To park this life goal for now

[FlyingSoap]

TL,DR: house buying in current times !!

Everyone talking about how rates are soaring. An article I saw yesterday saying FTBs will now pay over 10k in interest on average was the final straw. Apparently your actual equity would only account for 30% of the astronomically large payments. We have a deposit saved away in ISA but would still need a 95% (possibly 90) LTV so is a high risk for negative equity(owing more to the bank than the value of the house). This will matter and might come back to bite us as like most (all) people getting onto the ladder we can’t afford the home we’ll live in forever straight away, sadlynot practical for us

We rent in a beautiful village where everyone knows one another and there is zero risk of being evicted, and payments will only go up by nominal amounts. So lucky for this.

Is being a homeowner worth it if you’re compromising on other areas of life ?? It’s always been my goal but lately I’ve been thinking we might as well enjoy life a bit more rather than being so house poor and maxing out our budget. A low deposit and an extremely long term is essentially renting from the bank with all the drawbacks of property maintenance, right ? Just sounds like the opposite of secure to me

Even thinking now DH and I could make the best of our little home despite being rented and start our family here given we would then have a larger amount of disposable income to help buffer reduced income over maternity, then later childcare fees (although we will only need one full day of paid childcare anyway). We earn equally and I do intend to go back to work FT and love my job. Maybe this is illogical as lenders would then lop more off our affordability for dependant, though DHs salary should be on the rise over the next several years with commission and enhancements anyway.

I do see my attitude might be wrong but trying to be considered based on the research I have done, and other threads read on here

I think what I like to remind myself is that affordability checks aren't some kind of punishment - and buying just before paying your mortgage becomes less affordable due to reduced income/increased costs, at a point where interest rates are rising - actually you're probably better off being limited to what you can genuinely afford, rather than what it appears you can afford before your circumstances change.

In the situation you're in, with stable, low cost rent that gives you more money, I'd probably look at investing the money until the market suits you better.

Thank you. Invest in what sort of things? Sorry, bit naive with stuff like that.

Thank you, you sound like us! It’s frustrating isn’t it bet there’s thousands of others like us in a similar boat though. Doesn’t seem worth it at the minute does it?

Whether being a homeowner is worth it is down to the individual. But prices didn’t come down by much after 2008 and not for long, so I think anyone waiting for significant discounts will be waiting for a long time. I’m not sure what you are referring to with your interest figures but you pay mostly interest at the beginning and increasing amounts of capital as the term goes on. If you don’t end up buying you do need to factor in additional pension contributions to cover the rent expenses you will have in retirement.

Oh and I wouldn’t hold my breath waiting for interest rates to come down much either. I would be surprised to see sub 3% base rate in the next 10 years. The rates we have had over the past 15 years were the anomaly, not the rates we are seeing now.

It's a really personal decision. We brought in 2007 just before the crash. We had a 2 bed that ended up being the most expensive house on the street (mainly 3 & 4 beds) and we lost about 20k overnight. We ended up staying longer than planned and had both children there. We did move eventually and made about 90k.
So you need to think about what would happen should things crash again. We took the opportunity as we wouldn't have been able to get on the housing ladder any other way (open market homebuy so effectively 100% mortgage) We now have another new home and were able to put down a 20% deposit. Just depends if you can play the long game.
We wouldn't have been able to get a secure rental and wanted the stability that comes with home ownership.

I can't see 1% rates coming back for a long time. Prices will likely come down but it will take 2 yrs, they are likely falling now allowing for inflation. If you have cheap & secure rent, wait.

It’s cheaper to buy than so I don’t understand your argument really. If you are renting say a small 2 bed comparing buying a large 4 bed then it’s apples and oranges really.
A landlord needs to charge 125% of the mortgage charge and have access to less favourable rates so it’s cheaper to buy the same property compared to renting.

When we bought our mortgage was several hundred pounds cheaper a month than our rent was.

Stay put and enjoy low rent, savings, and not having the worries of homeownership. I know lots who are having to fork out huge sums in repairs as well as mortgage payments increasing and everything else. The stress it’s causing is sad among relationships and there’s no money for fun things like holidays etc. Enjoy what you have and see how things are in a few years.

Once you've started a family there's no way you'll afford to buy and then you'll be stuck renting.

Delaying it won't bring house prices or interest rates down.

Thank you, I think you’re so right, that’s what we’re worried about - no fun money. Since we are good savers naturally and have saved for this it would be miserable to move and have no money left for other things in life, especially given most of its going straight to the bank in interest

Despite income not decreasing, already having the deposit and only ever needing one day of paid childcare (and even then, subsidised hours would come in by the time we’re thinking about finding a provider for one day a week of childcare) ?

It’s not at the mo

I’m glad it worked for you in the end! It’s so tricky to know what to do isn’t it, especially when there’s risk of crash

We’re still waiting but to be honest if we found a place we wanted to live, and a nice house, we’d buy. But we’ve got a fairly huge deposit and wouldn’t borrow more than 4x one of our, similar, salaries.

Definitely understand the logic there. Might be a good time to buy if there is a dip in prices too, you’ll be in a position to watch and wait

Don’t blame you one bit

Mine too! Not to mention as a home owner you would also be responsible 100% for any other costs like maintenance and repairs

How is it not? Pretty much every lender still requires a btl to set the monthly rent at a minimum 125% of the monthly mortgage payment.

Just a quick rightmove search will show you

There are so many hidden costs to home ownership, and when people say they made 100k or whatever on their home, chances are, they’re not factoring in a number of fixed and variable costs. Overall people here have very high levels of mortgage debt, but very little actual wealth outside of property.

If you have affordable rent and can save, I would prioritize investing in a SIPP, work pension, and ISA to growing your wealth and take maximum tax advantages. Stick it in an well-diversified/lifestyle index fund or talk to a financial adviser. You can definitely build wealth and assets outside of property.