Would you be a first time buyer right now?

[CorStrewth]

For the first time in my life, in mid thirties I feel in a position to save a deposit and buy within a year. I have rented from social housing since I left home at 18 and have really enjoyed the security so buying is a daunting prospect. But add in everything else COL, interest, housing market surely due a crash(?) and I worry it would be the worst thing I could do.

Advice welcome. Current rent 500pm, mortgage would be 1000-1400 pm.

We are looking for our first house now. A mortgage will cost more than our current rent but we’ll be building up equity, and rent can go up, landlords can evict you etc. There’s never a perfect time to buy.

I never had access to social housing so my view was always that the sooner I started a mortgage, the sooner it would be paid off. But if you have social housing that is truly secure, I guess that changes things.

Generally though, bricks and mortar do not lose their value. I bought my first in the 80s and people have been forecasting a crash ever since. It finally arrived in 2009 and house prices were back to pre-crash levels by 2011.

People who were nervous about buying in 2007 but bought just before the market crashed are half way through their mortgages now. (Ok so they may have been in negative equity for a while).

It depends on how affordable £1,400 is to you, job security, other factors such as childcare costs.

I think if you are buying, well in to adulthood, they you presumably would be buying for the long term ? So even if the market does crash, it is just a paper number, and won't affect you as you wouldn't be about to sell.
In most people's lives, people buy property at a time it fits with their own lives (can afford the repayments and have saved a deposit), and where it fits with forecast property inflation or crashes doesn't really come into it.
You will be paying out, so you have your own home, and won't have to be paying rent until the day you die. You will have security and options to develop your house as you will.

I’m currently buying as a FTB. We didn’t have loads of choice as DC2 is due in August and we needed the space. We just got fed up with waiting for the ‘right’ time. I suppose the instability of interest rates is off putting particularly if they do end up coming down over the next year, but it might take you a while to find the right property and by then there may be cheaper mortgages available. Good luck!

Thanks, great perspectives!

Hi , I will be a first time buyer . No access to social housing as not likely to be eligible . I have to buy as I can’t afford rent ( living at home after my rent went up). My mortgage will be 1/3 of the rent in my area.
You could potentially get your property discounted and buy it if it’s council . If not and it’s comfortable to buy, I’d say do it . I am daunted myself with bills, mortgage etc. but I feel there is never a right time.

best of luck

The most secure housing type is either buying or social housing. If you like your social housing then stay put but save the extra into stocks and shares isa. If you don't and want to move then buy.

Now is a great time to buy with falls in house prices in many areas and fixed rates around 4%. Yes rates are higher than they have been but still low historically.

Also if you are doing okay even with cost of living then forget about all the headlines and look at your own situation.

Literally do your pros and cons to staying in social housing or buying.

In your situation, if I liked my home and area, with £800 month difference I would stay put. But I would save/invest the difference. That leaves you money to go part time in your fifties or whenever.

Also remember if you lose your job, you get help with rent costs immediately but it takes up to a year to get help with a mortgage.

Higher inflation means a mortgage debt is worth less every year…

Ooh that turns things on its head, interesting way of looking at it!!

All other things aside, high inflation is very good news for debtors!

As a very rough and ready guide, inflation at present is around 10%.
If you took out a £200K mortgage and just paid the interest only on it, no capital, and inflation stayed at current level for 10 years (unlikely!), your debt would still be £200K, but the actual spending power of that amount would be reduced by half - so worth about £100K in today’s values.
Meanwhile your income and house price is likely to double in monetary terms - as will rent.

That's such a brilliant way of looking at things, thank you. We need to get our ducks in a row with making credit file look its best and save our deposit but this certainly allays some of my fears - even if house prices drop, money still gains value (barring a massive crash of course which is going to be bad news whatever the hoke owner status!).