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About to buy my first flat and I'm in a complete panic

(35 Posts)
user1467739772 Tue 05-Jul-16 18:37:05

I'm a week from exchange on a flat in London. I had doubts about it before because it's very small and near a school. I work shifts so I'm worried it'll be too noisy. Now all the Brexit stories about there potentially being a recession are terrifying me.

Would you pull out and hope that prices fall in the next few months? Or would you just go for it? If prices go up, I won't be able to afford anything else. I'm feeling very anxious about the whole thing and not excited at all.

lalalonglegs Tue 05-Jul-16 18:45:09

I am pretty sure that prices will fall (and I keep an eye on these things). The first thing to go in a period of "uncertainty" is confidence in the housing market, especially one that is over-inflated and has already had the brakes applied in terms of surcharges for BTL buyers etc. However, bear in mind that you may struggle to get a mortgage even if prices do come down - the second thing that goes is banks' willingness to lend.

whois Tue 05-Jul-16 18:58:16

Tricky.

If you really liked the flat, I would say go for it anyway.

But it sounds like you don't really want to live there long term anyway?

The evidence I have seen is that prices are holding steady. I think the uncertanty will keep prices stable at least until things settle down.

Who knows if there is a big fall or not.

What area are you looking and what is your budget?

specialsubject Tue 05-Jul-16 19:31:15

Presumably it was relatively cheap because it isn't very good - but this is London where anything sells. That will still be the case , but prices may drop. So you won't be stuck with it as you would elsewhere but it may be worth less.

You had doubts anyway. Listen to those.

lalalonglegs Tue 05-Jul-16 19:49:05

special - I have nothing but respect for you but I wish people didn't keep repeating the idea that "anything sells" in London. It really is a myth and the market has definitely got trickier here in past 18 months or so (save the four months of fever before the new stamp duty arrangements came in).

shillwheeler Tue 05-Jul-16 20:08:09

Ask yourself why are you buying this flat? What did you like about it in the first place? If you pull out, what else is available and what are your options? Do you see yourself living in London long term?

On a practical level, if you're worried about it being noisy, visit at other times of the day. Speak to neighbours - others living in the vicinity. Personally a school wouldn't worry me from noise point of view as (having lived next to one) it's only during certain times of the day and just fades into the background...parking is a different issue!

Listening to your "gut" is one thing, but nerves are absolutely normal. If you're a first time buyer even more so. Do what you can to "test" your worries and put them to bed, one way or another.

No-one can know what the effect of leaving the EU (soft or hard) options will be. My feel is prices will either hold steady or go down in the short term. But (and it's a big but) overall I think the trend will continue to be to increase. Even with prices going down (assuming we are not talking absolute freefall) you may find in London the market dries up - still leaving you in a precarious position. If you're looking for a home, for the long term, even with falling prices it may still make sense.

Another thing to think about is your mortgage and interest rates. Presumably you'd lose your arrangement fee and getting a mortgage in the future may also be impacted by Brexit - making it potentially harder. So far as Brexit is concerned, there are also arguments for interests rates being kept low, and rising. Confusing, but my feel is they will go lower. So balancing against possible recession, could still make sense to go ahead. Particularly if you view this as a home rather than just an investment.

Nobody knows what the effects of Brexit will be, and nobody can predict house prices. One, two, three years down the line, my guess is that there will still be massive uncertainty.

It's a really tricky one, and will depend on how much you want to buy in London and how much risk you are comfortable with.

Probably shouldn't mention it but have you thought of lowering your offer to price in the uncertainty?

Daytona79 Tue 05-Jul-16 20:10:25

Prices falling is only a issue if you plan to sell in near future

What is your long term plans with this flat..? How long do you see yourself staying there.?

user1467739772 Tue 05-Jul-16 20:17:01

Don't think they'd take a lower offer as the seller is already threatening to pull out because my solicitor has been a bit of a slow poke. It's not that I'm necessarily worried about house prices falling as I think long-term they'll always go up but I'm just wondering if this would be a good opportunity to get a flat that was beyond my budget for cheaper.

I don't think there'll be an outright crash either but there might be a dip and I would be annoyed if prices started to fall and I could've got something better, where I could see myself more long-term. Equally I'll be full of regret if they don't and I missed out on my chance to buy.

If I loved the house, I would just go for it. I mean I like it but the school thing might be annoying... If only we could try out our houses before we buy!

user1467739772 Tue 05-Jul-16 20:19:09

Daytona79 - I was thinking 2 years or so as it's so small but I guess if there's a recession that would be silly!

specialsubject Tue 05-Jul-16 20:57:38

So don't buy what elsewhere would be a "no way'. I assumed ypu were London desperate, glad you aren't.

Daytona79 Tue 05-Jul-16 21:09:11

Hmmm 2 years isn't long at all take into account stamp duty and some prices fall you might lose out a fair bit

I'd be cautious for sure with proceeding.

user1467739772 Tue 05-Jul-16 21:31:31

specialsubject - yes totally London desperate! It's hard to know what to compromise on here as there's at least 1 or 2 things.

Daytona79 - that's what I'm thinking. Maybe I should hold out for something I can see myself in for 5 years +. but the question is can i afford it!

specialsubject Tue 05-Jul-16 21:43:26

Have to say - more politely I hope, sorry - that a flat opposite a school for a shift worker seems a really bad fit! 3 times a day yelling, twice a day school run...it would need serious double glazing.

user1467739772 Tue 05-Jul-16 21:48:47

Yeah, I know. sad It's only one day a week that I'll be in during a weekday but still for 5+ years. Hmm...

The worst thing is it's only single glazed so that's another thing to fork out for!

user1467753145 Tue 05-Jul-16 22:41:08

I am looking to buy a property as well and I hear different views from different people. A lot of my friends asked me to hold out until the dust settles a bit.

user1467739772 Tue 05-Jul-16 23:01:07

user1467753145 - it's such a strange time to be buying! But I do think now could be a good opportunity IF prices start to dip and before they stop giving out mortgages. If I were you I'd keep looking but maybe put in offers below asking price. Good luck!

Imperialleather2 Wed 06-Jul-16 09:38:09

Who knows if there will be a crash but I can't see that properties will keep going up.

You don't sound as though you really like the flat and are buying it out of desperation.

It depends on your situation and where you are living now. If your paying rent somewhere and your mortgage isn't much more then at least you have your own pad and the security that goes with it if you buy the flat.

Worse case if you're stuck there in 5 years tine will you be pissed off?

user1467739772 Wed 06-Jul-16 09:53:27

Imperialleather2 - in 5 years time I'd like to have at least 1 kid. Currently single atm so this place was intended to be the first rung on the ladder. I guess I could always rent it out. And yes, a big part of me buying this is because the London market is making me feel like it's now or never!

calicowallpaper Wed 06-Jul-16 10:15:31

user1467739772 - reading your posts I felt moved to comment because it sounds to me like the only reason you are buying this flat is the fear that London prices won't stop going up. I know how you feel having lived in London too for years and seen prices go crazy. I mean properly, unsustainably crazy, 12 times average household earnings crazy. I would advise you to take a step back and read the papers about what is going on with the economy and ask yourself if you feel comfortable buying somewhere you don't like with the risk of being stuck there. There is a good chance the seller and his estate agent are pushing you hard because they're very worried about their chances of sealing a sale if you pull out, and actually there is room for negotiation on price if you express your concerns (NB their first reaction will be to say 'you're going to lose it' but if you genuinely look like you are pulling out they will think twice). I am not saying prices will fall hard and you will be able to pick up a bargain over the next few months, but I would make sure you have a big enough deposit to avoid negative equity.

Nickname1980 Wed 06-Jul-16 10:44:34

I bought my first flat just before the 2007 recession - it hit literally a month or two before I completed.

The price of it plummeted and I was in negative equaty. Interest rates rose (I had a tracker mortgage) and suddenly it was all a bit scary.

BUT I would never have been able to buy my flat during the recession - my loan to value rate was far too low. It was in London and I put down something like £10,000.

And then interest rates plummeted and so did my repayments, so suddenly my mortgage was "cheap".

That flat was the best money I've ever spent, honestly.

I didn't love the neighbourhood either. I sold it in 2013 for a big profit. (I let it out for years and rented it out, which enabled me to afford to live in a better neighbourhood with my then fiancé.)

So, in summary, if I didn't buy then, I'd probably have missed my chance of getting on the London property ladder (prob could now, but all my deposits have come from that initial £10k growth).

If we're about to plunged into another recession, it might be worth considering what your mortgage chances would be if so. If they'd still be really good, then you might be able to get somewhere for a little less. It's so hard to say.

But if you're going to live there for five years anyway, and love the area (even if the flat isn't perfect), maybe ride it out.

I could never have sold my flat during the 2007 recession. And would have lost a fortune (to me) anyway. But selling it in 2013 was a different story.

Having said that, we're about to buy and sell again and have no clue what to do...

kirinm Wed 06-Jul-16 16:44:24

We are in the same position and have decided to carry on with the purchase. It's not our forever home (far from it) but we don't think prices will drop substantially anytime soon. It'll take a while and in that time prices might actually rise in that time (who knows).

If / when the crash comes the market will slow right down so I wouldn't expect to see lots of places suddenly come on. People will sit tight if they can. It took us about 15 offers and 5 months to even get someone to accept our offer so the thought of having to start the search again is kind of soul destroying.

Who knows if we could borrow on the same terms in a recession? On top of that if we see increased rates and haven't moved, I can guarantee we would be responsible for any additional costs our landlord incurs.

It's a risk definitely but so is staying in rented.

kirinm Wed 06-Jul-16 16:46:36

FWIW I don't think you'll see a huge drop in 'a few months'. You'll only ever truly see how much places are going for when the sales are registered at the land registry and that can take months. I'd say you are looking at having to sit back and watch for closer to 6 months.

Nickname1980 Wed 06-Jul-16 19:26:48

(I meant to say the 2007 recession hit a few months after I completed, not before!)

I agree with you totally, kirinm, it's a risk either way! But I think I tend to feel the same as I always have - if you love it and you can comfortably afford it, buy it. You never know what's going to happen. It could go up or down or both, but it's a home, not an investment - you've just got to think of it that way if you can.

Scribblegirl Wed 06-Jul-16 19:38:16

In the same boat - we're due to exchange on Friday for a London flat. Our reasons for continuing are:

- it's a 2 bed, so we're planning on staying at least 5 years

- we have a decent fixed rate mortgage for 5 years and neither of us are at immediate risk of job loss (and we can just afford the repayments on one salary if absolutely desperate)

- the area, while 'up and coming' is one we like and would like to stay in

- we are concerned by prospect of getting a 90% mortgage when lending dries up

- the flat is about £40k less than what we could afford and we're planning on adding about that amount in value by doing it up with the remainder of our spare cash, hopefully sidestepping negative equity

With your concerns I'd be tempted to pull out but of course only you can decide. What's your current living situation? We are with my parents (have already given up our rented flat) so it would take a lot for us to stay!!

user1467739772 Wed 06-Jul-16 20:47:36

calicowallpaper - I did wonder if they were trying to double bluff me as the seller said she was going to pull out straight after the Brexit vote if exchange didn't happen asap. I was debating whether to lower my offer until then.

Nickname1980 - Glad things worked out so well for you. My LVT is 85% and I managed to get a mortgage 5x my salary which is rare enough but in the climate now will probably be impossible soon. So, I am worried about whether I'll find another place before my offer ends as I'm not sure what the situation will be afterwards.

Scribblegirl - I think you're making the right choice. A 2 bed will hold it's value more than a 1 bed. And of course it means you have room for a family if you don't have children yet. I'm currently renting in an area I love to move to an area I don't really know but have a few friends there. So, there's that too. I don't want to leave Hackney!

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