Q. Our parents are keen to lend us a substantial deposit to buy our first property - but with prices still dropping, doesn’t it make sense to carry on renting for a while longer?
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A. I can certainly understand why you might think so. After all, if the place you are currently renting is sufficient for your needs, then why risk some of your parents’ hard-earned savings on buying something now that may well go further down in price over the next few months? Except, of course, for the fact that no-one can predict with any degree of certainty just how much longer prices are going to continue falling, or by how much.
On the other hand, one thing you can be certain about, since it is a simple matter of statistical fact, is that over, say, a 25-year period (ie. the average mortgage term), property prices will always rise. In other words, it’s a good, solid, long-term investment.
So, I suggest you ask yourselves two questions: 1) are you both in good and secure employment? and 2) are you prepared to make a long term commitment to your home, taking into account things like job prospects, children, and so on?
If you can say “yes” to both, then my advice is, go ahead and buy. After all, you’re in an extremely strong position. As first time buyers, you’re not hampered by having to sell anything yourself – and with access to substantial funds, you shouldn’t have any trouble getting a mortgage, either.
My recommendation would be to choose a property you will be happy living in for the foreseeable future and which is flexible enough to perhaps accommodate additions to your family unit!
However, be careful. Always speak to a reputable independent financial adviser who can find the best mortgage deal for your individual circumstances, and don’t overstretch yourselves. Bear in mind that paying out for a proper survey could save you money in the long run, and make sure you use a solicitor who comes with a good recommendation from someone who knows.
Above all, remember that you’re buying a home, not taking a punt on the stock market.
In other words, take your time, choose wisely -- and put that deposit to good use.