Is it a bad or a good time to buy our next home?

[scoiatollo]

We bought a flat 3 years ago, and now want to upsize. We're on a 5 year fixed rate mortgage and have 2 years left. The next property will be about 115k more expensive than this one.

Could this potentially be a good time to move, because we have our fixed rate guaranteed for the next 2 years, and sellers are currently pricing lower in order to attract buyers given the rise in mortgage..? So we get to take advantage of lower property prices and our current rate.

Or is it the worse possible time, from our perspective? Because if the rates are still this high or higher in 2 years, we may have massively overmortgaged ourselves...

Unless, you really need to move, I would hold tight to see how the market reacts.

You won’t get your current rate on the additional £115k that you’re borrowing. That bit will be lent on a different rate I think.

Hold tight to see if the next step up falls but you would probably sell lower?

We needed to move and I’m glad we’ve done it now. We kept hanging around for the market to change but before we knew it, 2 years had passed and we were still dithering! We were in the middle of a fixed term too and have had to pay some money to get out of it but now we have our forever family home. Very excited to get moving! We used a fabulous mortgage broker who made the whole process a million times easier!

I wouldn’t risk it personally.

How did it work with your fixed term on the new property?

Well if you sell lower, you need to buy lower, swings and roundabouts with property market. We have bought property since 1989, and seen 15% interest rates, and negative equity. Definitely a buyers market now. We downsized & relocated during lockdown, at the time property was selling like hot cakes. Market is much quieter now. Having said that property always comes up in end.

We have taken the plunge after procrastinating for years. We need to do it now to make a positive impact to our children before they leave home. It's a home for a family with older children/young adults if they stay longer.

Hoping it all comes off. It might not be our forever home, but it will be the last family home.

I think it depends on individual circumstances.

The reason we want to move soon is so we can have a second child before the age gap gets too big.

Annoyingly, our "dream house" has also recently come on the market... It meets every single one of our very finickety criteria. I'd be sad if it got away, but also don't want to do anything financially foolish

sellers are currently pricing lower in order to attract buyers given the rise in mortgage..? So we get to take advantage of lower property prices and our current rate

I'm not sure I'm following. Yes, a house you buy now may be cheaper than if you'd bought a year ago. But your property would also have lost value. I'm not sure why lower property prices are going to actually benefit you?

Also, as a pp said, you'll not be able to take out new lending at your existing fixed rate.

Do you know how it works when you move mid-fixed rate? I've been googling and it lists loads of different options and scenarios, and I'm confused as to what the standard route is 😕

I think if buying now, it's important to not expect rates to lower, just in case they don't. If anything expect them to go higher and think if you could still afford it in a few years at the higher rate.

If you are on an existing fixed rate deal which is portable to another property (not all are portable so you would need to check your mortgage deal), but want to borrow more money, you will keep your existing rate for the amount you currently owe and your lender will set up a secondary mortgage for the extra amount you wish to borrow. This second mortgage will run alongside your new one and will be at the current rate they are offering to new borrowers, which will likely be significantly higher than the deal you took out 3 years ago.

Standard is to port the mortgage buoy currently have and then the rest of the mortgage is on a new rate.

It's called porting a mortgage, look into it. It seems a lot more complicated than it actually is in practice. Basically what you currently pay will continue, but the extra 115k will be at current rates so you will have 2 payments making up your mortgage payment. I would stress test yourself on current rates and not bank on rates going back to under 2%. If you would be comfortable paying the whole mortgage at current or slightly higher rates then I would go for it personally.

Firstly if you are paying lower for a property remember yours will sell for lower too so always works out the same really.

We moved this year and had 6 years fixed rate left. We ported that part of the mortgage and then borrowed the rest on a new rate. We actually didn’t do too badly with the new rate considering but it ends a year before our old fixed rate. Both are via the same lender which is also my bank and they consolidated them together into one monthly payment. Was all really easy and not a lot of stress. The stressful part was the buying and selling!!

Our mortgage advisor sorted it. We ended up moving from NatWest to Halifax because Halifax offered a 4.18% rate. We just had to pay NatWest to get out of the fixed rate which was about 2k. It has come out of the equity of the house sale.

The train why people suggest that you should up-size in a falling market is that you'd get 10-20% off those extra 115k that you have to pay for the new house. But this only works if all types of houses fall equally and it isn't wiped out by higher interest rates.

It might be that your house (if it's a FTB place) will fall much more than the next house up. This whole logic is really dependent on your circumstances, so my main driver for getting a new place would be future affordability and if you can find something you'll want long-term.

Not train, reason (what was I thinking...)🤦🏻‍♀️

underlying assumption often is that more expensive homes fall most. I can see renters buying smaller FTB places rather than jump to bigger homes (when I bought in 2019, i was advised to stretch to futureproof which we weren't able to as I was still on my visa so they took DH's income mainly into consideration). Now the renters can't stretch even if they wanted to.

When people say buying a future proof place, it usually means a 2 bed house with extension potential or a 3 bed semi. That kind of house is always more expensive than a 2 bed flat or a 2 bed terrace (the kind with small second room and no extension potential). But you can live with a young child in those properties; many renters and Londoners do manage. I get that people may not like to be 'stuck' in such properties but there is less chance of negative equity with a decent deposit. And its better than not being able to pay the mortgage or having to move every year cos landlord is selling up again.

v. Tv g