Would you buy your dream place, even though you knew finances were likely to change for the worse short term?

[Belgianchox]

That's it really. Currently renting, and have put an option on buying beautiful appartment. It would mean slightly higher repayments than we are paying in rent at the moment, but hopefully only for a year or so as next year some savings we have will be freed up and will allow us to pay off a lump sum of mortgage. But, the downside is that my DH has today discovered that he will more than likely be laid off by the end of this year.
So, should we stay in rented accom, bearing in mind that it's not all that cheap, but we would still have a nice cushion of savings (we have equity from a previous house sales to one side), or take our chances now with buying the appartment as realistically it might be a while before banks would look at us again for a loan???? We already have an idea what repayments would be and would opt for a fixed rate.
I'm in such a dilemma about this, on the one hand I think it's our chance and we should take it, we would manage, I know we would. On the other I don't want us to end up tied into something we can't honour. Then I think well if we can't pay mortgage repayments, the chances are we'll struggle with rental too. To put this in perspective, there would be a difference of approx 150euros between the two payments.
So what do you think? We have 7 days to retract our offer without penalties, it's lake or break time for us......

[expatinscotland]

No, because if I have to worry about it, it's not the place of my dreams.

[noddyholder]

no

[raisinbran]

There will be several dream homes around in 2/3 yrs time when they are 30% cheaper.Think honestly with your head not your heart.

As Richard Branson always says when making an expensive decision could you live with the down side.

[solo]

No because you'll possibly/probably find yourselves in negative equity in 12/18 months, or at least not be in such a positive situation.
I'd wait a year or two and buy much cheaper and probably still get your dream home for less and with less worry.IMO.

[lalalonglegs]

Don't do it - your dream will become utter nightmare if redundancy goes ahead.

[jimjamshaslefttheyurt]

Where are you - you talk about euros. If the market wherever you are isn't as over-inflated as the UK one then I might consider it.

[jimjamshaslefttheyurt]

oh ha ha just seen your name

No idea what the housing market is like in Belgium. If it's not likely to drop in the way the UK one is then I would consider it.

[Belgianchox]

yes, sorry, I should have mentioned that i'm in France (misleading name, I know). Fwiw the market here in our region in particular is stable for a number of reasons. In that respect I'm as confident as I can be that the appartment won't fall in value. The way I see it is that for a slight increase in payments we would be investing rather than throwing money away on rent, so if push really did come to shove we would still have something to sell. Otherwise we'd just have to move to a cheaper rental, but all that we'd paid in rent would be lost iyswim. I might add that we have a 2nd property (tiny, but no mortgage) in a ski resort nearby which could always be sold if we were in dire straits.

The optimist in me says that dp will find another job and life will go on. We're fairly considered kinds of people, and I'm trying to think with my head rather than my heart, but I am leaning towards going ahead with the purchase.

Those of you who say no, you're talking from the UK perspective of an overinflated housing market that's falling rapidly. In the light of what I've just said would you still hold those views?

[FAQ]

I wouldn't - based purely on the fact that your DH may be out of a job at the end of the year.....and if he struggles to find another job and you have to use those savings/sell the 2nd property you'd be left with practically nothing.

[RubberDuck]

I would have to factor in what social safety nets are there for redundancy in France. In the UK, if you can claim housing benefit if you're renting, but get no relief on a mortgage for the first year. So I would be reluctant to move from rented accommodation if I knew that redundancy was imminent.

However, not sure what the situation is in France and they may have some sort of mortgage protection in the case of unemployment.

[Belgianchox]

Good point RubberDuck, I will have to look into that. I know you can claim help with housing even if you are a home owner here, there are conditions attached of course, I need to find out about it. Also the mortgage deals we have been accepted is flexible and means we could temporarily reduce our payments if need be, or extend the term. Our fixed rate also means that repayments can only go down (if we are able to inject more cash), there will be no remortgaging in 3 yrs time as there often is in the UK.
So most of you think i'm being completely daft optimistic to think that my dh will get another job quickly (winter will be no problem as he has specialised training in demand round here) and that life will go on? If he didn't find work we would also struggle to pay our rent, so where does that leave us?

[ButterflyMcQueen]

i would yes definitely
i need to feel settled and home v important to my mental stability so yes

make cutbacks elsewhere if you can...

[Belgianchox]

Ah at last, someone who thinks the same!

You see I figure that in 2-3yrs time if we buy this place we will be paying less in mortgage repayments than we would be for rent, so surely it makes sense in that context even if we know we might be in for a bumpy ride for the next 18mths or so? Rent here is high and rising which is part of the reason I want out, that and really wanting to feel 'at home'.

[jimjamshaslefttheyurt]

I think it makes sense if you're not at risk of a massive UK style crash.

[Helennn]

Like Jimjams just said. Don't think many people a year ago in the UK could see prices crashing as they are in the process of here. YOu get so used to prices going up it seems unbelievable they are now going down. Also, of course, if you do go into recession like us it may well be harder for your dh to get another job.

Only you know if it is a good idea, (and I can certainly see why you think it could be), hopefully we have made you think of everything so you can make an informed choice.

[noddyholder]

According to the FT web pages europe is heading the same way as us and prices are falling there too.The global economy is shaky and it would be unwise to buy now if your finances are not rock solid.You sound like you are talking yourself into it and tbh where a home is concerned I have done this in the past.justified it to myself because i loved it with disastrous consequences when reality struck.

[daftpunk]

yes, i would. but i'm a bit of a risk taker.

[Belgianchox]

I agree Noddy (sounds weird writing that!) that europe is heading the same way as the UK, but the fallout should be less than the UK as the economy here has not been allowed to overheat the way it has in the UK. Credit has always been harder to obtain here, people generally do not live off credit and cards, it's not part of the culture.
I know what you mean about talking myself into something, i'm good at that, but I am trying to look at this realistically. The fact of the matter is that even if we don't buy, we will still have high monthly outgoings that can only be increased whereas the mortgage, even if high, can only go down.
Can I add (in my defence!) that we have no other debt and neither of us have ever been out of work. I'm not saying it can't happen to us but I do think where there's a will there's a way.

What were the disastrous consequences for you NH? If that's not too personal?

[noddyholder]

We bought a house we couldn't afford to get ds into a particular school.We had all sorts of plans about how we would fund the shortfall but eventually we gave uo and sold it as no holidays meals out etc just wasn't us even though at teh time i thought anything could be sacrificed for the house

[daftpunk]

so did we noddyholder, (about 5 years ago) dream house, dream location, it needed lots of work, but we took it on. thankfully its worked out. haven't had (much) of a holiday, /meals out/ etc in all that time, but i still think its worth the sacrifice. its very important to me that my kids grow up in a nice area, more important than taking them on holiday. (they probably don't think that way) but i agree with you, it's not worth it if you're a person that really misses your holidays etc.

[ninedragons]

These savings that are going to be freed up, could they become available with payment of a penalty, or are they completely inaccessible? If you could get access to them in an emergency, personally I would do it. But as others have said, a home is very important for me psychologically. It's not like you're asking about buying an investment property.

How much fat do you have in your budget at the moment? Is that e150 all you have for meals out and impulse buys at fab little French flea markets, or do you live comfortably within your means? I wouldn't stretch if it meant denying yourself all the little pleasures in life.

Can you overpay like mad things until DH does lose his job? Is it likely he'll find another job in his field in the same area? I wouldn't buy if a new job could mean relocating, obviously.

Hmm.

[ninedragons]

Do you rent out the ski place? Perhaps if you rented it for the whole season and used it just at short notice in times when it isn't booked, you would be able to overpay the mortgage next winter?

[noddyholder]

I still live in that area have had 2 more houses since then but renovated them and moved on.Am now in rented and will buy again but its different in that I don't need a mortgage which would scare me atm tbh.

[Belgianchox]

Hmm, more food for thought. Well at the moment we live quite comfortably within our means and were we to continue with the same income we could afford the extra 150e without feeling the pinch. However there is no guarantee that dh will find a new job at the same pay level, he may well have to accept lower.
The savings I think cannot be released until this time next year, its something dh took out before my time so I'm not entirely sure of the details, but still even if it's only next year, we can manage until then. Dh has his job for sure until the end of the year, and then the winter he's 95% sure of finding decent work in the ski resorts (he's a ski patroller by trade and knows everyone here). So we're fine for a year or so, and then our savings would offset mortgage cost somewhat, and in my fantasy optimistic scenario, by that time dh will have found another steady job.
I work too, but at the moment it's very seasonal, so I could definitely look to finding something more regular too which would help lots.

Wrt renting the flat in the ski resort - we do this already during peak season, but could definitely do more.

NH, why would a mortgage scare you? Is it because of fluctuating interest rates affecting repayments? I could understand that, but if you know from the outset what you will be paying, and that it can't increase, isn't that a bit different?

[LyraSilvertongue]

Go for it. We are. Just got to get the mortgages sorted out then we'll be ready to exchange asap.
Our disposable income will be reduced by about £1,000 a month but we'll still have easily enough to live on, so it's worth the gamble imo.