Advice on whether to buy now or later

[punjama]

Would love some advice please.

Expecting first child in Sept. Currently live in parents (Dm) home (SE London, 4bed detached - only us 6-9m per year so not cramped at all)

Currently only husband works, wife planning to after child birth (3rd person as we will be sharing this account :-)) eventually. DH income is ~57-60k and v.certain to be 75k within 2-3 years.

Currently parents would be willing to help us with deposit so that including that and own savings can probably afford 400k home. Qs remains whether 2 bed flat or home outside London (3 bed in commuter town straight away).

The main qs however is whether now is smart time to buy. By living with parents currently paying no rent and can save more, plus parents can help with child when arrives...then in a few years when both are working and on higher salaries and it's time for primary (which we want to do outside London ideally but not a massive deal breaker) can buy bigger house..however main worry is that mortgage rates might rise substantially making it much more expensive to buy (with assumption that housing market stays stale rather than dropping as a result or maybe even continue rising faster than salary).

Part of me leans to waiting but another part is leaning towards going for the 2bed flat in London for 400k @ 60-70% ltv, getting it in nice area so can live through primary there (eg East dulwich), overpaying as much as possible on a 10yr fixed then with both of us earning get a mortgage for a house outside London (with the flat becoming a BTL)

Ps parent would spend more time abroad in country of origin but still stay with us and will rent out London house for income (so benefits for all involved)

I'd say if you're living rent free in a reasonable situation it's a no brainer, just stay and save.

The mortgage rates will go up, but house prices will go down/level out to compensate. In a year or two you can always get the place outside London, and you'll only have one set of stamp duty to pay (it will be normal stamp duty +3% for a second property, it will get very expensive).

If you buy now you'll get a place at a higher price, and then when your fixed rate mortgage deal finishes you'll have to pay a lot more because the interest rates will be more than when you started.

This is from someone who has just bought, knowing all this, but because we were paying whopping London rents, it was worth it for us.

If everyone is happy with the status quo why move out? Prices aren’t going up more than the amount you can save, like they were for the last 10 years.

Personally, I'd move out for the sake of feeling like a grown up and independence. With a 400k budget, I'd look around the boroughs of Bexley or Sutton as they're good areas for families, with excellent schools and relatively affordable housing. You won't be able to afford places like East Dulwich unless you go for living in a big council block. If you're worried about the prices levelling off or even dropping slightly, you could get a project so that you can add value to it.

I was wondering where that 2 bed London flat was? In the suburbs? Even a 3 bed semi in Aylesbury is approaching £400,000 and that’s at least an hours’ commute. Commuting areas are expensive.

Bubbles, in my neck of the burbs, 400k gets you a 2 bed Victorian cottage or a small 3 bed in need of work. Lovely area with top schools. Commuter towns are often just as or even more expensive + the cost of commuting tends to be 2-3 times as much so it's very much a lifestyle rather than a financial one.

@WobblyBanana - sorry if i misunderstood...agreed that prices are high now...but if i get a fixed 10yr @ ~2.69% wont it be a better deal? using a excel calculator that i have...a 10yr 2.69% & 3.94% variable gets total mortgage repayment of 401k on 278k borrowed.

say mortgages increase 1%-2% and it then ends up being 10 yr 3.5% and 5.5% variable after but we only need to borrow 250k. now instead....the total repayable is still around 406k.

guess qs is whether such a rate increase would result in an 6-8% price fall from 400k to 375k...pulling these numbers (% increase etc) out of nowhere to be fair.

ideally we would be aiming to overpay 1k + per month every month for 10 years as a minimum. doing a 1.5k average over period would result in 80k saving and even if rates are massive after 10 years remainder at end (42k) should be manageable on any remortgage.

@FluffyWuffy100 - there is a little bit of tension that arises from parent (retired) spending all day with OH in house. friendly terms but love is greatest in doses :) plus at end of day the potential deposit money is being wasted away via inflation....further more freeing up the london house would give rental income that could be used to finally spruce up & resell our country of origin home. whilst it might cost 20-40k (ie a solid 2-3 years worth of rental income) if sold it could generate several hundred k for family. atm its quite unsellable in its current state for a worthwhile amount

theres also a bit of fear of missing out with the looming interest rate rises...but at same time ive always been a pessimist...not a HPC forum level but with brexit etc and world wide economy in general being over stimulated there is potential for a crash...

@JoJoSM2 agreed and OH does say it will help with "personal development" having to deal with new issues. Dont really know much about Sutton, any particular areas?

Yes Dulwich is expensive...if we were to get anything it would be something like this:

www.rightmove.co.uk/property-for-sale/property-63546310.html

dont know what peoples thoughts are on such property.

@BubblesBuddy see above for the type of property thats catching our eyes. have to admit never heard of Aylesbury before (spent all life in SE london) and only been considering places like Tonbridge / Tunbridge Wells really! need to have a good look at what places are good commuter spots. Problem is currently work in Hammersmith area which has awful commute potential from outside london but is very easy from SE London (via Clapham JC). If / when i were to move to Central london (at which point salary would jump to 70k if this year then maybe 75k in 2 years) then many more options available. i feel like moving to a job more centrally should be main target first and foremost....just a bit reluctant since such good workplace capital at current job after 2 years of killing it...but family comes first i guess...

i also appreciate that i need to look at more commuter town options. OH is from abroad and most my closest friends have moved abroad too after Uni so nothing friend wise is tying me to particular part of london (can always meet up centrally with remaining ones)...its all about the lifestyle i guess...

at end of day im estimating that if i were to move jobs then i could only look in 6m either way (for mortgage req. on new job)...at which point both interest rates would increase and baby already here making move hard...at which point makes sense to wait even longer almost...

its a hard choice imo because staying put also feels like everything is in a rut. parent cant fix house abroad, family tensions etc.

many thanks again for all who replied / took time to read. apologies for long posts - this topic has been on my mind for months and as someone who can spend hours endlessly research options for hotels, restaurants etc (the rare times we go) you can imagine how much space this is occupying in my head!

I know the current trend is to say things are not selling and prices are coming down or levelling off

New development in our area has sold completely before they had built the show house (actually not a single brick had been laid) All bar 2 sold in the first week. Prices range from £950000 for a semi to £3 million for a detached. (Commuter area)

slightly off topic but what are peoples thoughts in general about modern purpose built blocks like the one i linked vs victorian flat conversions? dont know why but the idea of a conversion flat just doesnt sit for some reason...part of it could be that they all seem so small at 50-60sqm and awkward shaped most of time

the other potential option is to sell our London home i guess ~700-800k (mortgage free) then add 300k mortgage to that and get a 4-5bed home for ~1m somewhere really nice. downside is that we have home in gated cul de sac in nice area...but i guess the upside is moving from a 90sqm 4 bed to a 200sqm 4-5bed...much more room too so might be less tension between OH and parent...plus not 100% convinced about current london home from catchment area POV. 1 Outstanding primary but i think others are just out of reach...and with a new bigger home could be more selective area wise...

I thought you were living in your parents place, not your own, and parents were providing the deposit?

Sounds like you're in a much better position to buy than you were saying previously. If you can pay off £1K+ then go for it, we have incomes of 80K and 45K and with 2 children and a new mortgage can't pay off anything extra at all. But we don't own any extra property and our parents can't help.

A fixed rate for 10 years would be a great idea if you can do that, house prices would def be up by then, but wouldn't you be tied into that until the end of the fixed rate deal?

Are you being realistic about cost of living vs what you intend to overpay? If you're used to living with parents & sharing costs perhaps not. As we earn more than you but over 2 incomes so benefit from paying less tax etc and would never be able to overpay 1k per month in addition to mortgage payments on a similar amount to what you're talking about.

Plus if your wife goes back to work you will have childcare costs to factor in.

On the purpose built vs conversion flats, I'm enamoured with the look of a beautiful period flat but would still go for a purpose built block any day. You tend to get more sq m for the same money and rooms can be better sized and in proportion with each other. You can also get parking or garage which can be very handy.

Commuter town vs London - make sure you factor in commuting costs. An annual travel card for zones 1-5 is 2.3k, from outside London it can be 5 or even 7k. With both parents commuting, it could add 1k per month to your expenses.

To comment on Sutton as an area, if you're from SE London, then it might remind you of places like Bromley - just general family-orientated suburban location. Sutton High Street is very budget and I don't like it, but otherwise the place is clean, the schools top national league tables and it's also one of the safest areas to live in Greatest London. There's easy commute into Victoria via CJ or up on the Thameslink to Blackfriars, the City, Kings X and beyond + other trains that make it easy to get to wherever if you change jobs. From South Sutton you can literally walk to the coutryside and the beach is under 1h by car. Overall, a great place to bring up a family.

Here are some things you'd get on your budget:

A lovely family home for 425k

www.rightmove.co.uk/property-for-sale/property-71000168.html

A house for 3 generations - less good commute but a very high attaining state primary with large fields and a heated swimming pool

www.rightmove.co.uk/property-for-sale/property-71313899.html

So that's what suburbs have to offer but it's a very different lifestyle to a flat in zone 2 or 3 so a case of personal preference really.

Definitely stay! At the very least you have help from grandparents and that is worth it's weight in gold!!!

slightly off topic but what are peoples thoughts in general about modern purpose built blocks like the one i linked vs Victorian flat conversions?

My thoughts are Victorian conversion look lovely but are usually not as good to live in with massive sound transfer between floors, awkward layouts and poor heat retention. Purpose built is better £/sq ft also.

@WobblyBanana sadly the situation would be perfect if everyone got along with everyone and it would be so easy to find a solution but that's just for me. As expected OH flat out doesn't want to live with parent LT. Perhaps more convincing is required but she also did point out that such an arrangement limits out flexibility if we want to move out of UK in future.

Agreed about possibly over estimating overpayment possibility. Just going off combination of assumption that salary increases, we have opportunity for loads of hand me downs & we don't spend on going out, new clothes/toys etc and holidays.

Agreed would be tied down which is why ideally would want to pick area can see myself living in long term (hence desire for East/West Dulwich etc). But also I believe some mortgage providers allow consent to let after few years.

@sdaisy26 possibly not. But I guess more to point that any extra would be focused on that rather than "lifestyle" purchases.

@JoJoSM2 good point didn't think about OH commuter costs but she is from abroad and less "high flying career focused" and more "just get a job that helps family, is enjoyable and fits in with future kids schedule" etc

@FluffyWuffy100 & @JoJoSM2 thank you for your thoughts. As expected, glad I'm not bonkers.

I think find your own place. Any frustrations now between your wife and parents will escalate once your little one arrives. I love my MIL, but if she stays any longer than a few days, the interference/“advice” with grandchildren becomes grating. Good luck OP!

@KittyKK yes agrees. Just got a massive telling off for even floating the idea. Whilst I myself don't always get on with parent (part of reason why OH wants us to move out - doesn't want kids to see dad always arguing with grandparent) I still love her and don't like the idea of leaving her alone (no other relatives in UK for her). I guess I'll have to tell / suggest the idea that she simply sells the London house and use the proceeds how she sees fit - if that includes helping us with higher deposit will be up to her))

Also thank you for all previous replies, forgot to mention it in previous post)).

You are buying a home. If there is tension now between your parents and your dh it will only get worse.

I would also be careful in thinking you can get something amazing for your money if you buy in a nice commutable area.

These areas are at a premium because they are nice areas and are highly commutable

Tbh, looks like your heart is set on Dulwich and living with mother/mother-in-law doesn't appeal all around so a flat in Dulwich seems like your best compromise.

My husband's mother lived with us for a few months but we ended up annoying each other so she moved out. We do see her often for meals or now she's going to stay for a long weekend etc. We get on much better. Also, retired people are often busy with other activities so just make sure your mum has a life outside the family, e.g. meeting up with friends, doing courses, exercise classes, volunteering, being involved with the local temple/mosque/church etc.

Why not buy now, stay for a year, gain consent to let and return to the family home for as long as you can bear it? Your mortgage will be paid by the rent and you can overpay by loads in that time. When you are ready to apply to schools, you should have a big chunk to put down and can borrow more as your salary will have increased by then. Can you work in the City or at Canary Wharf? If so, SE London ideal. You can get a small terrace in the Bromley area for 400k or in Bexley/Sidcup (very good schools- grammar area).

I'd say - stay, not a good time to buy.

I think it depends what is going on in your local neighbourhood

We are North London area and you can't hang around as the sold boards are flying up yet in another area things are sticking