What would you do - houses

NotAGolf

NotAGolf

NotAGolf

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My girlfriend are in a position to look at buying a house. We've done a bit of research and we've essentially got 3 choices:

- Buy something big, 20-25 year mortgage. Not save much each month.
- Buy something big, 30-35 year mortgage. Save a fair amount each month.
- Buy something small, 20-25 year mortgage. Save a nice amount each month.

By big I'm talking a 2 bed semi/terrace, and by small I'm talking a 1 bed flat.

Originally we were looking at a bigger place on a normal length mortgage, but payments would probably be quite tight on that so we might have to go for a longer mortgage so we'd obviously end up paying more back over time. Recently started thinking about going for something a bit smaller to stay in for a few years and then move to something bigger down the line.

Not sure about the idea of a small place though, yes we'd save more and we don't technically NEED a big house, but a flat never really feels like 'home'.
The flat would be more modern whereas the house might be a bit more used and run-down. A big house is more future-proof as well.

Not sure about the value of a flat against a house if the prices were to go up/down, would one gain more value than the other or will it be fairly even? I'd imagine the flat will stay fairly similar value where the house would vary in price a bit more??

What would you do in this situation?
Thanks.
 
something big - 30-35 year mortgage.

Your salary will increase as you progress jobs wise and you can always remortgage, if you want it over and done with faster.
 
don't waste money on a 1 bed flat, buy as big a house as you can afford, even if you have to stretch yourself to do it.
 
How long would a 1 bed flat last you? Consider all of the hassle / expence I you have to do it again in a couple of years!
We just bought our first home (3 bed Edwardian semi) which we could potentially live in forever - a friend has just bought a 2 bed flat, and already feels confined!
We have a 30yr mortgage which at the mo is taking 1/3 our monthly income - but as salaries rise and we pay off the capital, it'll get easier! The money we would have 'saved' buying somewhere smaller would have just been wasted on frivolities!
 
If the savings interest rate is lower than your mortgage rate (which it almost certainly will be) then you'd be foolish to 'save a fair amount each month'. Plough it into paying off the mortgage earlier.

And yes, buy as big as you can practically afford without being close to the breadline.
 
Careful with this get as big as you can afford business.

Interest rates aren't going to stay this low forever and historically recessions are followed by a period of higher interest rates. Of course it might not be the same this time but work out your worst case scenarios and see how you could manage.
 
Buy somewhere that feels nice to live in, be it big or small.

And think about where it is, and how easy it will be to re-sell.

False economy buying small - will just mean more moves later with the cost that incurs.
 
At this stage in your life, you are buying to sell. Buying a big house on a 25 year mortgage, you may not be saving cash, but you are investing. This would be the option I'd choose. The longer mortgage is very expensive, and a flat isn't much use if/when you have kids.
 
Eriedor said:
Careful with this get as big as you can afford business.

Interest rates aren't going to stay this low forever and historically recessions are followed by a period of higher interest rates. Of course it might not be the same this time but work out your worst case scenarios and see how you could manage.
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They are'nt low now jeez buy what you can afford if they go up then get an evening job till your more secure :)
 
Old Wino said:
Wait till mid next year. Having flooded the country with billions of pounds, we are currently living in a falsely-inflated economy to stave off recession. It's working but this will need to be paid back so there is pain around the corner and interest rates will need to go up to avoid inflation. This could scare people away from commiting to a mortgage and bring house prices down again.
If social pressures override this then go for it but if you can, keep saving and wait until the general concensous of opinion is that over say a 6-month period, prices are increasing again.
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I don't believe house prices will go down now for the forseeable future, infact they are slowly creeping up again. House market has crashed and levelled off. If I was looking at buying a house now would be the time to do it in my opinion.
 
fRostiE said:
something big - 30-35 year mortgage.

Your salary will increase as you progress jobs wise and you can always remortgage, if you want it over and done with faster.
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i'd go with this

its also a decent time to buy with prices having fallen...if its not working out then you could always sell and make a small profit in a couple of years.
 
I think both of us agree that a house is definitely the way forward, the only reason we'd get a flat was if we really couldn't afford something bigger.

The thing we're not decided on is the duration. I believe a long option is the best idea, I created a thread a couple of days ago about the advantage of a long duration. The majority of people think it's a good idea judging by that thread.

I'm thinking at it from the point of view of fRostiE in that this is only a temporary thing, we'll start on a 30-35 year mortgage, over the next 5 years or so we'll move up the career ladder and increase our income. At which point we'd change our mortgage to a shorter duration as we should be able to afford the higher payments by this time.

My girlfriend however agrees with billysielu in that we'd be 'wasting' money on the long duration even if it was only for a short period of time.

So this leads me onto my next question....
What would be the rough difference between the following options over the duration of the mortgage (loan value = ~120k)?

option 1: 25 years for the full duration
option 2: 35 years initially, then switch mortgage to a 20 year deal after 5 years.

Thanks again.
 
VoG said:
don't waste money on a 1 bed flat, buy as big a house as you can afford, even if you have to stretch yourself to do it.
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That's exactly what got this country into this mess.


Wait. The second fall is coming.
 
All depends what you want in a house and what you do in a house. If you pretty much just sleep and watch TV get something small. If you love cooking, grow your own food, entertain/parties, have a hobby where you need a workspace etc etc then something big.
 
At the start of your term, the majority of what you are paying is interest, no matter what mortgage duration is if your mortgage allows 'free' overpayments you can be chipping away at the capital and greatly reducing the amount you pay when you come to remortgage!
They can't make you keep paying for 30yrs if you're all paid up in 20!
Edit: find yourself an independent mortgage advisor, not only will they sniff out the best deal for you, bit they will be able to answer your questions in much better detail!
We used 'pure financial solutions' and 'moneysprite' - both take their fee from the eventual mortgage provider, so in effect all of their advice is free!
 
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fRostiE said:
something big - 30-35 year mortgage.

Your salary will increase as you progress jobs wise and you can always remortgage, if you want it over and done with faster.
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+1 My partner and I are looking around with a view to buy in a couple of months or so and this is what we intend to do. To begin with you will have to be a bit more careful with budgets etc and won't save as much but give it a year or so and as you get payrises it will get easier. Plus hopefully by then your house value will have gone up benefiting you even more. If you are stretching yourself though, perhaps make sure you have a cushion of some cash saved in case anything goes wrong. :) You could even go with something big on a 20 - 25 yr mortgage with this logic.
 
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