Threads

See more results

Topics

Usernames

Mumsnet Logo
Please
or
to access all these features

Would you rethink buying now as a first time buyer?
71

trrk · 04/08/2022 10:25

If you were a first time buyer would you rethink buying now? We are desperate to move out of our current rental before our new baby needs her own room but really concerned about rising interest rates and the possibility we’ll lose money if we buy now and the market takes a downturn in the next bit.

OP's posts:
Please
or
to access all these features

SD25 · 04/08/2022 10:36

It is pretty unlikely you will lose money. And you will be paying off a mortgage and slowly owning somewhere, rather than paying someone else's mortgage. So I would say definitely go for it, just don't overstretch yourself and perhaps think longer about the area and type of property you buy if you're worried about a downturn.

Please
or
to access all these features

Blue2021 · 04/08/2022 10:43

I agree compeltely with @SD25. I don’t think you will lose money overall but just make sure you can afford the prepayments.

Please
or
to access all these features

Wnikat · 04/08/2022 10:44

Better to get a fixed rate mortgage now than in a few years time. Rates are only going up.

Please
or
to access all these features

trrk · 04/08/2022 11:21

Thanks for the advice! We do have a bit of uncertainty about future income as I’m on a fixed term contract which currently expires shortly after my mat leave which is also making me wary. That is just the nature of my current job (and has been for 10 years). I may look for a more stable job towards the end of my mat leave but it may result in a drop in pay and will have to subtract childcare costs no matter what. We could lower our upper price cap but it’s already hard to find suitable places in our budget now as Cambridge is a pretty expensive market.

OP's posts:
Please
or
to access all these features

Hummingbird33 · 04/08/2022 11:27

You won't lose money long term. Even if there's a bit of a dip coming up it always picks back up eventually. In the meantime you'll be paying to own rather than rent.

If you can afford to I'd buy ASAP before interest rates get higher, and get a fixed rate locked in.

Please
or
to access all these features

Lastqueenofscotland2 · 04/08/2022 11:30

Hummingbird33 · 04/08/2022 11:27

You won't lose money long term. Even if there's a bit of a dip coming up it always picks back up eventually. In the meantime you'll be paying to own rather than rent.

If you can afford to I'd buy ASAP before interest rates get higher, and get a fixed rate locked in.

Agree with this

Please
or
to access all these features

Riverlee · 04/08/2022 11:40

There’s never a right time.

If you wait, interest rates could go up, and mortgage offers may become harder to come by.

Also, you’re paying rent now. Don’t know how much you pay, but say it’s £500 per month, ie. £6000 per year. If you live in a house for five years, it’s unlikely to de erase by £30k. Even if it decreases by £15, you’re still £15 k.(although I do appreciate there are additional costs to home owning).

My son got a five year fixed mortgage at beginning of year. Since then, there’s been a few interest rate increases, which would have cost him £50+ per month (£300+ per year) had he waited.

Please
or
to access all these features

Ducksallovertheplace · 04/08/2022 11:46

If you look back on previous threads people have been asking this question for years. There seems to always be a sense of there could be a down turn at any minute. We bought in 2007 at a peak and then house prices did drop hugely a year later but we didn’t need to sell and now 15 years on we’re selling a double what we paid. My friend also bought in 2007 and lost massively as she had to sell due to a relationship breakdown.

Please
or
to access all these features

maxelly · 04/08/2022 11:51

Yes so long as it's a long term thing rather than something you are hoping to make a quick buck out of, a house (to live in, BTL is slightly different) is one of the most sensible places to put your money. The housing market does fluctuate but people always need places to live so it always has stabilized over time... maybe now is not the best time to overextend yourself with borrowing at the absolute top end of your affordability range esp if you think your income might drop in future but I wouldn't wait to move!

Please
or
to access all these features

SunnyKlara · 04/08/2022 11:57

Prices may or may not drop a bit. But you are paying off equity if you own the house.

Rental prices also may go up or down, but you are surely in a worse position if you say renting regardless as you are not building up amy equity?

Please
or
to access all these features

Furrydogmum · 04/08/2022 12:12

I felt so bad for my son and his fiancée buying their first house this year, but they are philosophical about it and happy with the 5yr fix they've taken. Both feel they are better paying for their own home than someone else's..

Please
or
to access all these features

Grumpyoldpersonwithcats · 04/08/2022 12:20

I've said this before on this type of thread.
I bought a small flat in 1988 in the London suburbs for £65k. Sold it in 1995 for £38.5k. It didn't get back to its 1988 price until about 2001.
Yes it's now worth well over 200k, but U'm afraid prices can go down and stay down for an extended period.
I know the market is completely different now, (my mortgage rate went from 12.5% to 17.5% in one day 😳) but the belief that property can never drop significantly for an extended period is a myth.

Please
or
to access all these features

Calmdown14 · 04/08/2022 12:27

What is the nature of your purchase? If it's a one bed flat you'll need to resell in two years, then no it's not necessarily a good time.

If it's two bed or more, in an area you don't see yourselves moving from for at least five years and will see you through primary years in terms of schooling then do it.

Once you are on your feet and settled ) hopefully) financially, try overpaying your mortgage slightly. Even £10 a week can make a big difference.

Even if there's a slight fall in prices, you'll pay off some capital so won't necessarily be worse off, especially if you get ahead overpaying.

If your income is variable and you may have another maternity leave I'd fix for five years as you don't want to be trying to remortgage in two years when interest rates are say 5 per cent and you won't be accepted for any decent products.
Get past early years and child care!

Please
or
to access all these features

PeekabooAtTheZoo · 04/08/2022 12:41

You'll definitely lose money renting though because you get none of that back so the real question is what's the potential discrepancy between the two?

Please
or
to access all these features

ForcingSmiles · 04/08/2022 12:44

We're continuing with our purchase for a couple of reasons;

  1. It's still far cheaper than renting and our rental will just keep going up too
  2. We're lucky enough to put down a 25% deposit. If house prices drop by more than 25% then I think people have far bigger problems.
  3. Whilst this isn't our forever home we're planning to stay for 5-10 years so hope we can ride out the wave.

    I'm not an economics expert but I can't see house prices coming down whilst demand still massively outstrips supply. In many areas people are offering 10-50k OVER asking on houses which yes...will likely get devalued by the bank. In which most cases the seller is getting 10-15+ offers so they'll just move onto the next one or the buyer will find the additional money somehow.
Please
or
to access all these features

oiltrader · 04/08/2022 12:59

Riverlee · 04/08/2022 11:40

There’s never a right time.

If you wait, interest rates could go up, and mortgage offers may become harder to come by.

Also, you’re paying rent now. Don’t know how much you pay, but say it’s £500 per month, ie. £6000 per year. If you live in a house for five years, it’s unlikely to de erase by £30k. Even if it decreases by £15, you’re still £15 k.(although I do appreciate there are additional costs to home owning).

My son got a five year fixed mortgage at beginning of year. Since then, there’s been a few interest rate increases, which would have cost him £50+ per month (£300+ per year) had he waited.

unless he fixed for 20 years they will come to him. when he remortgages probably at 4 times the rate he is on now

Please
or
to access all these features

SilentHedges · 04/08/2022 13:00

If you're paying £800pm rent vs £800 mortgage, some of that mortgage cost will be interest (dead money) and there are a lot more ongoing costs associated with buying than renting. So it's not as simple as "buying is cheaper than renting", certainly not initially anyway. As a poster pointed out above, prices DO go down and for extended periods. What you need to make sure of is that you're not overstretched (interest rates are going up) but can ride out any downturns.

Timing the market is sheer luck. I bought in 2019, then covid hit, markets were in freefall, and I thought I'd over paid on turkey. Not so. I would get on and buy in your position as its not just a financial decision, its an emotional one about setting down roots.

Please
or
to access all these features

MintJulia · 04/08/2022 13:06

I would still try to buy, for two reasons.

  1. It means you can't be evicted on someone else's whim.
  2. Mortgage payments are generally less than rent
  3. Approaching retirement, I have a secure home and won't see myself struggling to pay more and more rent, as my pension devalues over time.

As with any mortgage, make sure you can cover a 2.5% interest rate rise on your current income. If so, go ahead.
Please
or
to access all these features

Riverlee · 04/08/2022 13:11

@oiltrader. Yes, I appreciate that in five years time he’ll have to pay the increased interest rates, but until then, he’s saving money.

Please
or
to access all these features

dhair · 04/08/2022 13:21

totally depends on situation. If I was at home and/or paying low rent with secure job then I'd wait.
In your situation but although you could wait a bit as rate rises haven't hit the market yet. But future proof so I would try to go for a house that if the shit hit the fan I could stay in forever. And I wouldn't stretch myself, I see these borrow 7 x your income ads, crazy imo.

Please
or
to access all these features

dhair · 04/08/2022 13:25

unless he fixed for 20 years they will come to him. when he remortgages probably at 4 times the rate he is on now

but there is an advantage of knowing it's coming & preparing for it. Overpay, safe & push for better pay b

Please
or
to access all these features

dhair · 04/08/2022 13:26

sorry I typed pretty incoherently there but hopefully you know what I mean 😆

sun is in my eyes!

Please
or
to access all these features

Dreamstate · 04/08/2022 13:31

Riverlee · 04/08/2022 13:11

@oiltrader. Yes, I appreciate that in five years time he’ll have to pay the increased interest rates, but until then, he’s saving money.

Although if he can overpay he should as much as possible so when he comes out and if the rates are higher its negated somewhat because the interest will be on a smaller amount. Which is what my plan is as I have another 3 yrs until my fix ends

Please
or
to access all these features

StrychnineInTheSandwiches · 04/08/2022 13:31

If you live in a house for five years, it’s unlikely to de erase by £30k. Even if it decreases by £15, you’re still £15 k.(although I do appreciate there are additional costs to home owning).

Of course it can. And far more than that.

There's a recession hurtling down the track.

Please
or
to access all these features

dhair · 04/08/2022 13:33

OP what's your deposit, I wouldn't go for less than 80% because prices could drop

Please
or
to access all these features
Please create an account

To comment on this thread you need to create a Mumsnet account.