lower interest rate than you get on loans/credit cards etc.

If buying is going to be more expensive than renting, then pay off debts first and save up a bigger deposit after those have been cleared.

On pessimistic note, will your current debts mean that you won't get a good mortgage deal? In that case, definitely worth clearing them, saving and building up credit record in the meantime.

It really does depend on your situation - incomes, job security, level of debt, house deposit and cost of the house you want to buy..however it's not a bad idea to rent if you haven't found the right place and it's a very good idea to pay off debts.

If you want to get a new mortgage the banks will look at your affordability and discount your income by the payments you need to make to service the debts. You will also need a signifcant deposit to get the best rates so to be in the best position you need to have no debts and a good deposit.

Also house prices are generally falling so you could benefit from lower house prices if you wait.
It's certainly not a one size fits all but paying off debts in this uncertain climate is a very good thing to do.

Thank you both

The debts are a major source of stress, a large amount and at high rates. I think our credit scores are fine, mine was good when I last checked, as we haven't defaulted and have had the same credit cards for a while, but we have no money left for holidays/luxuries after paying each month so it would be nice to have a life again after clearing them!
Good point about prices falling too as there have been several houses near us that have been reduced in price and are still on the market.
If we cleared the debt we would still be left with about 35-40% deposit at the price range we're looking at...does that sound like a decent size deposit at the moment? When we bought the flat it was about 10 years ago and our deposit was about 30% so I've lost touch.

That's a brilliant amount of deposit and would definitely get you some good mortgage deals - mortgage lenders do take into account all your outgoings so the debts could have a bearing on how much they would lend you, so get them paid off.

As Smum says, that 35-40% deposit could be worth a lot more if prices soften even further in your area (have you already had an offer on the flat?). Since you haven't found anywhere to buy, I'd stay put, pay off debts, save a bit and get back to having a little bit of a life. Good luck.

Thank you lalalonglegs that is reassuring!! For some reason, I thought 50% was more like what was needed these days and hence the worry....all of our friends rent, so never sure who to ask!

We've had the offer and accepted it, and I'm happy with what we'll get.

Thanks again, advice much appreciated.