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As everyone knows, interest rates are through the roof right now. I found a small studio in a nice area of a popular city, which I can just about afford. Including bills, ground rent and service fees for the block, it would cost me around £300 a week.
This obviously feels insane, especially as I would need to put most of my cash savings towards it and losing £2k a year interest. At the same time, I'd get to live alone in a really lovely area.
I don't mind renting with roommates for nearly half the price, and having that flexibility to move around. At the same time, I feel I should get on the property ladder before it's too late.
Pros:
Build equity
Get into the market before prices/rates go up even more
Live alone
Potentially be able to rent the place out if need to move
Cons:
Service charge and mortgage rate means only approx 25% outgoings (excluding bills) going towards equity
Costs considerably more than renting with roomates
Less flexibility- what if I can't rent it out?
Potential house price crash
High outgoings means may get stuck in a career and not able to take a cut to do something else.
Do any ladies with property knowledge have any advice for my situation?
Good question! I would love to hear what other commenters have to say.
I have just one anecdote: my friend bought a two-bedroom condo a couple years ago. She, like you, could "just about afford" it, meaning as long as she worked at her job, and nothing bad happened, she would be fine.
A few months ago, she was fired unexpectedly from her job. For a couple months, she worried daily about not being able to pay her mortage. She told me she literally would not know what to do if she did not find another job within 2-3 months. Luckily, she was able to find another job within 2 months. However, things could have easily gone the other way, i.e., she could have been unemployed for a long time.
I would add a potential job loss to your list of cons. It seems you are at least reasonably secure in your job, but what if the unexpected occurs, and you lose your job (due to illness or other circumstances beyond your control)? For how long will you be able to pay the mortgage if you are unemployed?
Buy!
I was in the same boat in 2019 when I bought my place in one of the most expensive cities in the world. Terrified.
I'm glad I seized the opportunity because if I waited, I would have been able to afford even less. A friend is looking to buy now with the same cash down payment I had and in the same area. Compared to me in 2019, she has lost $150K in buying power.
Owning property is a huge financial advantage for women. The best time to get on the property ladder was yesterday.
Assuming the bank approves you for a loan, the flat doesn't need excessive work and it's in a safe area, I would buy it in a heartbeat.
Your list of pros is well considered and the most important thing is providing a stable roof over your head for current you and future you (retired you will thank you for having foresight and bravery in thinking ahead).
I would put aside fear of property crash or being unable to rent it out, as none of that is within your control and if it happens, you deal with it then.
I can’t give you definitive advice either way, but I would recommend you check the rental vacancy rates in your area to make sure that it’s a high rental area in case you ever need to vacate and rent it out.
Consider income insurance, which will cover your mortgage payments after a couple of months if something happens.
Renting it out is getting harder with all the tax shenanigans: that's why all the BtL landlords are selling up.
Remember this isn't just a finacial decision: this is a happiness decision. Happiness is worth spending money on
Living on your own is such bliss compared to sharing. It’s more expensive but it’s an investment too.
Personally I think prices in our cities may plateau or drop slightly but due to supply and demand on this tiny island I really doubt there’s a crash, even if there is it will bounce back , just look at 2008
I am by no means an expert, but from what I've seen around me, owning property is almost always a good thing, provided it's in good condition and in a somewhat desirable location. And it seems like there is almost never a truly "great time" to buy, unless you are exceptionally lucky. If I was in a position to buy, I probably would. Being free from landlords and insane rent hikes is a huge boon in my opinion. Eta: also, from a feminist standpoint, we need more women owning property and capital. I've seen so many men taking out loans they'll have to pay back for the rest of their lives (or even pass on the debt to their children) just because they want ownership. Women are much more risk averse, which is fine, but it also prevents us from holding more economic power.
Rates in the UK are going up and they’re likely to raise to 7% soon. How long they’ll stay there is anyone’s guess tbh.
The best time to buy was yesterday as they say- but can you get a decent fix? I’d rates went up in two years to 10% - it’s happened in the past - can you addord it?
Is it like 600 USD a month total? Seems insanely affordable. However I wouldn't bother with mortgage that is longer than 15 years. I would also investigate for potential big ticket expenditures like leaky roof or plumbing in the building.