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Original poster

In middle of buying - WWYD

46 replies

GreenCardi · 28/09/2022 05:12

I can’t sleep while going over this in my head so wondering what others would do in this situation. We are in the process of buying a house 300 miles away to move closer to family. We have been wanting to do this for many years but only recently has this been a possibility.

We currently have a tracker mortgage on our house (because we knew we wanted to buy and there are no exit fees). We can easily afford the mortgage on current house. The new house is in a wonderful location but I don’t absolutely love the house itself - maybe this would change once I could put my own stamp on it. New house means much bigger mortgage. Approx 4x our income (current mortgage debt is about 1x income). We have a mortgage deal in place for the new house that is affordable, it is a 5 year fix so would be up end 2027 (not sure exactly when we would complete). However, I’m worried that if interest rates continue to climb we could struggle to afford it in 5 years’ time, we would probably be ok-ish up to about 6% but might struggle if it was more than that. Some of this would be offset by the fact that our childcare costs will go down and I will probably be working FT rather that PT by 2027. Obviously a lot can happen in 5 years. Kicking myself we didn’t go for 10 year fix. Anyway, would you:

a) go ahead with the move and hope things improve/ settle over 5 years. Get to move to preferred area near family while DC are young. Possibly struggle with mortgage at end of fix in 5 years if interest rates continue to go up.

b) stick with current house and hope to pay off the mortgage in about 6 years (depending on what mortgage deal we could get now during this shitshow). Stay in current area which is fine (we are happy enough here) but not live close to family in the area where we’d prefer to be. Consider move again once mortgage paid off/ things settle down.

BTW there are no other houses for sale in the area we want to move to and pretty much nothing coming on the market, so not as simple as just finding a cheaper house to move to.

OP posts:

hoochyhag · 28/09/2022 05:16

I would go for it. It is a long term move, close to family. Youhave a deal for the next five years. You willbe fine. This fear is normal. All the best

Someaddedsugar · 28/09/2022 05:26

@GreenCardi I could have written this exact post. In a very similar situation to everything you've said with salary multiples and length of fix. We had a chat last night as I was on the fence about pulling out of the purchaser but we've decided to proceed as five years is a relatively long time and lots can change in that time. Your lender will have checked your affordability to 5 or 6% to make sure you could still repay. Hope the purchase goes well for you 😊.

Dontsparethehorses · 28/09/2022 05:28

Yes with 5 year fixed mortgage I would go ahead

Cupofteaonesugar · 28/09/2022 05:33

I would go for it.
You don't want to put off all those valuable years with your family and living closer to them. You would regret that the most.

Original poster

GreenCardi · 28/09/2022 05:34

Thanks all. I tend to be very risk averse by nature so this is all very uncomfortable for me! I might try to get some sleep now before school run.

@Someaddedsugar thank you, and good luck with yours too.

OP posts:

TaffyandTeenyTaffy · 28/09/2022 05:41

I would move too... if it was possible to overpay during your fix then that may entitle you to a payment holiday or to pay less per month after the 5 year rate ends.. You will also have options to be able to remortgage to a better rate, extend the term or move in 4.5/5 years.

Twiglets1 · 28/09/2022 05:48

I would proceed.
5 years is a long time to be safe for and the financial market could be very different in 5 years time with interest rates lower again Sometimes you have to take risks in life as there are no certainties and staying put would not make you happy.

user1471548941 · 28/09/2022 07:26

We are in the process of doing similar numbers wise but more like a mile up the road not 300!

We’re going ahead- for us worst case scenario is that we get stuck in a house that’s much for suitable for our lives than our current one! We figure 5 years is plenty of time for us to both progress our careers (lots of opportunities for us both) etc etc, rebuild savings and hopefully the economy to calm down so that in 5 years we can either remortgage with a better LTV and a rate we can afford on our salaries or move on up the ladder (not sure if want kids or not etc etc, whether we will want kids or not etc etc).

if you think about the 08/09 crisis, housing markets were definitely a lot more stable by 13/14, which is the equivalent 5 years!

Twiglets1 · 28/09/2022 07:46

user1471548941 · 28/09/2022 07:26

We are in the process of doing similar numbers wise but more like a mile up the road not 300!

if you think about the 08/09 crisis, housing markets were definitely a lot more stable by 13/14, which is the equivalent 5 years!

Agreed. I’ve been buying & selling houses for over 30 years and things never stay the same over a 5 year period. Personally I wouldn’t lock into a deal for longer than 3 years at the moment but I understand why some people want the security of a 5 year deal they know they can afford.

Original poster

GreenCardi · 28/09/2022 08:22

Thanks that’s really interesting, I thought we were stupid for not going for a 10 year fix. I don’t think many banks are offering 3 years at the moment. We have scope to earn a bit more and hopefully progress careers in that time too. I would have liked to do a bit of work on the house but think we’d prioritise overpaying off the mortgage. UK holidays for the foreseeable too but don’t mind that, especially while kids are small.

OP posts:

Snoken · 28/09/2022 08:39

Definitely go for it! In 5 years you will have had pay rises, paid off some of the mortgage and therefore be in a stronger position even if interest rates go up.

Original poster

GreenCardi · 28/09/2022 09:41

Thanks all for helping to put my mind at ease. I’ve now moved on to worrying that our buyers will pull out if we can’t exchange soon!

OP posts:

boxybox · 28/09/2022 09:55

I would go for it because you have fixed for 5 yrs, you haven't borrowed crazy amounts & your costs should come down & you can overpay/save in the next 5 yrs.

dancemonke · 28/09/2022 09:58

I am bewildered by the Mumsnet obsession with telling people to buy buy buy houses. Your house will be worth at least 10% less next year. Do some very careful maths. If it makes sense factoring in that drop, go for it.

boxybox · 28/09/2022 10:00

No one is saying that, it's about weighing everything up.

If the OP said I'm pregnant & we are moving house & borrowing 6x income on 95% LTV with a 2 yr deal then I'd say something different.

cushioncovers · 28/09/2022 10:04

I would still go ahead. 5 years is a long time. I'm half way through a 5 year fixed rate and will struggle to afford an increase in my repayments when it ends as will many others. Do what's right for you now, not what might happen in 5 years time.

OhhhhhhhhBiscuits · 28/09/2022 10:04

dancemonke · 28/09/2022 09:58

Says who?

cushioncovers · 28/09/2022 10:06

dancemonke · 28/09/2022 09:58

So what if it is worth 10% less next year unless you have to sell next year and only bought this year it won't make any difference. House prices always dip but in the long term they continue to rise.

cowskeepingmeupatnight · 28/09/2022 10:11

OP, I don’t want to be gloomy but there is a strong chance that property prices will drop 10-15% next year. You could be buying now at the top of the market, and whether that affects you really depends on how long you are planning to stay in the new house. I am in a similar position and thinking carefully!

On the bright side, I think you’re in a good enough position in terms of day to day affordability.

UK house prices could fall 10% to 15%, warn analysts and brokers

Ray Boulger, from the mortgage broker John Charcol, has predicted a 10% fall in UK house prices next year, while analysts have warned prices could drop as much as 15%.

Boulger says the gilt market meltdown, and the risk of interest rates rising to 6% by next summer “makes it very difficult to know where to price mortgage products”. This will undoubtedly have an impact on the housing market. He told BBC radio 4’s Today programme:

We can expect to see a significant fall in house prices, perhaps 10% next year.

Whilst at the moment I don’t think we’re going to see many more forced sellers… it’s certainly going to have an effect on people’s ability to buy.

Analysts at Credit Suisse are warning that higher interest rates, rising inflation and the risk of recession could lead to house prices falling by between 10% and 15%. Andrew Wishart, senior property economist at Capital Economics, has also warned of a similar slump.

Original poster

GreenCardi · 28/09/2022 10:13

We have about 30% deposit. I’ve also read that house prices may go down 10-15% next year but I’m hoping it would recover over the 5 years to at least what we pay for it now. Would have to be something very drastic for us to end up in negative equity after 5 years- don’t see that happening. It does make me wonder if we’d be better to wait a year but then who knows what will happen in the short term, it’s very volatile at the moment.

OP posts:

dancemonke · 28/09/2022 10:15

@cowskeepingmeupatnight is quoting the article I'm reading, @OhhhhhhhhBiscuits
Of course it matters less if you're planning to stay long-term, but it doesn't change the fundamentals. If you're taking out a mortgage, you still have to pay it back in the end. We never intend to move, but I'd still rather be paying off a £200,000 mortgage than a £300,000 one - and the shifts we're likely to see in the next few months will reflect that. I'd just much rather spend that £100,000 on something else!

Original poster

GreenCardi · 28/09/2022 10:17

On affordability, the new mortgage would be about 30% of our take home income (after mortgage payment we’d have about £3.7k left per month). Which I am nervous about although do think we can afford. It is a lot more than we’re paying now though. And as I said I intend to work more hours once younger DC starts school and childcare costs will go down. Argh.

OP posts:

cowskeepingmeupatnight · 28/09/2022 10:18

Yes, it’s tricky isn’t it. I think you’re right that you don’t need to worry about negative equity at all with a 30% deposit, so that’s one thing off your mind. On balance I’d say go for it as long as you like the house enough to live in it long enough that it regains any value it has lost. Even in todays stormy waters I reckon the value would have increased by the time your five year fix is up, but if not you might have to stay longer or forfeit a bit of what you paid. I’m sure it will all work out and at least you thinking it all through now means you’re ready for anything later.

boxybox · 28/09/2022 10:19

If you aim to move in a few years & make a profit then yeah those days are gone.

I see my home as a home first & foremost. If it looses value it's not the end of the world as it's still preferable to me to renting.

boxybox · 28/09/2022 10:20

and ideally most people moving would have a decent deposit so the 10/15% drops are more palatable.

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