Move now or in 2 years?

[PureHoney18]

Namechanged for this.

We are currently on the market in London. Hasn’t been a huge amount of time, but the market is really slow and stagnating. Nothing is really selling in our price range, or at the level we would look to buy at. We could drop our price and then make offers, but there is actually so little to buy at the moment that if it doesn’t work out with one of the few properties we are interested in, we could be waiting for ages for a house to come up.

Moving at the moment to upsize will mean increasing our mortgage by a lot, and our repayments will go from £1250 to c. £2000 a month. This is doable for us, we should still be able to save a bit each month as well.

However, given the nerves around the market at the moment, i feel a bit worried about taking on such a huge amount of debt (£550k mortgage) when house prices are falling.

I’m wondering whether it might be more sensible to fix for 2 more years at a low rate, and overpay the mortgage by £750 each month (so paying what we would if moving). We could also save in that time, if DH continues to get bonus then hopefully around £50k over the two years.

I figure that even if there is a huge price crash in that time, we’ll be better off by doing this, and will actually end up with a larger deposit against a (hopefully) cheaper house to upsize to.

DH wants to move now, as although we have enough space to make do, we are on top of each other and it’s starting to feel a bit claustrophobic.

WWYD? We had always planned to move now so I feel I’m moving the goalposts a little, but until we went on the market didn’t realise how dead things were right now. I just figure by sucking it up for a couple more years we will be in a much more financially stable position. Or am I missing something here? Prices are unlikely to skyrocket again, right?

I would stay put for all the reasons you gave. If prices start to rise get it back on the market and keep an eye out for houses you like.

Could you just keep your house on the market and see if you get an acceptable offer? As a current home owner, you are more protected from market fluctuations surely. If prices rise you get a better price for your current house. If they fall you get a better price for a potential purchase. Sounds like you are in a strong position to see what happens?

My only thought is that generally it’s expected that interest rates will rise in the next two years - so you might find its more expensive to borrow the same amount of money in a few years?

Hmm good point about interest rates.

We should have to borrow less on the purchase if we manage to overpay and save for 2 years, so the mortgage would be smaller even with a higher rate making monthly payments similar. And if we moved now, at some point we’d have to remortgage at the higher rate and then we’d be paying a lot more as our mortgage balance would be higher?

I think we’ll give it a go for another month and see if we do get a decent offer.

Just feels now might be the wrong time to overstretch, which we would have to do if we accepted a much lower price on our place at the moment.

Oh for a crystal ball...

That does seem like a lot of debt.
Have you explored all the options for making where you are work? Eg extending, putting stuff in storage/getting rid of it, better storage solutions?

It’s a normal debt for London!!

I think properties are selling if they are in tip top condition, not over priced and well located. In London that means near a station!

My DD has just bought in London and nothing is reducing or not selling - unless it has very obvious issues. Having viewed about 10 properties, I can see why some will stagnate. If you want to sell, you will if you tick all the boxes.

Don’t forget that if prices go up, the difference between buying and the value of your property increases. If yours is desirable, it will remain so. Therefore you have time to keep looking. I think I would over pay in your circumstances and reduce your current loan.

We have extended as much as is possible, and completely renovated (its lovely!) and are 2 mins from a station in a nice area. Nothing is really selling quickly at all round here. Even lovely large Victorian terraces next to outstanding schools are sticking (this is what we want to buy!)

So it’s not just us. We could reduce low enough to reach the next price band below, but we’d have to hope of getting the same reduction off the next place which is a risk.

I’ve worked out the sums on a few scenarios, and as long as we overpay and save a reasonable amount, the mortgage we’ll need to take out in two years should be less than we’ll have remaining if we move now.

Obviously there are a lot of variables though.

I think we’ll give it two more weeks, and maybe reduce to OIEO our absolute minimum that we need. Then if it doesn’t happen after another couple of months it will make our mind up for us.

I suppose I’m trying to make myself feel better if it doesn’t work out. A friend has been on the market over a year (north London) and I don’t think I could bear that.

It would be different if there were lots of properties you want to move to but in the current market you could sell for too little and end up competing for something more expensive you don't really like and could get stuck with.

With affordability as stretched as it is even if prices bounce back prices outstripping wages cannot continue much longer.