In middle of buying - WWYD

[GreenCardi]

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.

I would carry on with it, 5 years is a long time.

Same position here. Decided to go for it. Scary time to be buying a new house. But five years is a long time and we are going to do our best to overpay the mortgage so we are in the best position possible when we remortgage.

You should go listen to a few economists podcasts first. Generally speaking the UK is in freefall. Politically at sea, currency plummeting, cost of living expoloding, mortgage products being removed from the market. I'm not in the UK but in Ireland. I narrowly missed a bullet on property in 2010. If I were you I would not do anything. The market for houses will drop and you will find better value, probably much better value with stuff that will come on the market. Your pound will get you more house. So I would wait and see - a year or so and see how you go.

The market for houses will drop and you will find better value, probably much better value with stuff that will come on the market. Your pound will get you more house. So I would wait and see - a year or so and see how you go.

It doesn't necessarily work like that because the OP will already have a mortgage deal. Yes the same house may be 50k cheaper in 6 months but the price to borrow it will be a lot more too so your pound won't necessarily get you more house. Cash buyer, then yes absolutely wait.

@ThisisMax yes I suppose the other option that I didn’t put in my OP is to not buy this house but to wait a while. The pros of doing that would be that house prices would come down. However, they’d be coming down in response to increased interest rates so we might get a cheaper house but still pay the same or more for the mortgage with the interest rate increases. Is suppose over time interest rates may come down again which would be a benefit. Other con is that younger DC is due to start school in September next year so we need to apply for a place by January. If we move after that probably wouldn’t get in to local school. Also, because we are on a tracker mortgage now we will be paying a significantly higher rate than we would on the new house because we were able to secure the mortgage for that house about a month ago.

@boxybox yes, thanks, this is what I was trying to say above but you’ve put it better!

Good point @boxybox but I still feel interest rates will really climb a lot. Dont forget also in future that re-applying for mortgage would be different- cost of living will change discretionary spend and available cash to re-pay.

There are other OP points though too particularly the school one - that needs to be decided nowish. Tracker mortgage will cost more but mabe could fix?
Your house value will drop also in response to general drops.
That you have a mortgage now for other house is probably good but how easily can you sell your house now - you will be selling into a falling market no?

Its certainly a tricky one!

This, if you are OK with 6%. I think that’s what they’ll settle at in a few years.

I’m fairly risk averse but with a five year fix in place even I’d move. 4x salary is a bit more than they used to say back in sensible times when they said no more thann3.5x but it’s not crazily more. Think will childcare costs have gone down in 5 years? Will your wages have gone up? Promotions, etc?

I would still go for it, you have the 5 year fix you can afford. We don’t know what will happen in 5 years but you will have potentially improved earnings, reduced childcare and paid off some of the mortgage so the amount for the remortgage will be less.

Indeed it is @ThisisMax ! I wish I had a crystal ball. We have already accepted an offer on our house. If that fell through we’d need a re-think. A month ago I would have said it wouldn’t be too much of an issue because I thought we’d be able to sell it again quickly, but doubt that would be the case now. The school thing is really annoying. I wish we had been able to move a few years ago but I suppose if we had we might have been less cautious and borrowed more.

This is us too! We aren't moving far but it's a bigger house and better for lots of reasons. I am determined to go ahead with it, but there are other reasons I want to be out of current house. Our situation is similar. Low mortgage currently, moving to much higher mortgage but affordable and we fixed for ten years because we wanted the peace of mind and locked the rate before most of the hikes. High deposit so can take a hit with house prices and lots of improvements to be made but we don't plan to move from it for at least a decade.

I'm more worried about our buyers pulling out ATM. If they do and noone else wants the house anymore (a few offers but it feels like that was another world) we'd be stuck. They're FTB and might be spooked, and haven't had their mortgage offer yet despite their valuation being done the same time as ours, ages ago 😬

Good luck OP, I hope it all works out!

@QuebecBagnet childcare costs will definitely have reduced and my income will increase as have agreement from work to increase my hours from whenever I want to really. I would like to think I might get a promotion in that time too, and maybe DH. Of course not guaranteed!

Thanks @therouge good luck to you too. Our buyers have been waiting a while so I think they are still keen but I don’t know when their mortgage offer expires. If it’s anytime soon the whole chain will collapse and as you say, doubt we’d having anyone lining up to offer on it now.

Do what expands you. 5 year affordable fix sounds pretty good. See your home as a house and not an investment. Good luck with your choice

Buying and selling is one of the most stressful things.

Fwiw we were thinking of doing the opposite to you, moving further away from family because we're not tied to location. However, when it came down to it we realised how much we value being close to them and decided to stay in the area and I'm really glad we did. I think if it's all affordable for at least five years you'll be making the right decision, and like others said you will have paid some down and have fewer childcare costs and higher salary.

I'm in an almost identical situation, apart from not moving far (so won't be closer to family). I'm also regretting not going for a ten year fix and just having a five year!

I'm going for it -our current house just doesn't work for us and I've got the opportunity to move to somewhere better, so I'm taking this chance. Yes maybe I could wait a year and get a similar place more cheaply/get something better (I'm making a big compromise on the garden), but maybe I could wait a year and nothing suitable would be available/I might struggle to find a buyer for my place.

Life is uncertain, so all you can do is make a decision based on the information available at the time rather than hypotheticals.

@MarianneVos you are right, thanks. I hate uncertainty which is probably why I am generally quite a worried person 😅. We are also compromising on the house, I don’t think it’s as nice as our current house in some ways (particularly the kitchen) but the garden is better than what we have now. Also the location- which I why I don’t see it going down too much in value over time. I also suspect that there will continue to be very little on the market for a while.

I also hate uncertainty and am an anxious person so this situation is my nightmare really! The only way I'm coping is to just think of it as a done deal rather than a decision I still have to make to avoid the constant second guessing myself!

Hopefully in a few months we'll both be happily in new homes.

@MarianneVos yes and hopefully all this stress will be a distant memory soon enough!

https://www.theguardian.com/money/2022/sep/28/uk-house-prices-predicted-fall-mortgage-interest-rate

Not saying I agree with it, things may be done to avoid it, but that's the sort of article people may be getting it from.