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Have offer on house but haven't seen anything I want to buy.
Let's keep the figures simple. £300k on deposit such that I can access the cash any time means around 300kx2.5%=£7.5k interest -after tax at 40% that leaves £4500 ie £375 per month
Cost of renting a housewhile looking around £1k per month.
So each month I'm down £625.
The pros are that
I become more attractive as a buyer so may be able to get more off the asking price.
If market falls, I get more for my money.
The cons are
I've two lots of removal expenses
I'm losing £625 a month.
If prices go up, I have sold my house for less than I could have got but have to pay relatively more for my new one.
What to do? If I don't move until I've found something I want to buy,I risk my sale falling though. If I move into rented, I could lose out financially big time.
Let's keep the figures simple. £300k on deposit such that I can access the cash any time means around 300kx2.5%=£7.5k interest -after tax at 40% that leaves £4500 ie £375 per month
Cost of renting a housewhile looking around £1k per month.
So each month I'm down £625.
The pros are that
I become more attractive as a buyer so may be able to get more off the asking price.
If market falls, I get more for my money.
The cons are
I've two lots of removal expenses
I'm losing £625 a month.
If prices go up, I have sold my house for less than I could have got but have to pay relatively more for my new one.
What to do? If I don't move until I've found something I want to buy,I risk my sale falling though. If I move into rented, I could lose out financially big time.
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I woudnt sit on 300K sterling for any longer than is necessary.
Id get back into property. Not that im bullish on the UK market, I just think the risks of not owning a house and keeping cash far outweigh any short term profit/saving you may make. Equally I wouldnt invest the money for my house in foreign currencies.
Just get on with finding somewhere you like and try to buy it at a fair price- then sit back and relax.
Just get on with finding somewhere you like and try to buy it at a fair price- then sit back and relax.
my thoughts are that your deposit interest rates are too low to sit in cash.House prices could move 2.5% in the blink of an eye.If house prices fall yours will fall but so will the ones you want to buy.Rise/ rise the flip side.Your " compensation " for selling is to lose 625 a month for an unspecified period of time.There seems to be a bit too much risk for a 2.5% return which is actually a losing return.
The other way to look at is say you lose for 10 months.Loss 6250.Can you get MORE than 6250 off the house you want to buy? If its a 400k house thats just 1.5% reduction.A "cash" buyer can often get a good deal in a buyers market.
As a point of interest to compare to australia.
deposit 300k x 7% interest less 35% tax= 1137 per month
rent cost about 2000 a month
loss 863 a month
however 300k pounds is about 620k aud
620 x 7%-35% = 2350 per month
rent cost 2000
profit 350
gotta love the aussie equation.
The other way to look at is say you lose for 10 months.Loss 6250.Can you get MORE than 6250 off the house you want to buy? If its a 400k house thats just 1.5% reduction.A "cash" buyer can often get a good deal in a buyers market.
As a point of interest to compare to australia.
deposit 300k x 7% interest less 35% tax= 1137 per month
rent cost about 2000 a month
loss 863 a month
however 300k pounds is about 620k aud
620 x 7%-35% = 2350 per month
rent cost 2000
profit 350
gotta love the aussie equation.
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