Should we pull out of this purchase?

[Thursday37]

I'll try to keep this short-iash as it's quite a complex lot of circumstances that led to us moving in the first place, but not all relevant to my post I guess.

We live in a tiny hamlet in an individual new build, it's big enough for us but we don't love the area and there's a practical issue with schools. We didn't have DD when we bought it (she was an unexpected bonus). House was built in 2018, has air source heating with all sorts of fancy smart tech which keeps running costs down. EPC rated C. Everything is new so maintenance free.

We are close to exchange on a thatched cottage in our most perfect village, we've wanted to live there for years. Slightly smaller than what we have now, but schools are perfect. It has oil heating, single glazed, needs a new kitchen and we are waiting on a thatchers survey as well as RICS level 3 to come back to see what sort of state it is in (ridge was done recently and the oil boiler is fairly new so house is E rated which could be worse for a cottage). It is stretching our budget to the max. It's also beautiful.

We knew running costs plus mortgage were going to be higher and kitchen will have to wait but with everything going on it's now looking insane to buy it. We are stretching ourselves to buy it and we have 2.5 years left of nursery fees. After that we will be much more comfortable, but we are now really worried about going ahead with all the uncertainty over energy and the economy. Heating oil costs are terrifying and it would not convert easily (house is not listed, but even so).

Houses where we are looking to move to are a rare as rocking horse poo - this is the first one that's come up in 9 years so it's not like we can defer it for 12 months and try again. If we stay here we will have to run the gauntlet of applying for out of school catchment as we can't use the local school (long story but it's an absolute no for practical reasons). The new house has guaranteed excellent and suitable schools at primary and secondary so it is a long term move for us.

I feel sick at the thought of pulling out but also sick at the thought of the costs to live there and the risk it places on us. Do we stay here or take the risk that things settle in a year or so and it will all be fine? We don't have long to decide as the mortgage is in place and the searches etc all done. I know wobbles are normal but this is not your usual wobble.

we can use the fires instead of oil for sure

And don't forget to factor in the cost of logs, which no doubt will be going up this winter.

In the 3 years since we did school applications for DD, 3 local schools we dismissed because of no wrap around care now have it. A lot can change in a few years.

With the equity in the house….

Can you play around with the LTV and increase slightly on the mortgage repayments and then keep a portion of cash as a lump sum cushion should you need to draw on it in the next 2/3 years. Then as you say you will
Be childcare cost free and in a much better financial
Position.

Go for the house.

@Moobootoyoutoo

You have two electric cars? And a horse? 50% equity? Crikey then move - in the worst case scenario you have sooo many options before defaulting on your mortgage - best wishes with the move

Yes 2 electric cars, one is an old Leaf that we own outright, the other is on a cheap lease deal for 2 years. These are not flash cars! They together cost about £40 a month to charge with no road tax and relatively little maintenance. The lease is £155 a month so much cheaper than a petrol alternative as we run 2 cars for about £200 a month total. We need 2 cars as we are properly rural, no buses. I used to have a big 4x4 to transport horse but couldn't afford to run it.

We are borrowing the max and putting in all our equity to buy it - defaulting on a mortgage is unlikely but we are potentially buying at top of market so we may lose out short term if prices drop. But it is a long term home. I don't want to put exact figures here but house is £400-£500k bracket and we can borrow roughly half.

The horse is a beloved money pit, I had her when I was young and single and can't afford her anymore really as she needs medication and a lot of additional care. But we make do. Her costs are the same as the mortgage every month so when she is gone I will have more cash for kitchens etc. But I will also be very sad! I will likely have another eventually but not for a good while.

But yes, I realise we are hardly on the breadline, this isn't a thread about real hardship - if we were we in dire straits we wouldn't be moving. But I do worry that this move is financially risky in the short term and I might miss a cheap to run home in the current climate.

I really, really don't want to move again. We have moved 5 times in 9 years including this one, 2 were rented as we were relocating area but 3 purchases since 2015 is a lot of stamp duty. We did well out of each of them which has brought the "dream village" in reach. But just by our fingertips, and then the world goes mad......

I’d move, put it this way, if you leave it and re look at the market in a year you could be looking at paying substantially more for the property - not just the fuel. And that’s even if any properties come up.

Invest in thermals, heated throws and a log burner and tough it out until nursery is done. Second income if needed. Hell I’d deliver pizzas for a year if it meant the difference between getting an excellent school or not.

I bought my house two years ago and it is worth over 40k more from just market increases alone. I wouldn’t have actually been able to secure a mortgage for the current value 2 years ago. It was tight for us to move at the time but we’d not get into our village now. We’d be priced out.

You don’t wait for the market, you get in the market and wait. IF you can afford it, even if it’s tight then I’d go for it.

How old is DD? you say 2.5 years of nursery fees left but will she not get 30 hours when she turns 3? That drastically reduced our FT nursery bill (reduced by just over half)

Taking that into account would it make things easier?

With a 50% deposit on the house, I would be applying for an interest only mortgage. Your payments will be MUCH a lower, you’ll have the money to do the kitchen/any work, and your cash flow will be comfortable whilst paying fir nursery and weathering these price rises.

Once DD is out of nursery, change your mortgage to a repayment mortgage.

With an interest only mortgage for a year, just think of it as renting in your ideal catchment area for a year, before you start paying back the house purchase.

“The full tank would now be about £2k instead of £500.“

Are you sure you’ve worked that out right? It has doubled since Russia went into Ukraine, but it’s not 4 times the price...

You’d regret letting the house go if you’ll never get a chance to buy in this area again.

Unless the survey comes back with something truly hideous that will cost £££££££ then you have to go for it.

Tighten your belts for years if you have to, but you will always regret it if you don't buy it.

I had oil at a previous property , continuously had it stolen out of my tank and although I could have locked the tank I didn't as my partners parents also had an oil tank they locked so the thieves damaged the tank to get the oil , with the prices going up I think this will be more of a problem so I would avoid oil at all costs

And going back around 8 years ago my tank was £ 950 to fill

definitely move, you can always make things work somehow if money does get tight as you aren't on the breadline or even close.

I strongly believe house prices will remain as they are, i don't believe there'll be a crash purely due to demand and rising population numbers.

I've seen a few people have waited because there'll be a crash because of brexit, or covid, and they've all suffered. In 12 months my house has made 100k and we can easily take money out of the house if it ever got tough.

Move, it'll only be harder as time goes on.

Ah it's tricky but if this is a long term home for you I would move, so long as you can afford the monthly running costs. In the short term, you may lose some money on the house if the economy drops but over a 10 year period it will be irrelevant and you will have 10 much happier years living there (which after all is the primary purpose of a house). It's also worth thinking about the fact that you could lock in an interest rate on a mortgage now for say 7 years at a great rate, so you might be paying much less monthly over the next few years if you move now considering interest rates are likely to go up, a lot I'd say xx

I think you have to accept that you need to move to this particular location and this is the house that's available.

I would do a bit of due diligence to reassure yourself that there isn't some way of making your current location work, or another alternative location that might be possible. But if not you have little choice. I have lived in old, oil-heated houses before. It is significantly more expensive than living in a modern house but it doesn't sound like you're in a position to be picky...

Sorry if i made it sound like I thought you were being goady, I didn't mean it like that at all, just from a practical perspective then you at the very least would have options, 50% equity being the main one

@QforCucumber

How old is DD? you say 2.5 years of nursery fees left but will she not get 30 hours when she turns 3? That drastically reduced our FT nursery bill (reduced by just over half)

Taking that into account would it make things easier?

We get 30hrs from January but that has already been factored in to our plans, we don't save a huge amount, about £300 a month which is the increase in mortgage basically. We are winging it from when we complete until then - about 7 months I expect - using some savings.

@WavyHazyGravy

I think you have to accept that you need to move to this particular location and this is the house that's available.

I would do a bit of due diligence to reassure yourself that there isn't some way of making your current location work, or another alternative location that might be possible. But if not you have little choice. I have lived in old, oil-heated houses before. It is significantly more expensive than living in a modern house but it doesn't sound like you're in a position to be picky...

We could move out of the countryside to a town but we'd absolutely hate it. We like the country life (we've lived everywhere from London to small towns to the back of beyond). So it's not like we don't have options, we could afford a huge 5 bed if we did that. But we don't want to, we'd rather stay where we are than move to where there are lots of people and more sensible housing stock (with mains gas!).

The current location is fine if we get an out of catchment school, but I am rather out of love with it for a whole host of reasons I'd rather not get in to. It's a nice house though and we could continue to live here forever if we had to. If the survey throws up something on the cottage we will definitely stay for the short-medium term at least. We certainly don't have to move, but I think DD's life will be improved by moving as she grows up. It's a busier village and nearer to a small town than where we are, so more children and more mixing. But still rural enough for her antisocial old codger parents (we had her very late!)

Go for it op. You’ll regret pulling out and staying more than the increase in fuel costs.

Worst case scenario is that you’ll have to sell if you couldn’t afford the running costs.

Worst case scenario if you stay is that you’ll never be able to buy in the village you want as nothing will be available/priced out.

People regret more what they didn’t do, rather than what they did.

Good luck (but I don’t think you’ll need it )

@tabulahrasa

“The full tank would now be about £2k instead of £500.“

Are you sure you’ve worked that out right? It has doubled since Russia went into Ukraine, but it’s not 4 times the price...

It's £1.69 today here according to the village facebook as it's the current hot topic, it's going up and up. It was less than 50p when we viewed the house. I know it fluctuated when we were on oil before, but we usually banked on it being around 40p. I can see it going to £2 easily soon. It will level out I am sure before next winter but £2 is frightening.

@Derbee

With a 50% deposit on the house, I would be applying for an interest only mortgage. Your payments will be MUCH a lower, you’ll have the money to do the kitchen/any work, and your cash flow will be comfortable whilst paying fir nursery and weathering these price rises.

Once DD is out of nursery, change your mortgage to a repayment mortgage.

Our IFA says we need to port the mortgage we have as he's not convinced we'd get the same borrowing from a different lender as we need a smidge over 5x salary at the moment. Our affordability will be better when nursery costs stop.

We could look at interest only though when our current deal ends in about 2 years I guess, that's food for thought thank you.

Hi @Thursday37 I don't think you should pull out. It sounds like you'd have to move somewhere for schools so better to be for somewhere you love than end up with a compromise.

The location sounds ideal. The cottage sounds a cold, miserable money pit. I hope that the schools outweigh the obvious disadvantage of buying a thatched cottage. Dsis had one and the insurance cost a fortune. Oil heating is a very expensive way to heat a property and as a pp has said, gets stolen. Her cottage looked pretty, but it was cold, dark and dingy.

Buy the dream house. Things will probably stabilise fairly soon and if it is Armageddon, at least you will have had your dream house.

Look I know things are mad at the moment, it is scary and it is important to have a good safety buffer. But there is only so much that you can do. You do also need to keep moving forward and living life as best you can. Good luck!