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

Life gets super expensive after children
in London one child’s nursery is costing us £2k pcm - we have two kids..

we went from being very comfortable to much less so following kids

so our mortgage would also have reduced

Fair enough. I suppose with us only
requiring one day a week hopefully this shouldn’t be as bad, we are out of London as well. Costs can be crippling though I know

@FlyingSoap if you don't have huge childcare costs it shouldn't be too prohibitive, obviously kids cost money; clothes, food etc but your costs will adjust as your life will likely get a bit smaller with kids, less entertaining and holidays etc.

The key is to buy a home with some growing room, moving house is expensive with stamp duty etc and with house prices not rising much atm you can't bank on the house increasing in price a lot to fund that move. If you buy in the current market, assume it could be difficult to move for a while and make sure the house is suitable. We bought too small first, thankfully managed to sort it out but had many a lost night sleep worried we would be trapped.

Your last para hits the nail on the head I think. Naturally we could press on with moving now but we would be in a tiny property less suitable than our rental and obviously with the market heading the way it is, could find ourselves easily trapped there and paying extortionate repayments for the inconvenience of it! Not to mention legal fees and stamp duty each time. It would be much safer to move into a property we could afford to stay in but with rates the way they are I don’t want to max out our borrowing just do to that, as it leaves us vulnerable financially if my income drops even temporarily or if one of us has long term sick etc

Our kids were primary school aged when we bought. So no nursery/ childminder costs. I don't know how that would have compared to pre-kids, we were definitely not in the financial position to buy pre-kids.

As for "the done thing" not everyone owns a home (some never) ...

I would not delay having kids, if you're ready, for the pursuit of buying a house. Fertility is much more important and critical, you won't know if thats a challenge until you try.

This isn't a decision about never buying a house , this is saying, maybe this moment now isn't the moment, wait for a better financial moment.

YES it is absolutely fine to start your family while renting!

@FlyingSoap yes I think you are in the same boat we were in 2017(with a less scary but still uncertain Brexit market) we were also in cheap, stable rental accommodation so it was very much about what we thought we should do in the long term.

As it's looking like prices aren't going anywhere fast any time soon, I would concentrate on building up that deposit, bide your time, we are only just seeing what the impact will be on the market, I think there are a lot of delusional house prices on Rightmove. See what happens to interest rates, keep an eye on prices for the properties that appeal, and reassess in 2024. Normally I would say if you have the deposit and the means just buy because the market will rise and fall and it's a home first and foremost, but I can see the value in pausing at the moment! It's so unsettled.

Are you in an estate rental currently (as you mention being in a village)? There are lots of different types of rental and estate rentals are fairly secure. Lots of people rent for a variety of reasons, and buying your home isn't the be all and end all, though it definitely makes retirement planning easier.

Property outstrips all of this. In all the properties I’ve owned - I’ve made at least £10k per year profit on my purchase price. Most of the time without doing any work (not even painting). The trick with property is to buy, overpay as much as possible, and live in them for at least 5 years - and to buy as big as you can afford at the time before scaling up. Too many people wait for their dream homes and then find themselves priced out.

True, you can’t buy time back can you! So glad things worked out for you x

Essentially, yes!

@Wenfy it used to, houses aren’t gaining in value like that anymore in fact the opposite

No harm in waiting a few months to reassess

but you do seem to be convincing yourself that renting is a better longer term proposition than buying which it just isn’t

house prices may reduce temporarily but in the long term they will always increase - land is scarce and people need somewhere to live. Land will always be in line with or beat inflation in the long run. Plus you are saving cash as you pay off the capital element of your mortgage - and this capital element increases over time

renting longer term is never a good idea compared to owning - it is a true cost, and you are paying a landlords mortgage. Plus people who rent into old age needs their pension to be able to fund that

personally we bought a 2 bed house back in 2016 after the referendum for 5% - scary and didn’t seem like a good move

but now we have a 4 bed in London with over 75% ltv

we couldn’t have done that if we had spent money renting - that rent taking our income and also not letting us save

personally in the short term I would always sacrifice on nice holidays etc for a few years to get on the ladder and - short term pain long term gain

I suppose if you are uncomfortable about doing anything right now it could make sense to wait until 2024

but interest rates are unlikely to ever reduce to the low levels we got used to - and not before 2028

also even if you only have one day of nursery - children are expensive. School activities, days out, play dates, clothes - it all adds up

all the best op

This is temporary

in the long term house values will always increase in line with inflation at least

time value of money etc -

Yes OP I would assume this is temporary, as much as I am saying I can see the value in pausing this year, I very much still believe home ownership is preferable long term and doubt that changing, it's just about when to make the hop which is always the gamble with any type of investment.

No way would I be buying with 95% mortgage at the moment, especially if you have a secure and affordable rental property. Even if you plan to stay put, being in negative equity can have consequences when your mortgage deal ends. You really don’t want to end up on a SVR, many of them are already touching 8%.

It is really unsettled! Think we will continue to save and see where we are

This is exactly what I’m scared about! Especially given we’d be buying a small property that we know we’d have to sell at one point, I would be devastated if we lost all our money due to prices falling

Also OP, with an election year coming up, it wouldn't surprise me if we start to see some programmes to help first time buyers, even if Labour get into power no government wants to see the property market fail, so another reason to perhaps bide your time.

@ksjsb never considered the election but of course! Sure the last one was when the last first time buyer incentives were introduced if I remember rightly

I know nothing about estate rentals and their security or otherwise, but a main criterion for me would be how certain I could be of not having to leave my rented home -- the insecurity of renting apartments where we got moved on so frequently was what made DP and I buy a tiny flat in the first place.

Then, when we moved out of London, we rented in a village at first, and felt lucky, as there was virtually no rental stock in the area at all, BUT after a few years (by now we had a young child at the village school) the owners decided to sell up, so we ended up buying the house, reluctantly, as there was literally nothing else to rent for many miles around.

Understood, I mean security is a big thing isn’t it! Was it easy enough to buy your house when the owners sold? It must’ve been stressful

Certainly not cheap to buy. I spend more than twice on housing now than when I was renting, mortgage including. I know I'm paying off loans so it's not quite the same, but my spending allowance doesn't know the difference.

Worth it? Meh, I like my apartment and love being able to do DIY without having permission from a landlord. I can afford the stupid outgoings. It's fine. I'd be fine without it, too.

Thank you

@Backstreets this is it, not sure I want the financial vulnerability at such an expensive stage of life either! Will you stay in your apartment for a while?

We’re looking to buy at the moment as first time buyers. It’s really slow in the area we are looking with barely anything coming up. We’re only looking to borrow 2.5 times our salaries and we have a 10-15% deposit so we’re in a good position and can pay the mortgage at the current rates. But we aren’t in a rush - if it takes us a while to find something we’re ok with that.