To buy or rent at the moment?

[mamabird201313]

I'm in a predicament and need some advice from people much wiser than me!
I've just sold my flat (been here 2 years, love it but the freeholder is a nightmare and we've heard on the grapevine that they'll be replacing the roof and walkways soon which will be a BIG £20k bill to all leaseholders). Staying here isn't an option because I've had so many problems with them and need to get out for my mental health as well as my financial future.

I'm looking to buy a house with my partner (who is self employed) and we're due to see a mortgage advisor next week to see what we can afford but we've just spoken to her and she's said she honestly doesn't advise we buy at the moment. She said she's just done a mortgage for somebody with 3 years of amazing books and the best rate she could get him was 7%. She said she thinks we should rent for a bit until the market settles down otherwise we'll be hit with a huge interest mortgage.

So my question is... what would you do? Would you rent for 6 or 12 months even though it's 'dead money' but we'll hopefully get a better mortgage in the future? Or shall we take the risk and buy so that we're putting our money into property?

I don't know if it's worth mentioning that I have a lot of equity in my flat (about £130k I'll come out with) and we're looking at houses that are about £300k. Planning to put down about £80k and then keep £50k aside as we were hoping to get a bit of a project.

Maybe check with another mortgage broker, always worth getting more than one opinion.

To be honest the broker who gave you this advice doesn't have a crystal ball, so they can't say whether interest rates will come down in the next 6-12 months or not. They may as well just keep climbing. I wouldn't think you should be put off from buying just because of high interest rates - if you take a two year fix, then you can move to a better deal relatively soon (if the rates indeed do come down, but that's not something anyone can guarantee). Would two years of paying 7% interest rates as opposed to paying e.g. 5% (or whatever you expect it could land to after 6-12 months) be more expensive than paying dead money to renting?

One thing to consider is of course the impact that high interest rates will have on property prices. It could well be that the 300k property you're looking at now would only cost 270k in a year's time (assuming prices dip 10%). But again, nobody knows for sure what will happen to property prices, they are very much dependant on the area where you live in as well. Some areas may dip that much, whereas if you live in an "up and coming" neighbourhood then prices may be more resilient.