Would I be crazy to consider buying now?

QTPie

OP, how old are you and have you ever lived by yourself before?

I think that moving into a place of your own is a big step, particularly financially (not only do you have rent/mortgage, but you also have all of your utilities, insurance, council tax, if it is a flat then normally a service charge... etc.). It can cost a lot more than you think.

I am saying this - not to patronise - because we see quite a few people on here who have bought their own place, over-stretched themselves, end up selling at a considerable loss, then moving back in with their parents... I would NOT want to see that happen to you.

Today is not a bad time to buy (if the property can be bought at a reasonable price): ignore the doom-mungering - statistics, graphs and trends can be used to suggest anything. Prices may continue to drop, but if you are financially secure, you plan to stay put for the longer term (more than 5 years - which could be an issue with a one bedroom flat...) and you get a good fixed interest rate, then it isn't that bad.

BUT the most important thing is to ask "is it a good time for you personally"? I honestly think that you would benefit from renting for a while, finding your feet and maybe looking to buy in a year or two (when you have a better appreciation or the costs of running a flat/house - may also give you a bit more time to save a larger deposit).

Good luck, whatever you decide.
QT

besonders1

I would say anytime would be a good time to buy if the house was priced cheap and as long as there was nothing wrong with it. I would imagine that you are less likely to get gazumpted in todays climate and you would get 20% discount from the peak although I would wait longer if you can as personally I think todays so called bargain prices are just tip off the iceberg compared to selling prices 5-8 years ago. I would just watch out for Estate agent and media spin about when the bottom of the market will be .

JayZed

flutterbyuk25 wrote: »

Turns out I can rent a 1 bed flat for £400-£450/month or buy a small 2 bed terraced house (in an area that I would consider living in, as a FTB) for mortgage of around £470/month.

Is that a repayment mortgage or interest-only?

flutterbyuk25

QTPie wrote: »

OP, how old are you and have you ever lived by yourself before?

QT

I'm 26 (27 next week) and yes I rented at uni for 3yrs, then bought a house with a now ex boyfriend, lived there for 3 years. Sold it when we split, deposit for next place is a result of the profit made on that sale.

So I'm aware of all the costs involved, bills etc. I am good with budgeting and will be able to afford it.

I've been back home with parents for 2 and half years. Moved back with parents for numerous reasons - too expensive to buy on my own/rent at that time, wanted to travel for a bit and my mum isn't well so I can look after her (but she is improving now so feel i can move out).

x

flutterbyuk25

JayZed wrote: »

Is that a repayment mortgage or interest-only?

repayment

x

QTPie

flutterbyuk25 wrote: »

I'm 26 (27 next week) and yes I rented at uni for 3yrs, then bought a house with a now ex boyfriend, lived there for 3 years. Sold it when we split, deposit for next place is a result of the profit made on that sale.

So I'm aware of all the costs involved, bills etc. I am good with budgeting and will be able to afford it.

I've been back home with parents for 2 and half years. Moved back with parents for numerous reasons - too expensive to buy on my own/rent at that time, wanted to travel for a bit and my mum isn't well so I can look after her (but she is improving now so feel i can move out).

x

That sounds good: it wasn't clear from your original post if you might have been 19 and never lived away from home before - but that definitely isn't the case.

As I said, above, then: it isn't a bad time to buy (especially - as you say - if you are certain that you can afford it, are good at budgeting and financially secure). BUT you do want to be there for longer than 5 years really: that MAY be a worry if you buy a 1 bedroom flat at your age (if, for example, you are looking to settle down and maybe start a family). That is a very personal decision, but you probably don't want to be buying now to sell in a year or two...

Good luck, whatever you choose

QT
(I can understand wanting your own place... I haven't lived at home since the age of 18 - university, then living with my then boyfriend now husband - people who live with their parents are brave).

JayZed

Flutterby, if a repayment mortgage is going to be as cheap as (or not much more expensive than) renting, then that's a strong argument in favour of buying. Can you get a mortgage at the relevant interest rate with only a 10% deposit? If so, then I'd say go for it.

rs82uk

Dont forget it may be about the same to buy as rent at the moment but at the moment IR is silly low and can only get higher so do you want to be in a situation where your mortgage payments suddenly shoot up by 200 quid

penguine

With only a 10% deposit, I would look to save longer before buying. We're only at the beginning of what looks to be a very severe recession, and prices are likely to fall much further. Back in the 1990s property prices fell for several years then remained stable for a few years before going back up again. This recession looks to be much worse so prices may well fall further.

In a few years' time you're likely to be able to get a larger property, and with a larger deposit you'll have a better choice of mortgages. As others have noted interest rates won't stay this low forever. If they go up you're likely to be very badly affected as in the early years of your mortgage term you're paying a larger proportion in interest.

JayZed

I'm a little puzzled by the suggestion that it's a bad time to buy because interest rates are low. I appreciate that's not exactly what the previous posters are saying, but the suggestion that you shouldn't buy now because interest rates might shoot up is counter-intuitive. The whole point is that you can fix at a low rate now, which you might not be able to do in a year or two. The front-loading of interest is an argument in favour of, not against, getting a low rate at the beginning of the mortgage.

At least, you can if you have a sufficient deposit, and my main concern for the OP is whether with a 10% deposit she'll be able to get a decent mortgage at this time.

As for the future of house prices, well yes, they might continue to go down and they might remain low for some time, but that's not necessarily a reason not to buy now. Calling the bottom of the market is a tricky proposition, and the key basis for the decision should be affordability, not asset values. It's clear that the OP is giving serious thought to the affordability issues.