Buy now or wait?

[Star5555]

I am looking to buy a new house sometime this year as I nearly have enough saved for a deposit. I'm getting close to the 10% down mark and feel pretty confident about the mortgage process itself, but am worried about getting the timing right. We currently have the option to buy the house we are renting, and while we are very comfortable in this home we were hoping to move into the catchment for the secondary school we'd like our dc to attend. The problem is that the houses in this area are either a) too expensive or b) smaller than I'd like for our needs. Obviously know we need to sacrifice something but I can't decide what to give on.

The house we are renting was currently valued to be around £330K and is in our price range, but over the amount I feel comfortable borrowing as it will mean eating into the money I usually put into savings. I'd really like to avoid maxing out what we can afford in case interest rates go up or our circumstances change. To be honest, I don't feel comfortable offering more than £300K and ideally would prefer £275K but that price is no longer realistic it seems given prices in our area have shot up in the past few years. I still want to look at other houses too but we'd be in the exact same position of having to negotiate down. We are FTB so no chain, so at least have that going for us, but I'm really not sure how much it's reasonable to offer below the valued price.

I could of course wait and save up more, but it just feels like that leaves me open to the possibility of further increases in prices which will eat up any additional savings. I'm torn on what to do: should we wait to buy or try to get something now?

It sounds like you want to pay less than the market says houses are worth in your area. Sellers aren't going to magically negotiate down because you want to add to your savings.

I'd say start looking but if you offered me 275k on my 330k property you wouldn't be entertained, and estate agents do talk amongst each other about time wasters. Go into the process being realistic, no one knows what will happen with house prices but the general rule is they'll only go up.

Why would you wait? Get your 10% plus moving costs and start looking. It may take a while to find the right house as there’s bugger all on the market right now.

there’s no such thing as a reasonable amount to offer, you offer what you can afford and think it’s worth, if someone offers more you might lose the house, if no one is interested in it you might get it for less.

We are in a similar predicament about moving for a good high school. The area we wanted to step up the ladder has shot up in price so we would have to go smaller. We have decided to move somewhere much cheaper but still good schools.

But unfortunately in your position unless you move to a cheaper area if you want to be in the catchment you'll have to go smaller and within your budget. How long until your DC go to high school? If it's a fair while you could try save more deposit but depending on how much you might save house prices could go up and you'll be left in the same position.

First time buyers will be 3% paying stamp duty from 1st April.

From Natwest website:

How is Stamp Duty changing in 2025?
Stamp Duty is set to change on 1st April 2025. From this date, some Stamp Duty thresholds will decrease. This could mean you’ll pay more Stamp Duty in 2025.
The changes apply to both standard Stamp Duty rates and to the relief rates for first time buyers.

For non first time buyers:

The 0% Stamp Duty threshold will reduce from £250,000 to £125,000.
For first time buyers:
The 0% Stamp Duty threshold will reduce from £425,000 to £300,000.
Standard Stamp Duty charges will apply to properties worth more than £500,000. This replaces a £625,000 home value limit.

I would seriously think about buying your rental property. At least it gets you on the ladder and you are not throwing money down the drain.

Also to add about making an offer, nobody is going to give you a £330k house for £275k no matter how nicely you ask! They have costs to move to their next house too and will need their equity for a deposit. People who've priced their house too high will eventually have to come to the realisation that nobody is going to pay that and have to reduce it until they get interest.

I did read in the financial papers yesterday they think interest rates will go down in spring, making mortgages a bit cheaper and this could outweigh the SDLT rise in April.

I don't know the ages of your children but is it an option to carry on renting a bit longer, but move to a rental in the catchment area for the school you want?

Wait to buy somewhere after the first child starts secondary school (assuming that the sibling rule is used at that particular school so the second child would get priority to go to the same school).

Or if you have accepted that the catchment area you want is unaffordable, start viewing houses around other decent schools in the 300k - 330k ball park. You sound highly risk averse but you have to take some risk when buying a house and houses are worth what they are worth in the marketplace with no regard to your personal feelings. To buy a house you love you may need to come out of your comfort zone, but it's a good investment for your long term future.

If you are comfortable in your current home and your LL is willing to sell then I would go for it.
There are always compromises to be made but the main thing is to get on that ladder and start chipping away at your mortgage.
Not having to move out of your existing house is worth a lot in both financial and physical terms.

As someone who a few years ago was a (reluctant) LL, I can tell you that having a tennant who wants to buy is a good thing.*

• If you do decide to buy, don't mess around like our tenant did. They decided that the rent they had paid over the previous three years should be knocked off the asking price. By the time they got the message that was not happening, we had received offers well over asking so they missed out and had to move anyway. Had they offered the asking price (or even close to) at the start, we would not have even gone onto the market.

On one hand you say you want to carry on saving and on the other you are worried about increased house prices and the morgage taking up your savings.

If you look at the facts - our house was purchased for 250 and is now worth 420 - this is our savings!

There are more than one good school available - look at other schools, other areas, and like PP said consider renting in that area and buy when you can.

I said in my OP I know 275K would be unrealistic now and would go up to 300K for a first offer. Most advice says 10% below asking isn’t unreasonable and negotiations go from there.

Thank you for this perspective! I agree saying to reduce because of rent would be crazy! The lowest valuation for the house was £325K. We know of a few things needing replacing in the near future like the boiler so if we offer lower it will be for these reasons and we’d be prepared to go up to the lowest valuation price which seems reasonable for the current area. Our LL is lovely so I’d be polite and willing to work with them on a price we can both agree on. We are heavily leaning this way at present and just waiting to save up a wee bit more to get the full 10% deposit.

I’m my OP I acknowledged that £275K is unreasonable. We’d be looking at a first offer around £300K on houses in the £325K and lower price range, with the expectation we would either need to walk away or counteroffer up to asking price.

@Nourishinghandcream , do you think the LL would be put off if we put in a first offer of £300K? I don’t really know how to begin and don’t want to offend them with an offer too low, but if we start at £325K I worry we’ll need to negotiate up and that’s our absolute max. Plus, the higher price would mean waiting longer to save up the 10% deposit so we can get a better interest rate plus paying stamp duty on the extra £25K as realistically I don’t see us getting our ducks in a row before 1 April.

The other thing is if we wait too long they’ll need to get the house revalued and by then prices could go up putting us in the same position.

This question isn't aimed at me but I doubt anyone would be offended by a 300k offer on a house valued between 325k to 330k.

It's not a bad offer, especially as they wouldn't have to pay EA fees if sold to you

@Twiglets1 , Thank you for your reply. Well LL wants £335K which is close to the top of what is was valued at recently. They don’t want to budge on that from the sounds of it. I’d have gone as high as £325K as it’s a good-sized property, but the higher price puts me off as I know the house needs a new boiler in the next year or two which is a big expense I’d rather not have from the get go.

Try putting in a formal offer then at the price you consider reasonable. What the LL wants they won’t necessarily get as the market isn’t great for sellers at the moment. It would be a lot easier for them if you bought it compared to a stranger where they would have to give you notice and sell it with vacant possession

I think I would be inclined to put in an offer for 325 and say that is the maximum you can afford. The market isn’t great atm and they would be saving on agents fees.

There is a lot to be said for buying your current home. Better the devil you know!
You won’t be in a chain! You could easily end up losing thousands with trying to purchase another home when chains fall apart or surveys show problems or trying to buy a house with a seller who isn’t serious!!

Totally agree.

Also you say that your current house will need a new boiler in a couple of years but if that is all that is required, you are in a far better position than buying somewhere you don't know which turns into a moneypit.

It isn’t the only thing. But probably the biggest for now. Over the years we’ve been here there have been several major repairs and that does worry me. We’d get a level 3 survey to see there’s nothing else that’s imminent.

But you are right that something else could end up being worse.

They still plan to use an agent and aren’t in a rush to sell. I could try putting in an offer but my sense is they are firm on their price. I could put 5% down and buy now or wait 7-10 months and revisit and put 10% down. So I may just say we could buy now at X price or wait and talk again to you later.

In the meantime, I will probably talk with an estate agent to get some advice on buying on the open market and see our full range of options. I feel it can’t hurt and we may get a better sense of the market that way.

We are in a three tier system but the top middle and high school are in the same area. Have got about two years for middle school for first child. I know what you mean though. Compromises must be made somewhere.

Simply you should be making offers based on what you think the house is worth. 10% is actually a huge discount to be asking for from an asking price no matter what the internet tells you, so going around making blanket offers 10% under asking is going to get you a load of rejected offers, a reputation as a timewaster, and no property to buy.
You need to do some research into the area you want to buy in - look at actual sold prices rather than asking prices, look at how quickly properties are taking to sell, look at whether they are having to drop their prices to sell. Work out what are the features that make a difference to price (ie: parking).
For a reality check, I'm in the middle of selling mine and I accepted £2k under asking which is approx to 0.5% - buying my offer was accepted at £5k under asking, which is closer to 1% but still nothing like the kind of discounts you are talking about. If you want to buy a £330k house for £275k you have to have a bloody good reason that is based in facts about the property and demonstrates that's the correct valuation, no-one is just going to get an offer like that and go "oh, fair enough, OK".

You sound very clued up and in control of your finances.

You know how much you can afford in mortgage payments, and a broker will be able to convert that into a potential mortgage amount at current market rates. Together with your deposit (less any costs - solicitors, surveys, stamp duty, removals, etc) gives you your total budget.

My approach to your LL would be "We have loved living here but we can only afford £XXX and I don't want to insult you with that". It's then down to the LL if they want to continue a conversation.