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25% deposit. Worth renting in an area of London you love and buying a buy to rent in a cheaper area?

My boyfriend and I need to decide how to spend our deposit. We currently rent in Brockley (South East London) but plan to move out of London in the next 5-6 years. We have recently been thinking it's better financially to buy a 2 bed buy-to-let in Shadwell for c. £245K for which we could charge at least £1300 pcm (our mortgage would only be £800 pcm) then sell that in five years and move out of London rather than buy a 2 bed for c. £325K in Brockley which we would sell in five years. Any thoughts massively appreciated.

Asked on Oct 26 2013, House Prices in London | Report content

Answers (1)

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  • I think this is a smart strategy. In the current climate it is better to have money in property than in the bank. Do not spend all of your monthly profit. Keep some as a hedge against future interest rate rises. When you look at comparable deals 'value for money' is important as much as guessing future growth. An experienced auction buyer or repossession buyer might buy a similar property to you 10% cheaper. That purchase advantage is profit. So to answer your question Brockley/ Shadwell matters less in my opinion than the value for money in each deal. Repossessions are an excellent way to purchase property more cheaply than the average purchaser. Below is a link to a real time database of repossessions.

    Web reference:

    Answered on Nov 25 2013, Report content

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