Are we being too cautious buying a house.

[Sandles12]

Basically my partner and I live in a 3 bed terrace house with two children under 4, smallish house and not much of a garden. I bought it 7 years ago when it was really cheap and it's fully paid for so we are mortgage free. It's now worth roughly 115000. We have also saved about 80000 between us over the last four years or so. We both earn about 43000 per year before tax and live comfortably. Not extravagant but we do treat ourselves to good food etc. I am currently on mat leave so not earning much ATM.

We feel we have outgrown house and have been viewing houses for over four years. We are looking for a house in the region of 250000. Every house recently has gone way above the asking price. We are looking for a four bed with two living rooms and a decent garden, garage if possible. We are pushing 40. For example today we viewed at house on market for 250000 but there was already an offer of 270000. It was a lovely house but no garage and not the biggest garden. Also right beside road so we did not think it perfect. It got me wondering about the people who out the offer in, are they better off than us or just willing to pay a large mortgage? Who knows.

Just wondering are we being too cautious? Always wondering will there be a drop in prices soon. Seems to be people are going a bit crazy when it comes to house buying.

I think you’re being very cautious.

You’ll have the guts of £200k in cash. It sounds like houses in your area aren’t massive expensive.

Would you consider getting a mortgage for about £90/100k and buying something that ticks all your boxes?

As you’ll have seen from the past four years you’ve been looking, prices are going up and up. This might happen (unlikely at a massive scale) but chances are they’ll continue to rise.

Everyone has different situations. Just based on the figures you’ve given it seems like you could up your budget - if you think of borrowing up to 4.5 times salary, plus the equity and savings you already have you could be looking at the 500k mark couldn't you? But it’s not just about what you earn/what you have - how much do you spend on childcare? How much on other bills? How much do you need to feel you can do the things you enjoy? When do you want to retire? All of that will differ for different people. It’s not necessarily about how much you earn/how well off you are but also how much you want to commit to a mortgage.

OP house prices are crazy just now. Where we stay central east Scotland, its not uncommon for houses to go for 20%+ over the home report value 😥 we've decided to stick for now but ideally want to move up the ladder when mortgage is due for renewal. Good luck with your search 💐

If you can wait a couple of years I'd hold off moving just yet. If it's anything like the bubble of 2011, you won't have to wait too long for prices and interest rates to fall to a more sensible level. If you know what area you're looking to move to I'd suggest keeping a bit of an eye on Rightmove just to get a feel for the local market. Certainly house prices in my area are ludicrous right now compared with what they were at the end of last year.

@DistrustfulDinosaur

If you can wait a couple of years I'd hold off moving just yet. If it's anything like the bubble of 2011, you won't have to wait too long for prices and interest rates to fall to a more sensible level. If you know what area you're looking to move to I'd suggest keeping a bit of an eye on Rightmove just to get a feel for the local market. Certainly house prices in my area are ludicrous right now compared with what they were at the end of last year.

They’ve already been looking for four years.

Isn't it worth going as high as you can comfortably afford ? Fir context I live in South East London v ordinary street and a 3 bed terrace with a garden is 850 . It's shocking I know and ludicrous rise over several years but I think you may be expecting something very unrealistic to pay so little for a nice big house and garden.

Pay what you need to get the house you need ...

What is the reason for putting off buying what you need ? 🤔 you could afford to pay a lot more than what you are considering.

Lol. Your financial situation is almost exactly the same as ours. We put an offer in on a house for 605k today. Which probably won't be accepted. The last 2 weren't. Ah, the joys of the South east

Yes. You're being too cautious.

Way too conservative

You have at least 150k deposit so for a 250k house you'd need a 100k mortgage which is a multiplier of less than 1.5 x your combined salaries.

I assume you are 30s or 40s.

They’ve already been looking for four years. I realise that but the OP was saying she's noticed recently prices are going for a lot above asking price. That's true across the country as the housing market is currently in a bubble. I was meaning if she keeps an eye on the market she will be able to spot when prices drop again and it's likely she won't have to wait too long. The last comparable rise in house prices was in 2011 and by 2013 prices had started to even out and interest rates had started to return to sensible levels.

It depends how desperate the OP is to move and whether she's happy to overpay for a house now and potentially be in negative equity during the next decade. If she sees something she loves as a 'forever' house being in negative equity doesn't matter so much as long as she can afford the mortgage. However, if she may need to move in that time (eg has another child or for work) it would be sensible to wait for prices to dip before buying.

Yes we could have about 800 to pay in childcare too each month and I'm planning to go part time. Suppose it's just when I've witnessed the rise over the years and what we could've got a few years ago. Four years ago when we weren't really seriously looking we missed out on the dream house. New build Bungalow in country with double garage and big garden as we hadn't sold our house and another couple had. It went for 225000. Now I'm guessing it would go for 300+. Surely they can't keep rising for much longer.

It does seem cautious given your equity and earnings. I thought we were risk averse but just traded up.

Our thinking was that the interest rates are low and this is our last chance to get a decent mortgage for 20 or so years given our ages, so got a great rate fixed for 5 years. We have about the same equity as you and just bought a 4 bed detached for £320 but needs a bit of updating.

Have a play with some mortgage calculators, MSE has a good one to work out what £100/200k would cost you per month.

you do sound like you're being cautious. Amongst the people I know most have a mortgage running up till they are mid 50s or early 60s. So you'd have a good 15 years at least to pay back a mortgage and end up with a bigger asset at the end of it. But its up to you. you could alternatively put the extra into pensions and compromise on your house preferences.

Hard to know but people have been talking about the housing bubble bursting for years. But then if cost of living and interest rates keep rising maybe a few more people will have to sell as they can't afford their houses anymore.

Our combined income is a little less than yours and our mortgage is £340k (we're from London and live on the outskirts, so no option to spend less unless we moved away from everyone we know).

Only you can decide if its worth it for more space and a bigger garden, but if you've paid off your mortgage and saved £80k in the last 4 years or so, I would have thought you could comfortably manage a mortgage of £100k or thereabouts.

Surely they can't keep rising for much longer.

Yes they can. House prices will continue to rise.

In your situation you are better to stretch slightly now, otherwise the gap between what you have and what you want will just keep getting bigger.

It sounds like you have quite specific criteria in mind and none of the houses you've viewed recently have been quite right for you. I think you'll know when you find the right house and there's no point overpaying for something you're not completely happy with. House prices will keep rising of course, but not at the rate they are now.

You are being very cautious. For a house of about 270 you’d be taking 80k between the 2 of you, and you bring hone more that that a year, and you aren’t yet 40?

Whether prices will drop is another question, but certainly you can afford a house of 300k if that’s what you want.

I think it depends on how long you think you'll be living there.

Short term there is a risk that the house may loose value.

Long term property always goes up.

If you are not planning on moving on in the next 5 to 10 years does it matter what the valuation of the house is whilst you are living there?

In your position I'd be less cautious and be looking at a place I could see myself being happy in for the long term.

I think youre being cautious and optimistic to get a 4 bed 2 reception room and a decent garden for that amount!

Surely that depends on where you are buying @curlii103, where I am you could get that size of house, detached and with a garage and decent garden for not much more than £250k.

I think you are, yes. It just means you won’t buy or move..
If you want to move you need to bite the bullet and buy!

There will never be a perfect time, a perfect house or a perfect price. If there is - there’ll just be a bidding war on it.

Don’t think about what you could have got years ago, think about what you Vulcan get now.

Get a manageable mortgage to get what you want. You may not be able to afford it in the future. FWIW we have a similar household income to you, and last time we moved we borrowed £160k ish on top of the equity we already had, we could have borrowed a fair amount more but decided to keep it to that level.

Of course being mortgage free has its benefits, but if you feel like you have outgrown the house something has to give

*can get now. Don’t know where Vulcan came from

You will have a small mortgage and interest rates are low.

Your childcare costs will fall when both children are at school.

You can afford to buy the home you would like to live in.

And personally, with growing kids, I wouldn’t pick somewhere in the country’. Unless in a village with a shop, good transport to the nearest town and within walking distance of the school. Unless you want to be car reliant and run a full time taxi service.

I'm surprised you're able to view properties if you haven't put your hosue on the market.

I also think you're being too cautious and perhaps expecting too much for your money. If the hosue for 250k already had offers for 270k, then it's unlikely you'll get anything that ticks all your boxes for less. You'll need to compromise on something, or increase your budget.