Six figure deposit, first time buyers, market about to crash - WWYD

[Dol4321]

We are a married couple with a 7month old baby. We rented in London for over 10 years, moving up north during the pandemic as our employers switched to working from home. We now rent a house up north near Manchester and love the area we are in.

Our only hope of ever getting on the property ladder was through saving up for the deposit whilst also paying the eye watering London rent. Neither of us have wealthy families so parents lending / inheritance was not an option and obviously the cost of living in London is crazy, hence why it has taken us a decade to get the deposit together.

Due to progression in our jobs and bonuses, we have managed to save just over £100k and between us our joint annual income is £140k.

I really appreciate just how fortunate we are to have that amount saved, and to earn what we do particularly coming from low income families and childhoods. I am also really proud of having saved what we have.

It means that we are now looking at buying a big family home with a garden, with a budget of 650k-700k. We want this to be a house we are in for 10/15 years.

We are looking at a 10% deposit of £65k-75k, with £25k for stamp duty.

The dilemma comes with the following situation.

There is a new build estate near us (Redrow built) that is really nice and extremely family friendly. Primary school being built, lots of shops and commodities. Annoyingly it is very close to to the footballer postcode (Cheshire) it is also extremely expensive especially at the minute.

Our new build increased in value. It was also cheaper per sqm than the period properties which where I live you pay a premium for.
Significantly cheaper bills too!

It all depends on location and those Redrow houses are lovely, I know I have seen various Redrow estates current and old. They are tempting!
I would just be wary about the price increases. Also your size mortgage is relatively common for first time buyers with that type of income. We have similar ish income and taking out up to 450-500 but we are NHS medics/academics so have pretty sound job security as well as an increasing pay scale so we factored that in.

the market is in a boom. It’s going to keep going up in my view for some time now. It is never a mistake to get out of renting and onto the property ladder, as long as you don’t overstretch on lending. Do your calculations on affordability based on a 5% interest rate, which was about standard ore crash and is where we will end up sooner or later. Good luck.

dont wait.

Personally wouldn’t buy a new build but it’s down to personal taste.

For mortgages above £500k, I think you need more than a 10% deposit. Or has that changed? Have you spoken to a mortgage advisor OP?

Your London wages won't last forever so make the most of it.
But don't see what your dilemma is

Those houses are immediately adjacent to the M6 and right in the flight path of Manchester airport so hardly a great location unless you're happy living with high levels of pollution and noise. They're also not great quality builds.

Criteria changes nearly weekly at the moment but you can do 10% as long as 4ish times earnings equals the rest. The govt 95% mortgage guarantee scheme runs until December and (supposedly) goes up to 600k.

Do you definitely have to pay stamp duty as you’re first time buyers?

Buying a new build is the same as buying a new car that depreciates the moment you drive it out of the garage. I wouldn’t do it unless you adore the property and plan to live there for twenty years.

the market in the NW isn’t about to crash, for the first time in years the advice is to find a property to buy before you sell as it’s a sellers market. Sellers are advised not to go into rented because the prices will increase so much over a year.

find something else.

I would buy now but not a new build for all the reasons PPs said.

Near our old house, 800 houses were built. Then further permission for another 1100. This was 12 years ago, the houses are nearly all built. They're were supposed to build a new primary and a commercial area with a new Dr surgery and shops. None of that has materialised. They have added an extension to the current primary but no new shops or drs. If you had bought a house 12 years ago thinking your DC would be in the new school, they'd be nearly grown now.

Yes, if the property is more than £500k.

Oh I didn’t know that, thanks!

People saying their new build has increased in value - yes of course they do eventually! The point some of us are trying to make is that they generally don’t appreciate in value as quickly or as well as properties that weren’t new build ones at the point of purchase. They might be appealing as a low stress option but they don’t make the best financial sense if you see your house as part home/part investment

We have been looking for a house on the A34 corridor for a few years. They are expensive as it is easy to commute into Manchester. I was too picky at first then the market stalled and there is a shortage of houses to buy.

If it is Woodford, the school is opening in September. They are only having a Reception class and increasing by one new class a year so it will be hard to judge how good it is. Also not good for families with primary aged children in years 1-6.

Again in Woodford the houses have increased in value significantly and it is nearly impossible to buy a plot as there is a lot of interest and few plots being released.

OP isn’t coming back

Our new build was brought in 2019 and has definitely increased in value, largely because no similar sized houses have come on the market since we bought it in our area. If a new build is the best you can get for your money in the area you want then buy it. House prices may fall but no one can tell you when, with inflation at 9% eating into the value of your savings I’d buy now.

Haven’t read the entire thread but one thing you could do is look at all the houses that have sold, but are still displaying on Rightmove stc.

Ring the agents and say you’re ready to go if the current buyer pulls out. It worked for me.

Many sales are falling through esp now as banks aren’t lending for over inflated prices.

I would be very wary of borrowing 4 to 4.5 x joint income. 3x joint or 4 x one income would be more reasonable and easier to maintain if one of you lost a job.

Given how much rates will increase I think there is bound to be some impact on the housing market and the new build market generally has further to fall anyway because you are paying a new buyers premium.

I wouldn't buy a new-build myself, you get more bangs for your buck with a second-hand house and you can have a survey and know what you're getting because it's already there. But having said that, if you don't like DIY, don't mind if in the very short term it will depreciate more than a second-hand one in a similar market, and want just to walk into a place, new builds can have upsides that are important to some people. Also, significantly older houses are tricky to insulate. For me, I like 1960s. Modern enough to be warm or warmable, old enough to be light and spacious. But we've ended up in a chilly 1920s house this time- it just had other things we needed more.

Move further outside of Manchester and get more bang for your buck by taking out a lower morygage. We are in a small town the other side of alderley edge, lots of new builds but also lots of other more period options and you would get a LOT of house for 500k. There are no bad schools in our area, but it is becoming a tad commutersville. You wouldn’t lose money on a house, though.

Hi everyone, don’t know if anyone will care for an update but I wanted to post a genuine thanks to those that replied to this thread a while ago as (no exaggeration) your advice probably changed our life!

my original post annoyingly cut off, as the dilemma was - should we go for the Redrow new build on that estate, and tie ourselves in with a 10% deposit upfront (which would have been us putting down about £70k, not including all the upgrades etc) but with a move in date of at least 12 months time so not moving in until summer 2023.

or, should we hold out and keep looking for something older all the while knowing that the market is mad, interest rates are going up and that we’re continuing to spend on rent as we do so (and have a baby who is rapidly becoming a toddler, so our rented cottage feeling very small).

anyway, I read out all of your replies to my partner and by the end of this thread we were so worried about going for a redrow (or a new build in general to be honest) that we decided against it. We had saved for so long it felt so scary putting down that much money on something with a lot of uncertainty and with a lot of risks eg snagging etc.

Weirdly, that exact same week an older house came on the market that is literally a dream forever home. We viewed it, made an offer slightly over asking (but still cheaper than the redrow!!) and we also wrote a letter to the sellers as we knew they had had lots of offers. It is their family home where they have lived 30 years (they are retired and downsizing) and we wanted to reassure them that we loved the house and saw ourselves there forever raising a family and really looking after it. They chose us, and over the last few months things have been ticking along with surveys etc. They have had an offer accepted on their new home, no chain, so we are really hoping we can be in for Christmas. No concerns on surveys.

Since then, I have had so many emails from Redrow and the houses on that estate have gone up considerably - the latest was £800k for a 4 bed (!!!) and £712k for a slightly smaller 4 bed. Mad! I am so glad we didn’t go for it as we never would have found the one we did, which now just feels insanely better value given what we could have spent with Redrow.

thanks for your advice again, and here’s hoping you don’t get another update from me in a year’s time complaining about how older houses are money pits and that our roof has fallen in!

Well done!! Perfect outcome. I’m glad you bought immediately but didn’t go for a new build.

enjoy your home!

This is fab. I was about to reply to you to say don’t put down such as small deposit on an expensive new build! We sold our house in the midlands and moved into rented up north (for work) and made quite a profit on the house we sold. Our salary is slightly less than yours and we’re saving until we have a deposit that’s 2/3s of what the house will be worth that we buy. We could afford a big mortgage but it’s throwing money away on interest and will leave us with less disposable money to give our kids great experiences. we also won’t be going for a new build. The smaller the mortgage the better as who knows what the future holds, everything’s uncertain and interest rates are increasing. We want the best schools, a house that’s established and plenty of money left over for a great life and to see us through incase the future goes tits up. An expensive mortgage could be detrimental to that. Well done op x

Good. I hope you can exchange contracts soon.

Lovely update OP. Really pleased for you. Hope you get the keys soon and can start enjoying your beautiful new home 💕