No, I don't think you are mad. Your friends who are saying you are have probably not spent years putting up with manner of annoyances in rented accommodation. They are trying to look after you by making sure you are not going to financially stretch yourself in the midst of the wrong time to buy for 20 years, which is kind, but if they are home owners, they just won't 'get' it.
I have been renting flats for 31 years and this year has pushed me to the brink of I Just Can't Put Up With Other People's Shit anymore. The rental market has spiralled to dire in the last two years and it is only going to get progressively worse over the next few, unless there are some major government incentives put in place to attract potential new landlords. Right now, they are selling up in droves.
If you have a kid and can afford to buy your own house, the financially responsible thing to do is to buy a place so that you can build up equity, and at some point down the line, your child may have some sort of inheritance.
But you really seriously need to dive down into the maths to figure out if you should do it now, or wait a few years. I am terrified of negative equity so have done a bit of work on the sums.
- My OH is 41 and because I cannot work, it is cheaper for us to remove my name from the mortgage; brokers have made this affordable to us by stretching the mortgage to a term of 33 years (we are FTBs with only a 5% deposit)
- Our mortgage costs are going to be scary; we will pay a minimum of 2.2k a month versus our current rent cost of 1600
- What's going to happen to mortgage rates in the near to medium term future is currently a very grey area amongst economists; currently the most expensive mortgages are those with 3 year fixed rate deals, I assume because that is when mortgage lenders think rates will be low enough for them not to make a big profit because they will have dropped
- 2 and 10 year fixed rates are currently the worst deals you can get.
If you have a very small deposit as we do, short term fixed rates are a very real risk to financial stability. If we were to mortgage with a 2 year fix and house prices drop in the area we move to, we wouldn't be able to move to a different mortgage lender after year 2, and we would be stuck on the SVR, which is the rate mortgage lenders charge when your initial discounted fix ends. Currently, SVRs can be twice the discount rate. For us, that means our 465 house goes from costing us 2.2k a month to over 4k a month. When house prices drop and you end up in negative equity, you basically get no choice but to stick with your current lender's SVR because nobody else will offer you a mortgage.
Which leads me on to my next and most important point. Firstly you need to decide what level of risk you can afford to take with mortgage rates. If you absolutely cannot afford to take a risk, go with 5 years, because even if house prices crash, they will probably rebound within that period. Secondly, be militant about where you buy and how much house prices rise in that area .It's no good putting the postcode into Rightmove and seeing 'house prices have risen 9% in SE26 in the last year and 25% since 2019' because it's utter bollocks. People who own £400,000 houses sell their houses to their children for £15,000 to avoid inheritance tax, and the odd one or two 1.5 million land sale in a really low priced area will superficially raise the average price to far higher than the 150k average selling price in the area.
The only way to truly guage sales is to put the postcode and nearby postcodes into a land registry sold prices search. Then calculate their first sold price versus their last and you can get an average percentage per year price rise by dividing the rise by number of years.
I have seen many houses that I like, but when I looked at land registry history, discovered that more than half of them LOST money over the last 10 years. That was far too much of a risk for me.
There are some years when vast falls are normal - a lot of folks lost money from 2008-2013, so ignore those.
My other warning would be to avoid buying a fancy house on a not so fancy street. We looked at an absolutely gorgeous 340k bungalow that the builder himself lived in and it was almost the perfect house, until I said to the OH : it's almost everything we need, but if we buy it and the neighbours turn out to be a nightmare or we want to move abroad, who exactly are we going to sell it to on a street where every other house sells for 150k? Not that we give a shit, but most people who spend that kind of money care about.keeping up appearances, so a gorgeous fancy bungalow on a pretty mediocre street wouldn't appeal to them. Cos whatever would their friends think of them?! I lol - I don't give a shit, but that particular property was only going to be a three year home for us, so was a big financial risk.
Bleh. Wall of text.
It's not good time to buy and right now, you will probably pay more for a mortgage than rent, but the equity in the long term will make the outgoings worthwhile, and it's the right path to go down if you want your kid to have nice money if and when you die.