To pull out of house sale 😒

[Brooksey5]

Several people have told me that we should avoid exchanging contracts on the house we’re buying. In case the markets crash and we end up in megastore equity. We’re first time buyers and it took us ages to find a house we like in the area that we want.

Our Mortgage is for 60% of the property value so it’s seems really unlikely to me that the value will go below what we have the mortgage for. (Not that it would be great to to loose that much cash)

But we just want to get on with life, stop renting and have somewhere we can call our own. I accept that we probably won’t be able to move for a few months. But is it so bad to still want to proceed with this house?

*negative equity 😂

We are going ahead with ours

Think of all the money down the drain on rent!!

Go through with it. We complete tomorrow

I would go ahead, but then I refuse to live my life not doing things "just in case". Take reasonable precautions but nobody can tell you how long this will go on for and what the housing market will look like afterwards. At the end of the day, in my eyes it's still preferable to renting.

If you are planning to be there for a few years go ahead. The market may well tank for a while after this but it will climb back up again later. You are unlikely to end up in negative equity at 60% LTV and even if the value drops a bit and you end up selling and moving elsewhere, the market will be much the same for selling and buying, so you won't lose anything and eventually it will be fine again.

as long as you're planning on being there long term like 5 years plus you should be ok

The market isn’t going to crash, it didn’t in 2008

I’m not sure you’ll have the choice whether to complete on the sale. Depends where you are in the country but the Scottish Land Registry are now closed, so no completions. Contact your Solicitor and they will advise. When you can, I would complete, especially if it’s 60% loan to value and you plan to stay there for a few years.

With a 60% LTV I would move but plan to be in The property for at least 5y therefore allowing the market to stabilise

I personally would go ahead.

@ChrissieKeller61 that's optimistic as the world is in an enormously worse state than 2008

Go ahead. There are always reasons not to do something. You’ll have something now to look forward to!

The UK housing market will still be supply restricted long term which will to some extent limit falls. If you can afford it and are looking to move for the long term go for it. Mortgage rates are very low as well so it should work out much cheaper than renting.

In the long term house prices always increase which is why they should be viewed as a long term investment.

In the short term they might increase. Or they might decrease.

You're welcome.

My parents bought their first house at the peak of a boom, the marjet crashed and they were in negative equity for years. Should they have not bought it? Well, not exactly...

They lived in the house 45 years. They bought it for just under £20k in the 1970s and sold it recently for over £1million.

That's partly crazy London prices but also that long term it's likely to go up significantly ovsr time.

Or, a slightly less dramatic version: when I bought my first flat people kept warning me the market was going to drop. Which is did eventually but not instantly as people predicted but a few years later, prices fell a bit. They never went back to the price I paid though. If I'd listened and waited I would have been priced out.

If you're buying a house as an investment to sell again soon perhaps don't bother.

If you actually need a home to live in go for it I reckon.

We’d be happy to be in the house for about 10 years Max so we were planning for the long term anyway.

The Mortgage is £200 a month cheaper than rent too!

So far the solicitor is still working on the paper work. I guess it depends if land registry are working from home too

The risk of being in negative equity is a lesser risk than the risk of being priced out in my opinion as one way, if it goes wrong, you stand to lose money but have a home you own.

The other way, if it goes wrong, you stand to be priced out of the market and never be able to buy a house in that area.

We bought as first time buyers in Ireland in 2007 just before the housing crash. We bought in a new development and ended up paying about €135,000 more than or neighbours who bought after the crash. We were in serious negative equity for about 10 years but it is a beautiful house and we are still happily living in it and haven't once regretted the purchase. I think that once you are happy with the house and won't want to sell for the foreseeable future until you're out of negative equity then go for it.

I'd say go for it.

I'm not convinced there is going to be a huge house price shock, funnily enough thanks to Brexit. People kept holding off and people will continue to do so.

So there is already loss stock, housebuilding is more or less being curtailed now (so delay of stock). Coupled with low interest rates leading to demand in mortgages, there is still going to be a supply side problem compared to demand.

Brexit expectations were a downturn in house prices, but actually have continued to increase (except in London and SE to a lesser degree, but they are a law unto themselves).

And as PP have said, markets are cycles. It'll go back up again.

I’m really risk averse but at 60% mortgage , plans to be there long term and lower monthly outgoings even I would go for it.

I'd go ahead. If you spent your life always waiting for the market to be in your favour, you'll waste a lot of time and a huge amount of rent money!

We bought in November and I'm half expecting prices to fall, but we needed to buy. Stamp duty cost us 40k (we're not in the UK) but the way I see it is that we'd have spent that 40k in rent over 3 years. So if we can stay here 3 years, house prices might have recovered and we'll have recouped our costs.

You plan to stay long term and the mortgage is cheaper than your rent. Definitely go ahead!

Thankyou for the pep talk everyone 💕

Don’t pull out. You’ll regret it

OP, what is your current situation? If you are first time buyers I guess you’re renting now? Have you given notice to your landlord? Is the new house ready to move in? You won’t be able to refurbish now; do you need to buy furniture and appliances?

What is your cashflow situation? If you buy now but then cannot move for a while, for how long can you afford to pay rent + mortgage at the same time? No one knows how long this will last.

How safe are your jobs? How much will you have left in savings if you buy? How long would these savings last you if you were left without a job? I would rather have, say, £100k in savings, that would last me a long time even if I lose my job, than a 60% LTV mortgage and £7k of savings that would only last me a couple of months – unless maybe I had a very very safe job. But that’s me – of course everyone’s approach to risk is different.

I am not sure if removals are considered an essential service which is still allowed; even if it were allowed, I wouldn’t move now (unless there are extreme reasons to do it): dirty dusty boxes and crates, and possibly a removal team, is the last thing I’d want to have around right now. How do you maintain social distancing when moving and installing heavy furniture appliances etc? How do you have carpets cleaned professionally? Etc.

Do you need to work from home? Are you sure you will get a broadband connection in time?

As for future value, no one has a crystal ball. IMHO the importance of keeping savings that would last you many many months trumps any other consideration.
Don’t listen to people who say that renting is money down the drain – it depends. Most comments along these lines seem ideological, financially illiterate and totally ignore all the factors at play. For very long periods yes, true, but for shorter periods it depends. There are may cases where renting can be better value for money. For example, have you run any numbers? Have you calculated where house prices should be in, say, 2 years, for the cost of renting to be the same as that of buying?

Also, saying that the mortgage is £200 cheaper than the rent isn’t the whole story. I assume you meant the total instalment? You need to distinguish between:
the total instalment: that affects your cashflow, and that’s money you won’t have available to pay for food bills etc, and
the interest cost: that is the real cost of the mortgage. The principal you repay is money you repay to yourself – it adds to your wealth but ends up locked in the house, and is hard to extract and use it to pay for your bills

We went ahead with ours