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

Majority of rental properties are owned outright or have a very small mortgage. The most you can borrow on a btl is usually 75% of the property value. This is much stricter than when you buy for your own home.

So “125% of monthly mortgage payment” when many rental properties either are not mortgaged or the mortgage is only on 75% of the home - can easily see how the rental payment could be less than a mortgage with a loan at 90-95% of the home value.

Perfect explanation

Oh you’re in a great position! Hopefully your repayments will be low, finding the right house can be hard can’t it

Oh yeah, unless I win the lottery or one of the fit karate dads from Cobra Kai on Netflix ask for my hand in marriage and we need more space, I'm staying put. So that was a consideration when deciding to buy, too.

Haha this made me laugh

Just heard on the radio that the base rate is going up next week too 😬

Too, the “market rent” is not linked to what would be “125% of the mortgage payment” for an owner-occupier mortgage based on a 90/95% LTV mortgage.

Market rent isn’t linked to that figure.

So sissynova is confusing to very different figures.

Yes. Estate rentals, HA rentals, renting from family, landlord owns property, number of things really I suppose

And it’s true that it’s not linked to market rent yes! Imagine if it were

We lived in military housing in our 20s which was incredibly cheap (at one point we were paying £130 a month in the 2010s for a large 3 bed semi in zone 6 London) but the downside is it's military housing......

That is cheap!

I'm not a home owner, I'm in social housing, so I have no real idea how it all works. But what I'm curious about is what the profit actually is from owning. I get the principle that if you say buy a house at 200k and sell it for 250, theoretically you've made a 50k profit. But if there are so many fees, a high rate of interest etc, haven't you just put that 50k (or more!) into the house yourself and are therefore "breaking even" if that makes sense?

I also get that it allows you to potentially move up the ladder. But if someone has a stable place with low rental costs would they be better off maybe investing their spare cash elsewhere?

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.

That only applies if the landlord has a mortgage. Most don’t.

Magic times, @FlyingSoap, magic times.

When you are comparing the cost of rent vs mortgage payments, only the interest part of the repayment is the equivalent of rent. The rest of the mortgage payment is the equivalent of saving (as it's directly paying your loan back).
There is an awful lot of scaremongering in the press about interest rates.
Look at a graph of rates over the last 30 years or so - they hovered around 5/6% for years, just where we are now - we've just been lucky enough to have had a good chunk of time on low rates.
As long as you're not buying for a short period of time, I'd get on and buy. I'd probably go for a variable mortgage too - risking increases, but benefitting from decreases.
Any small overpayments you make, have a big impact on reducing the interest paid overall.

@House4DS it's not scaremongering though, I read yesterday that a 6% mortgage interest today feels like 13% did in the 80s due to the level and ratio of borrowing these days, you can't compare 6% today with previous decades.

I see things exactly the same way, I honestly do. All the costs involved are fully your responsibility and the onus is on you if anything goes wrong, but maybe we just don’t know enough about it!

Lol mine has gone up by 500k in 3 years. Don’t confuse what’s happening across the market with specific areas. The UK is a series of housing markets. The average figures don’t mean squat.

Posts like this is why financial education is so important for women. You must educate yourself. I can’t believe the amount of sheer stupidity on here.

This is a bit offensive, isn’t it? I’m sure all the financial advisers who have said that prices will fall by 10% at least must know less than you then.

I would 100% buy before starting a family.

Exactly

From what I can see, owning a home provides immediate security now - you have comfort knowing you won’t have to move and later down the line once the mortgage is paid your pension/savings/investments can be spent on things you want to spend on (not accommodation).

I would always encourage buying if you can. We bought in 2016 and initially we felt the mortgage was a lot of money but as time goes on and salaries rise the mortgage becomes a smaller % of your income. It gets to a point where you don’t really notice it. You mention your good savers so you might even be able to overpay and reduce the initial term.

Even in this market?