Am I crazy?

[insomniac1]

Hi everyone

I just wanted to get your opinion on something which I feel so conflicted on. My family and I relocated to London/Hertfordshire border a year ago. We have 2 young children. We chose to rent for a year whilst we looked for a house to buy. We are in a very fortunate position to be buying our forever home with predominantly cash.

We have been searching for a year and seen about 30 houses and not loved any. There is one house which is the best of the bunch which we are v close to offering on. It needs work though which I was really against doing but it seems impossible to find a house which has been renovated in the last 5/10 years in the area that we are in.

The other complication is my daughter will move to senior school in 2 years and my son will start primary school in 2 years (planning to send both to independent schools).

I am starting to think maybe we wait to buy our house in 2 years time. We are fortunate that with our cash deposit we can put in a 2 year fixed rate bond and pretty much cover our rent. We absolutely love our rental house. It's a few minutes from the station and from my child tends prep schools. I also don't think my landlord will sell (we did approach him about buying the house!).

Would it be crazy to do this? My biggest fear is that house prices may go up loads and we end up not being able to afford what we can now. But I love the idea of having the flexibility - if my kids don't get into the local independent schools which are v competitive I would prefer to be near the schools they do get into. Also my husband currently can't work from home so we need to be by a tube station. But 2 years down the line who knows!! He could be doing something different which allows us to move a little bit further out.

Feeling v confused! WWYD? Thanks so much!

The way house prices are rn I reckon it'd be wise to wait if you can

I don't see house prices shooting up any time soon and with being predominantly cash buyers you don't need to worry too much about mortgage interest rates.

It sounds like you can afford to be fussy. In your position I'd stick it out for the perfect house.

Thank you. I guess it still doesn't allow us to be fussy as our money will be locked up for 2 years so we can't then change our mind if we, for example, found our dream house in 6 months. If we don't lock the money away we are paying a significant amount of rent which feels like a waste of money with the cash sitting in an instant access account.

So effectively it puts us back to square one in 2 years time but with the knowledge of where our kids will be at school and of whether we can wfh etc. I just worry that house prices may go up and then we will massively regret it.

I think they will be bouncing back this year, never mind in two years. I’d be buying now.

If you love your rental and interest covers the payment then why not. As your buying cash your not in a position to not be able to afford if house prices did start to creep up. The worst that would happen is you take a small mortgage.

I would wait and I rarely say that. Your in an ideal position. But you must treat this as another full time job. Know every estate agent on your area by name. Ring them weekly. Forever homes worth having can sell before they even hit rightmove so don’t take a back seat, and nearly always in less than a week with viewings organised first day on the market.

Good luck

Surely there’s a mid way - a higher interest account that will pay a significant portion of your rent but is accessible within the timeframe it would take to buy a house (say 6 months from offer to exchange).

Thanks everyone. Food for though!!

I would have thought that your purchasing power has already increased from a year ago? Prices in most places seem to be stagnating or dropping a bit over the past few months.
I will be in a similar situation. I’m still waiting for my sale to complete but am already in a rental. I plan to put the money in the best interest easy access account (the MoneySavingExpert site has great info on these). The interest will help massively with the rent.
I’m totally worn down by the process of selling and there’s very little coming onto the market so I’m in no rush and whilst we don’t love this rental, it’s comfortable and big enough so if we have to wait until next year so be it.
I think in your shoes I would be inclined to keep some financial flexibility in case the perfect home does come up.

The area we are looking in seems to have been relatively protected. Houses are def not going to sealed bids etc but they are still achieving close to asking. I think the problem is there aren't many distressed sellers around here so all it has meant is they have chosen not to sell so stock is low!!!

We are getting around 2.5% on an instant access which isn't bad but a 2 year fixed would give us 4.2% so considerably more.

But I think you're right having the financial flexibility is important. Knowing my luck the perfect house will come up just as we lock it in!!

Also I'm wondering whether perhaps I'm the issue. It's my personality that I'm nervous about change and always think the worst. So this house that we are close to putting an offer in - it is actually a good house and in reality will we ever get the perfect house with a finite budget? So im struggling as to whether this is just me being unrealistic if that makes sense

Buy the rental?

A lot could happen in two years. Your perfect house could come on the market. There could be a drop in prices you want to take advantage of. Prices might start going up again. Your landlord may not renew your contract. I wouldn’t want to tie the entire house money up in an inaccessible account. Is it the case that your money would be entirely inaccessible during the 2 year period or that you would pay a penalty to withdraw it?

Would taking on a small mortgage and increasing your budget open up any further opportunities?

What you could do is split the money partly into the fixed term account and keep some in an easy access account with a view to taking out a mortgage if the right house comes along.