FTB looking now - anyone else? Are we mad?

[YaffleYaffle]

Thanks to a substantial pay rise and a gifted deposit we are in the very fortunate position of being able to look for a house - right when it’s terrible timing.

We really don’t want to wait. We want to buy our own home and start a family. There are a lot of problems in our rented house (not things that can be changed/sorted), we’re unhappy in this area and I would be so stressed if I was pregnant while living here.

We have had a really difficult few years for various reasons and this feels like such an exciting new start for us. Finally we can get out of the private rented trap.

But it’s such awful timing with mortgage rates going through the roof. I really want to believe the people who say there’s no good time to buy a house and why wait until things get even worse. I just feel gutted we couldn’t have done this earlier and worried we are getting a mortgage at the worst possible time.

I should say we can afford a mortgage, just so much more of it will be interest than before.

Well, it might be the worst possible time in 6 months' time. Or 12 months. Or two years. Or ten years. You'll only know with the benefit of hindsight.

My DH and I bought "at the top" in 2007. We knew we might be buying at the top of a bubble; we knew we may go into negative equity. So we didnt over-extend ourselves - got somewhere smaller and cheaper than the Mortgage lenders said we could afford; fixed for 3 years (then watched the interest rates plummet!).

I didnt regret it because we were "on the ladder" and we went in with our eyes wide open. I would still rather paying (a little bit) of capital off my own mortgage, than paying a landlord.

There is never a good time but at the moment it is a buyers market and properties are selling for less than they were. Offer lower than the advertised price and allow some wriggle room for rising interest rates on a mortgage. Try and get a good, fixed rate for long as you can.

I am a seller at the moment, not for my place but for my late Mum's and it has been on the market for over 6 months now. People are making silly offers now. You are in a good position as a FTB. Good Luck!

Yes, so much more of it will be interest than before - but some of it will still be paying off capital on your asset. At the moment, the entirety of your rent paid each year is “lost.” I doubt you’ll be paying as much an interest each month as you currently pay in rent.

Nobody knows when the “right time to buy is or whether the market will stagnate, drop 10% next year or drop 20% next year. As long as you’re planning to stay in your home for at least several years, it will be fine.

Thanks for these lovely kind replies, they are appreciated. Regarding rent - exactly, we are so sick of throwing money into a black hole.

@Lou670 I’m sorry to hear that, I hope you find a buyer soon.

FTB here too. Its so nerve wracking isn't it?! We've had an offer accepted, mortgage approved and are waiting for the survey.

We offered under the asking price and have a healthy deposit but I still find myself getting worried especially when I keep seeing new articles everyday about house prices crashing 🙃

I keep reminding myself that we are buying this house to live in, we can afford it and this is the best time for us to buy as we've found the house we want.

Best of luck 👍

It really is nerve wracking! Exciting to be at the survey stage 😃

I think I am going to have to just try to ignore the news. We are going on our first viewing today and are really excited!

Best of luck with the survey stage 🍀

Ah thank you! Its getting very real now...

best of luck with the viewing, let us know how it goes 😀

Good luck!

My advice would be to stop thinking 'I will buy a house', and think instead 'I am looking for a house '. You might end up waiting 6 months until you find a house you love, or your dream home might come up next week. If it does, you'll want to go for it because even if the market does tank, there's no guarantee that you'll find somewhere just as good or better.

Compare how much you pay in rent and then how much a mortgage would be. If you pay £1k a month in rent then that £1k could be going towards your own house, and an investment in the future. If you don’t move for 5-10 years the house will most probably be worth more than when you buy it and you have to live somewhere.

We put an offer in on our home first in Oct 2016. The brexit vote had happened and house prices were expected to crash. We then remortgaged in February 2020 and house prices were expected to crash again due to the pandemic. If our house falls in value by 20% (which is the worse case scenario at the minute), it would be worth £6k less than what we paid for it 6 years ago. That obviously wouldn’t be ideal but we have paid off enough of the mortgage that we would still have equity. When we bought, we purposefully made sure we didn’t over exert ourselves with what we bought just in case house prices drop. I would also look for a house that you can stay in for 5-10 years, so if prices do crash you’ve not outgrown but can’t afford to move after 2 years.

We are looking to move in the new year. Our house price might have dropped but we’re at a point where we don’t really have a choice to stay where we are. We probably would push ourselves to the absolute limit now because we had a childcare bill. However, we would be looking for a house for the next 15 years so hopefully the market would recover if needed. It’s scary pushing ourselves to the limit and we aren’t comfortable with it especially when costs are so high but we know it would be while we have nursery fees (2 years when we move). It’s far from ideal but as our next move is for the longer term, I’m willing to take the risk and weather the storm.

Thanks everyone, some great advice here.

@InTheNightWeWillWish i hope you find the right place for you!

I am not a FTB but it feels like a mad time to move now. Mortgage rates have gone up but yet at the same time, sellers are still maintaining their asking prices with maybe £20k knocked off. i thought i could 'sell low and buy low' but the market doesn't reflect that yet!

We are still looking with an eye for potential opportunities but realistically this could take quite a while perhaps 1-2 years and things could look very different then.

I bought at the top of the market, just before the crash in 2007 - on a 100% mortgage with horrible interest rates too!!

We are just about to move and will have made a very healthy profit, even though the house is only small and very much just a starter home. Saved years of renting and even though I had a shitty mortgage with a shitty interest rate (don't ask!!) - I've still benefitted financially, as well as being out of the horrible rental market for the last 15 years.

Property always goes up in the end - if you can afford it and can fix your mortgage, I don't think there's ever really a "bad time" , providing you're not trying to flip houses and move again quickly.

@YaffleYaffle how was your viewing?

Thanks for asking! Nice house but not quite right for us. Felt bad for the sellers who were thinking of taking it off the market.

We have another viewing tomorrow. The place definitely needs freshening up and we’re unsure if it just needs a bit of paint (fine) or a lot of work done (not for us).

There’s been nothing new for the past week, just the odd price drop in my Rightmove alerts, so we have no other viewings lined up. We are looking in a fairly small area though (just one specific town) as we really want to live there. There’s nowhere else we love that’s within our budget. So we might have to chill and wait for a while until
the market changes I guess.

What type of property are you looking for?

If your budget allows you to buy somewhere that will do you with a child or two I would worry less than if you are buying a one bed flat that you expect to sell in two years time.

Similarly what about area? Is this somewhere you are likely to stay, have family support etc? Or is relocation likely within five years?

Something that doesn't stretch you to the max but has long term potential is the ideal. By that I don't mean a fixed upper given current building costs but something on a reasonable plot that you could add to down the line (as in 10 years plus).

I bought in August 2007 as a first time buyer. I think it was the most expensive month of the most expensive year on a tracker 0.5% above the base rate which in month one went up to 5.75%
I didn't make anything on the property but because of falling interest rates when I sold six years later I'd paid off 42k (not including my original deposit) as I continued paying at the higher rate and it was a really cheap place to live while on maternity leave.

If I'd needed to sell within two years I'd have been in trouble but it was a decent size and although not our ideal home (flat) we'd have made it work if necessary.

As long as you can say 'unlikely' to the main reasons for selling up in a short time frame then go for it.

We will hopefully be looking soon. Can afford a mortgage but no deposit. Also ftb and I'm 41!

Depends what rate you’ve managed to secure from the bank. I did my maths and unfortunately it looks very doom and gloom at the moment with interest rates of 5.5-6%.

We were looking at 750k properties. And basically if we go fir fixed rate of 5.5% for 5 years the deal on 675k mortgage will cost us 180k (it’s just an interest to the bank) plus we’d acquire 50k in equity. mortgage payments on 675k are about 3800-4000. Given property prices aren’t gonna rise much in the next 5 years which is very possible, there’s literally no difference whom we’ll pay those 180k, bank or landlord.

However, if we choose to rent for let’s say 3k a month and put 1k into savings, not only we are living in much bigger property, but in 5 years we have 60k in the bank instead of 50k.

At the moment our rent is half of that in premium location for 2 bed flat. And given it’ll stay similar (200-300£ more) and we won’t switch, we’ll come out with 130k after 5 years plus the deposit we already have. Obviously we invest our money to keep up with inflation.

Either property prices need to catch up with rising interest rates, or it is no sale for us. There’s really no point paying these enormous amounts for the mortgage when you can just rent decent place for less money, and put the difference into your bank account. With these rates currently, there’s hardly any equity you’ll manage to build. Also market is filled with bigger properties for rent, because people are desperate to buy something else, but can’t sell their flats/houses for inflated prices.

@Calmdown14 we’re looking at 3-bed terraces in an area with family nearby. Not stretching ourselves too much. Your post is encouraging thank you. Glad it worked out well for you.

@teaandtoastwithmarmite best of luck! Might any of the FTB schemes be any help for you?

@Wanderergirl no rate secured yet unfortunately. I wish we’d applied a few months ago but hindsight is a fine thing. We’re very, very unhappy in our rented place but there is nothing else available at this price or anything near right now. We are looking at properties of around £300-£325k with a £75k deposit so will be starting off with a good chunk of equity and can access slightly better rates with a 75% LTV. We will also be able to overpay to some extent which will really help overall. So if we find the right place we will probably go for it having just accepted that we will be paying more due to these crazy times. I appreciate we’re in a very fortunate position to have a big deposit.

Of course if you wish to part with your cash then it’s completely different situation. We want to keep healthy amount after the purchase for ourselves, so not willing to put more than 10%. Also it’s not our forever home and falling prices are risky, means we’d lose out money when selling in 5 years time. And we are in London.

Think we’re just in totally different situations! Best of luck with whatever you do.

Our property search had took over a year (started September 2021) we have only just found the right house and got an offer accepted.
We've already hit problems because the sellers need the house completed in 8 weeks due to their mortgage offer on their new house running out (been on the market for a while) and the estate agents have promised them the world but unfortunately house completions are averaging at 4-5 months (according to our mortgage advisor, so if I'm wrong please correct).
I'm wondering if we're mad too ha!

Happy house hunting! Fingers crossed you will have found something soon!

@mollysmummyx wow, not sure 8 weeks is realistic but fingers crossed it all goes through smoothly for you! And thank you!

@YaffleYaffle I've got a help to buy isa. We earn too much for shared ownership etc