A little Scared! Advice please

Jennywren113

My boyfriend and I have decided to live together.
He has a mortgage and I rent.
He has had his flat for 2.5 years. Mortgage for 77K with Northern rock and just had flat valued at 90-96K so about 13K equity. He has 2.5 years left on at a fixed rate.
I rent and my rent is £360pcm (but could easily go up to £500). His mortgage is about £460pm.
I also have about £3500 for a deposit so between us (if he manages to sell we have about 15K)
Northern rock who his mortgage is with have said that they will lend us about 90% and we are looking for a property around £125000. His fixed rate mortgage lasts until the end of 2010 at about 5.something% and they have said that they will lend us the money and keep the rate the same until the end of that period.

The reason I am scared is I have heard on the news this morning about predictions of a 25% drop in prices etc etc. If we sell and then house prices drop we could very quickly lose the small amount of equity we have.
Does anyone think that my other half should just stay where he is for the moment and I continue to rent. Is it a really bad time to be buying now?
Any advice welcome , I have never had a mortgage before and find the whole thing incredibly scary , I am 33 and feel its about time I invested but really not sure if its the right time.

~Beanie~

Can't you move in with him for a while and save your money for a bigger deposit? At least you will be paying only one set of mortgage/rent and bills instead of 2 like you are at the moment.

Jennywren113

Not possible, his flat is tiny, barely big enough for him let alone 2 people!

ModernSlave

Jennywren113 wrote: »

Not possible, his flat is tiny, barely big enough for him let alone 2 people!

If it's that small he may have problems selling it anyway. When people know prices are dropping they tend to wait until something bigger and better falls into their price range, rather than making do with the small 'first rung' property.
What kind of rent would he get if he moved out with you to rent a bigger place? Would it cover the mortgage and would NR allow him to have a tenant?

JayZed

If you can't move in with your boyfriend (which would be the best solution), can your boyfriend move in with you (assuming he is able to let his place out at a sufficient rent)?

And why might your rent go up from £360 to £500? That's a massive increase at a time when most rents are stable or falling.

Jennywren113

Thats a good idea, however the rental potential is not great either. It probably wouldn't be quite enough to cover his mortgage. I think you are right about it taking a while to sell.

JayZed

Oh, by the way, I have friends (a married couple) who have lived in a flat the size of a postage stamp for eight years. Excluding the bathroom it's a single room about 10ft by 8ft. I wouldn't choose to live like that, but they're happy enough there.

Could you and your boyfriend not manage in his flat for a year or so, until prices begin to level out? Even if prices haven't levelled out then, properties will be cheaper, you'll have saved quite a bit of money and he'll have a bit more equity in his flat - so for a bit of short-term pain there could be considerable long-term gain.

Jennywren113

And why might your rent go up from £360 to £500? That's a massive increase at a time when most rents are stable or falling.[/quote]


Sorry , didnt make that clear, what I meant was I could afford to pay anywhere up to £500 rent! not that my current rent could go up.

mizzbiz

I reiterate what everyone else says about you both moving into his flat. We have done the same thing and it's no problem.

You will be grateful a few years down the line that you chose to do this if you do. It may be a little uncomfortable at first but you will adapt to it.

The only major issue we have is storage for both our stuff, but still, it's not too great a problem.

GracieP

What is the penalty rate to break the fixed rate? Probably less than the loss of equity on his flat over the next 2.5 years. If I was you I'd seriously consider having him move in with you, and (try to) sell his place. Then stay in your rental for a year or two while saving.