Pulling out a house near to exchange

[HappyKite2067]

We are near to exchange of our new build house and I’m now having huge doubts about going ahead with it. I’ve had a bad gut feeling throughout but as it gets closer it’s getting stronger!

Reasons:

1. Estate management fees and people telling me to ‘run away’ as they are life ruining
2. The cost of the mortgage is so much higher than our rent, and I’m genuinely worried we can’t afford it- I’ll only have £200 disposable income after all bills, petrol and food, and other half £500. At the moment, we have around £1500 left over between us.

Reasons why I’ve talked myself into going:

1. I need to move for my new job
2. We’ve been renting for 2 years and have secured an okay fixed deal
3. There’s very little choice in the area we are moving to and new build is probably (even with mgt fees the most cost effective)
4. We are TTC (although how we can afford one I don’t know)
5. We are both going to have pay increases next year and the year after.

Am I being unreasonable to pull out and stay renting, and maybe choose to rent closer to work to have more disposable income and wait for an older new build which needs less work?

@HappyKite2067 have they offered incentives?

we got over £40k worth of incentives on our house , so defo didn’t pay over the odds and worked out way cheaper than an older house of the same size.

don’t walk away from a good deal.

We know it’s a huge red flag which is exactly what my question is about 🤪 I feel like we should pull out but OH says it’s our only real option if we want to move there, have a family and have a house we can stay in for a while. He said he doesn’t have the time or money for us to do an old build up (like we did our first home).

I think he's made his mind up then OP, if you pull out and everything is a disaster then he's going to blame you. Do you like the house are you happy with it?

Yes! Stamp duty and solicitors fees paid, upgrade worktops to quartz, rainfall head showers, flooring, down lights, towel rail, integrated dishwasher and fridge freezer! This is my partners points, the management fees would have to seriously go up for it not to be cost effective than an old build.

You’d be nuts to walk away. That’s thousands of pounds worth and I agree with him!

I love the house! I love the area and it’s near my job! It means parents can stay (who live abroad) and we wouldn’t need to move if we didn’t need to. I love everything except the worry around affording it, my partner is extremely laid back and says we will manage but it’s me who does our finances 😝 I’ve always been taught to live within my means and this goes against my grain, and come hand in hand with everything sky rocketing. If we go for something cheaper I probably won’t like the house and want to move down the line anyway.

So you think just suck up the drop in disposable income? Our worst case scenario is £700 per month joint DI. Hoping to get this up to £2k joint in 2 years with the pay increases (although of course anything can happen!).

Just get on with it OP. These are natural worries for all first time buyers. You wouldn't have secured the mortgage deal if it was unaffordable.

What will the £700 need to cover?

If it's just holidays, lunch out, Christmas gifts etc, the you'll be fine.

So long as you've got all the essentials covered (mortgage, insurance, commuting, utilities, food, council tax, car maintenance, pension, rainy day savings), I think you should go for it. You're never going to feel completely financially secure. Be sensible and don't go wasting £thousands in furniture village on new sofas etc!

Is there a reason you're ttc right now? Would it be wiser to wait until you've been in the new house a year to rebuild a little savings pot?

As a non-Brit I'm always intrigued by the "renting is dead money" argument. Yes it is, but so is the interest paid on a mortgage (as opposed to repayment of principal), and given OP would be paying more than her current rent she'd also be missing out on, for instance, dividend payments generated by an alternative investment for that amount of money.

OP I'd be looking VERY carefully at the basic math of buying. As far as investment advice goes, the smart thing is to calculate the price to rent ratio, meaning you figure out how many annual rents you'd have to pay to buy an equivalent property. If houses are more than 20 annual rents advice usually is to stay well away and to invest an equivalent amount in other appreciating asset classes instead to come put ahead.

https://www.investopedia.com/terms/p/price-to-rent-ratio.asp

I might be more laid back about it because I had less than that when I was a single parent to 2 and I brought my old house post divorce. It all worked out. And when I sold I made a tonne of money that I invested here. ( our mortgage went up £1k a month in December and we’re still making it work!) So it was scary. But it was all ok. I did get promoted so my money rose but a good budget and a low maintenance house and you’ll be good. Any issue with the house won’t be your problem to sort.

You’re just having the normal wobble before completion. We’ve all been there. £700 is really not a bad disposable income figure- £175 per week to spend on whatever you like after food etc?

The only thing I’d say is your partner having £500 and you having £200 seems unfair. In my opinion you should contribute a percentage so you both end up with the same disposable income, or it all goes into one account.

I’ve bought a few new builds, they get a bad press. It’s carefree home ownership for a few years with building warranties etc, it helps knowing you won’t have any unexpected building costs. We bought an old house last year, 2 months after moving in- £2.5k on a new boiler!

Good luck!

Yes everything is covered, gym, petrol, car insurance, food, bills etc so it really is just a disposable income for clothes or going out. There’s a couple of reasons we are TTC right now and we can’t really wait, it might take us a year anyway! We already have savings, we aren’t putting all our money in but I don’t look at savings as something to dip into!

Our mortgage will be 1.5 x our rent, but our rent is a 2 bed apartment so the equivalent rent on the house we are buying for a similar property would be the same monthly amount. It’s just we wouldn’t rent that size a property, as we don’t need the space. We are only buying that size as a long term plan for family and so we don’t have to move again and pay stamp duty etc!

If you are in England there is no penalty for pulling out prior to exchange though you will still pay your solicitor and any surveys etc
@HappyKite2067

We have paid about the same low management fee for our shared car parking for about 10 years now. I worried too but it's never gone up.

Your pay will drop with mat leave if you decide to take the full year.... be sure to claim tax relief on your childcare by opening a childcare account once you return to work but also check if universal credit can help first as they pay upto 85% and tax free childcare only give you 20%. Buy the house if you love it, you can always tighten your belt if things go south but I understand your reluctance completely.

The service charge between my sister & I when we owned a flat in London was £1500 a year 😱. It’s probably gone up by now! We didn’t even have a lift. I know that’s London & it’s always more expensive but £150 per annum sounds very reasonable to me.

I’d wait a little as it’s likely rages to come down a bit in the next few months. 5% for 5 yrs is a very high rate (without time value over 20 yrs you pay double of what you borrowed).
the numbers aren’t stacking up and if I were you I’d hold off TTC - just have a read on here about the costs of a child (especially if you don’t have much grandparent childcare).

If it's truly disposable income then you'll be fine. Budget for childcare though, even with the new free hours it isn't cheap. Buy the house!

It's because British housing rises in value so much.

Our first flat, in four years has risen 60k in value. So in four years, paying the exact same as we were paying in rent, we've made 60k through doing nothing. More actually, as we've also paid some of the mortgage off through our monthly payments.

Admittedly houses rise the most in London/South East - but across the UK you generally make a lot of money by buying your home.

We've lived on a private road with fees more than that for over 20 years. Yes they can put the amount up but they never have. Also no one pays them.

There's a bank account with a fair amount of money from when people used to pay them though, money is just sitting there.

If we wait, house prices could increase and the interest rate we could get now is actually higher than when we fixed! Why aren’t the numbers adding up?

Bought a new build around 6yrs ago. FTB and had the same wobble about money as you. We pay around £20pcm management fees - they have only increased around £3pcm in that time. We started TTC when we bought the house and have only just been blessed with our first. Yes it’s a worry but buy the house, you never know how long TTC will take anyway and if it’s the right house, money will have a way of working itself out, even with added childcare costs (at least that’s what I’m reminding myself now 🤣)

Your better off buying now before you have a baby

if you try to buy when you have a baby a mortgage company will take into account nursery fees
the fact that you have a dependent child
you may also be part time

so you may not be able to borrow as much

the same will happen when you remortgage but at least you will have made repayments into your home

If it’s a new build as long as you aren’t moving in the next five years or less as you pay a premium for a new build which you rarely get back if you try to sell within a few years