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To travel or to buy a house? What would you do?


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Hi all!

 

I'll keep this brief. I'm 32, my partner is 30. We both come from under-privileged backgrounds, with my partner's parents now retired in council housing and my parents deceased and not in the picture. My point is we have worked hard to get ourselves into respectable jobs and we are on good track with saving - we can't help but be jealous of friends that get a lot of family financial help but we know we are lucky to have what we do. Due to my lack of parents I find myself with questions like the below with nobody to quiz, so I thought I'd try here.

 

We are both going to be moving jobs this time next year - me towards moving up in my career and my partner wanting a change of career. This will leave us a window of opportunity to do some travelling for a few months, which we both really want to do, but calculations show that we will have enough for a 10% deposit to buy a house in the UK for the first time ever if we continue with our saving throughout 2019.

 

We are absolutely not having kids and we have both always wanted to travel through Asia for a few months. We travel modestly so would not come back with nothing, but I'd anticipate going from the 10% house deposit we have to 5% when we return, accounting for the rent etc we'd need to pay when we get back. The nature of my work means I should be able to find a new role fairly easily.

 

What would you do. Would you travel or would you buy a property and invest as soon as possible?

 

Thank you for any wisdom.

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I’m not in the UK but in Canada - but the rules are often quite similar. Keep in mind that usually, to get a mortgage, you need to be employed at your job a certain length of time (2+ years?) - so you would either need to buy the house before you change jobs or wait a bit to buy a house.

 

Also - what are the plans for the relationship? Buying a house together is a big deal. Are you thinking marriage? Weddings cost money.

 

My vote would be to travel to Asia but not for months and months. Once you are older and settled and have a ton of bills, that will be less appealing. Do it now.

 

... but spending 5% of the cost of a house on travel is a lot - and you aren’t in your 20s anymore.

 

Balance. Do both - but more modestly, IMO.

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"The nature of my work means I should be able to find a new role fairly easily." - I'm rather concerned about this. You are basically both gambling on your ability to find a new position and even better than the current jobs you have. That can easily end in financial disaster. You can't predict economy, job market, etc. On top of that, RedDress is correct that to qualify for a mortgage, you have to show job stability. No bank will loan to you if you both have recently changed jobs and had a months long gap in employment.

 

Also, spending 5% of your savings on travel, yeah rethink that. That's quite a lot of money to spend on travel and pretty far from a modest budget. I also agree with above poster that you need to compromise and think much more modestly. Better to travel for a few weeks and spend less than to travel for months and end up regretting the expenditure if you encounter delays in getting a job. Remember that you will have time off and funds again for another vacation without breaking your savings accounts.

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Thank you for the reply. Good point about the mortgage - I would think, logistically, that waiting a couple of years after returning to signing the dotted line would be fair. I'd be 35 then which I also feel is a fair age for me personally.

 

We are not getting married so luckily no wedding costs! We have a rock solid 5.5 year relationship and have lived together for three, both totally opposed to having children so luckily on the same page.

 

I like your point about more modest travelling and will consider it. I will continue to cost it in the coming weeks and test out multiple scenarios. Thank you for your time, I really appreciate it!

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60-years-old here.

 

I busted my hump for decades, always putting off travel.

 

I would call it a mistake.

 

I finally did a two-week "tour" of England and France. However, I am old, out of shape, and have a cancer (stabilized, but still..)

 

You are never going to be in better shape physically than now. You have no guarantees that the economy won't tank even if you have a good job.

 

You have time to repair poor economics regardless of traveling or not.

 

What you will not have is your relative youthfulness.

 

No responsibilities?

 

I'd go if I were you.

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Go go go! Don't wait. Most people i know who have waited have ended up getting pregnant, getting jobs they love and don't want to leave or other things. Life! I did it in 2015 and went for 8 months and don't have a single regret despite spending a lot of money.

 

Do it while you can. The house won't go anywhere. Buying a house can always be delayed, travel can't.

 

I now have a great job and don't have the itch to go travelling like i used to. I am so happy in my cozy home and take smaller trips every now and again and am completely satisfied.

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60-years-old here.

 

I busted my hump for decades, always putting off travel.

 

I would call it a mistake.

 

I finally did a two-week "tour" of England and France. However, I am old, out of shape, and have a cancer (stabilized, but still..)

 

You are never going to be in better shape physically than now. You have no guarantees that the economy won't tank even if you have a good job.

 

You have time to repair poor economics regardless of traveling or not.

 

What you will not have is your relative youthfulness.

 

No responsibilities?

 

I'd go if I were you.

 

This is essentially exactly what I was going to say. If you put off traveling, you will never find the right time. Go see the world.

 

You get roughly 70-80 great years on this Earth. You’ve already spent 30 of that in the location you’re at. You’ve seen what there is to see there. You’ve experienced what life consists of there. Seek new experiences!

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Buying a house can always be delayed, travel can't.

 

It's interesting, reading through this thread - I'd be willing to bet that those who consider that house purchase is something that can happen whenever you feel like it, houses won't go anywhere, all that - DO NOT live in the UK!

 

The housing market here is ludicrous; even though house price inflation is slowing down (depending on where you are in the country) it's still ahead of general inflation and certainly ahead of wage rises. Even waiting for a few months can put the cost of a property out of reach. Meanwhile, the housing shortage means rental properties are becoming more and more expensive, too.

 

There is a bit of uncertainty as to what will happen post-Brexit, so you need to look at the likely scenarios in your local area before making your decision. Of course travel can be delayed, especially if you don't intend having children.

 

I used to have a relatively high-powered managerial job, which enabled me to buy my house. I worked very hard to pay off the mortgage early, so that I could afford to take a much lower-paid, more rewarding, less stressful job without taking a huge financial hit. It's a decision I've never regretted.

 

I come from a very poor background, too, so no parental input - but there's the satisfaction of knowing that everything I've got, I got for myself.

 

So my advice to you is to look at what's happening in the housing market near you. If the prices are falling, then hang on for a bit. If not, dive in as soon as you can and stake your claim; generally speaking, owning a house is something which is getting increasingly out of reach for first time buyers.

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I don't live in the UK—USA here—so take whatever I offer here with however many grains of salt are needed. Don't know the market there, don't know a thing.

 

Anyhow, I come from a modest background, always dreamed of a life where I could travel, and from about 18 on started building that life with a lot of intention. Thing is, I also dreamed of a life where I owned a home, had those conventional roots and stability. So, a bind! How to have the cake and eat it too?!

 

What I ended up doing is buying a home first—specifically a multi-unit home in what turned out to be a very sweet time in the real estate market. The home pays for itself while kicking off some income—and, well, when I want to travel it pays for my trips. I just rent out my unit short term, and use that money to travel. The home appreciated, so I refinanced to buy another, in another city, which works the same way. A tiny little real estate hustle that I could never have imagined but that has changed my life. I now live all over the place—sometimes in one of those homes, sometimes renting them out and picking a spot on the map to explore for a bit.

 

I don't know if anything like that is possible for you—if there are multi-unit possibilities in your budget, if Airbnb is popular where you are, whatever. But I can say it's been a huge game-changer for me. This thing (home buying) that I always thought of as some massive financial commitment that anchored me in one spot also turned out to be the thing that allows me to be free to roam. Yeah, it took 15 years of working and saving in one city to get there—I was 34 when I bought my house—but the life its provided (deep roots, strong wings) is a fun one.

 

All that said, I'm a big proponent of not putting off pleasure, that the sweetness of life is not to be missed out on. You guys are young and sound so totally awesome. If traveling Asia—which is fantastic, and super cheap!—is the thing that sounds super exciting right now, make it happen. You're both responsible, frugal. You can—and will—make and save money again. Buy a house because it is thrilling, not because it's "what you're supposed to do." If Asia is the more thrilling choice right now—and you can't find a hustle that allows for both—then I'd opt for that.

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Housing prices have been nearly doubling inflation in the US as well. And, like us, the UK just bumped its interest rates to the highest they've been since the recession. Particularly if you've only got 10% to put down, I don't think whether you buy a home right now should be contingent on whether you go on this vacation or not. It truly should be its very own consideration.

 

Buying property is often a lazy investment. Not for the money and effort, but for the lack of thought often put into it. That's not to say anyone here or elsewhere hasn't done their due diligence and made a very great financial decision of it, but that it's important not to have a substantial, non-liquid "asset" (as much as something you're actively responsible for insuring, maintaining, and paying applicable taxes for without renting it out can be called one) serve as your default.

 

With any intent to regard it as a part of your life, don't buy a house because you want to make an investment. If you're not looking for your house to actually serve as an asset straight away (flipping, renting, etc.), you buy a house because you want to buy a home, which, despite how anyone might read into the tone, really is a fine enough reason on its own. It could well be in 10 years you get the opportunity to sell it for a nice 20% on your $250,000, but I wouldn't buy a home unless I were fine with it being worth nothing by the time I died and crossing my fingers dying comes before losing it. Point being that on a spreadsheet, whether buying vs. renting would make or save you more money fluctuates depending on the locality and economy, and in reality, we have zero idea what substantial repairs may need to be done (never mind the time, effort, and headache you also put in for them), whether you'll need to relocate after a year or two and have to choose between becoming a landlord or losing any appreciation to closing costs, what catastrophic events could occur which leave you with an unaffordable 6-figure leverage, etc.

 

Just as reliable as whether you'll have a nicely appreciated property in however many years is that, so long as developers and banks can cash in, there will be properties to buy at a price you two, being committed dual-earners, could afford. If you need a a very specific property in a very specific location to call home, obviously that's its own consideration. But I can near guarantee you won't be losing out on the opportunity if you give it a bit more time.

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oh gawd this is the question of life isn't it?

I always approach these decisions by using the "Death Bed" formula.

 

"When I am on my deathbed, what would i tell me to do looking back on this decision?"

 

whatever that answer is - that's what you do.

 

From a more immediate analysis sense. 1) money can always be made. 2) tomorrow is never guaranteed. i would travel because who knows when you might have such an opportunity that fits your job career timelines like this one? It doesn't mean you can't buy a house, it juust means you have to push back the timeline and add a few months or maybe a year to replenish the 5k, 10k, 15k, or 20k you spent on traveling this year.

 

Another way i see it is: okay so you can't get a house. doesn't mean you can't have a home (aka rent). Where as buying the house means you can't travel. So in one scenario you have your own new place and travel - you just dont' own the new place. Or Scenario 2 is you live in a place you own but didn't travel and aren't sure when the next opportunity would be.

 

to me.. there are too many angles i see that say "go travel..... make up the money later to buy the home". And i would guess that would align with most peopel's "Death Bed" analysis of this situation.

 

Good luck and congratulations on either situation you choose!

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Buying a house doesn't mean you can't travel. In fact, if you want to go travelling for a significant length of time, rent the house out and use it to finance your travels.

This is an excellent suggestion! AirBNB is very good income stream from what I've gathered (asking people who are AirBNB hosts).

 

So yeah.. best of both worlds. :)

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I would plan to go on a vacation - but not one long enough where you lose your job. Why not go away together for 2 weeks? And then in 6 months or a year, go away again for another few weeks? Go somewhere that is on the top of your lists to go - vs going on a sort of walkabout. i have traveled but *never* just up and left for six months. Wait until you have earned it as far as time in at your job to get that much time off, etc, and when you have a financial cushion to do so. If you come from a disadvantaged background, were your families hard workers - they just did not have the skills for gainful employment or did they tend to be impulsive with their money and therefore chose their lot in life because of it? that might also influence your decision because if you have learned implusiveness, maybe you should take a step back and decide if this decision is a bit impulsive.

 

I think that i would travel for a week or two, then buy a starter house -- they say buy the worst house in a nice neighborhood - the one that has a dated kitchen, etc, and then by the time you move because you want a bigger house or live in another area, the house is worth more not just because of the market, but because you have did some fixing or worked on its curb appeal as well. going a way for a week here and there vs half the year will satisfy your need to travel while still having feet in reality

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i recommend renting before buying (unless you can just absolutely afford it without problem).

1) you want to get to know the area first before becoming committed financially.

2) it allows you to move about and see which neighborhoods and situations really do match for you

3) its nearly impossible to know what's overpriced and not when you are new to the area, or what a good vs bad neighborhood is according to your needs until you spend time.

4) it takes time to gather in all the "local secrets" that you'll want before nailing down and committing to a home and neighborhood (like for the Bay Area... you WANT to live near mass transit for your commute. this may not be your natural instinct coming from somewhere else and coming to the Bay Area).

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Regardless of whether you travel or not, I wouldn't consider taking on a mortgage amidst pending job insecurity without large enough funds to weather a potential recession. After years of stable or upward markets turning volatile and due for a correction, you may find yourselves either postponing job changes or unable to swing to the next branch as easily as you might anticipate.

 

If you have enough funds to which you can return comfortably, you may want to travel if you're okay with postponing a property investment for a while.

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i recommend renting before buying (unless you can just absolutely afford it without problem).

1) you want to get to know the area first before becoming committed financially.

2) it allows you to move about and see which neighborhoods and situations really do match for you

3) its nearly impossible to know what's overpriced and not when you are new to the area, or what a good vs bad neighborhood is according to your needs until you spend time.

4) it takes time to gather in all the "local secrets" that you'll want before nailing down and committing to a home and neighborhood (like for the Bay Area... you WANT to live near mass transit for your commute. this may not be your natural instinct coming from somewhere else and coming to the Bay Area).

 

renting is a good idea until you know where you want to be - but i still think traveling for months at a time right now is not a great career move .

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  • 10 months later...

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Get yourself on the housing ladder. You can travel the year after. The UK has a pretty horrible rent to purchase ratio for renters, precisely because people seem to be okay with renting to enjoy life today and worry about tomorrow's problems tomorrow.

 

This thread is 10 months old. Some troll revived it with nonsense.

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