Friday, November 18, 2011

Housing Budget Dilemma

I'm in a dilemma. My husband has just received a raise and we have put an offer on the house. We have exactly £9,000 saved up.

We put an offer on a house which is £160,000 and needs a 16,000 down payment. We are hoping to borrow the rest of the down payment from my mother in law.

However the house is not in a very good school area. Actually the worst in the whole northeast.. Schools are a huge issue here in England because of bullying and low class uneducated families. (they are not as open minded as families on lesser incomes in America).

So my daughter would have to go to private school. The payment would be £815 a month. and on the tightest budget where you couldn't even crack my ass cheeks open with a walnut cracker cost of living that we could possibly have is £1000.

We could possibly have a rental income of £300 a month.. however we need to fix up our rental property to the cost of at least £2,000.

And most importantly I need a car. We can buy one for about £4,000.. a good quality car that we needn't fear would break down as soon as be bought it.

My priorities are

Car
Education for me as well as my daughter
House
another car for my husband because his is breaking down


Now as you may have noticed.. there is no way my budget would be able to handle all my expenses and take care of the priorities that we have in one shot. I have put an offer on the house (that I would just have to move out in a year and half anyway) and I am thinking of backing out of the purchase.

If I back out of the purchase.. then I can save about £24k by next august plus keep my £9,000 in the bank. My mother in law has promised to give me a bit of help in fixing up the house I live in at the moment. I will also secure a car for myself, my husband, and have money for education and keeping my sanity (i.e. daycare, exercise,) and my daughters education.

If I don't back out of the house we will only save at most 14,000 by Jan of next year. Without being able to afford childcare for my son.. and therefore stalling my own education efforts. However, we would have more of a social life with friends as their will be room for entertainment and a garden for the children to play in. In selling the house we would prob. break even to have our 16k down payment back..

I just think it makes sense to take care of my priorities first. The housing market isn't going to go so drastically up that it will be unaffordable .. Will it??? And a better area would mean I would not have to pay for private school for my daughter.

Any words of reason out there??

You can comment or to see what others have to say about this here

1 comment:

K.B. said...

Wait.

Pull out of this deal and wait.

Sounds like you've found the features in a house that you want, but not the price nor the location. Plus you'll have added expenses not only of your children's private school tuition, but all that entertaining you hope to do won't come free. Don't be in too big of a hurry to get in over your head.

List your priorities for a house, including price, features (garden, number of bedrooms, etc), neighborhood or region. Give these priorities to your real estate agent and say, "These are what we want in a house." The agent will probably balk, and tell you that out of price, features, and good location, you can get two out of three. Smile nicely and tell the agent that you're not in a hurry. You'll save for a down payment while the agent take sthe time to track down your dream house.

Then be patient. Persistent, but patient. Do some looking yourself, too. Eventually, you'll find the house that fits your price range, is in a neighborhood you like, and that you fall in love with.