Should I buy now or wait

caseylee2003

Hi All,
I'm in a dilemma as to whether I should buy now (we're first time buyers) or wait, reasoning being:
We have about £20K or so saved which is about 15% deposit on a £170K house and the rate I would get would be about 5.8% fixed rate. The issue I have is that when I work out how much interest we will end up paying it is very depressing - i.e. we will end up paying about £300K back over 20+ years, unless I have misunderstood this as this is all fairly new to me. Now me and my partner have decent incomes, and could probably save up to around another £20K in the next year, or could even wait a couple of years and get an even bigger deposit, but are we in danger of missing the boat with cheap house prices and also cancelling out the savings we are making by continuing to pay rent (we pay £650 a month between us at the moment).

Thanks very much for your opinions

Casey

beecher

Keep saving would be my advice. Hopefully prices will have further to fall and you could easily have a 25% deposit in a year which will make a huge difference. The gamble is that you don't know what sort of deals will be available by then, but I would think it is worth that gamble in order to up your deposit.

Mini_Bear

I wouldnt get lured in2 the VI spin of "u will miss the boat if u dont buy now". ppl are still bein made redundant.. until jobs start bein created i dont see how property prices can sustainably rise.
also have u thought about overpayin ur mortgage each month? look on the mortgage free wannabe forum, they have excellent advise. it may be wise to go for a mortgage that allows overpayments every month. this will cut down massively on the interest u pay over the full term and could mean ur mortgage free 10 yrs early!

happybroker

It is a dilemma and I can completely understand why you feel as you do.

The rates at higher ltv's are high as banks don't really want to be in that arena which is mainly down to liquidity issues....I was reading that the impact of a mortgage at 85%+ ltv on the liquidity of the lender is 6 fold that of a mortgage below 80% and so they effectively price themselves out of it (like a plumber who doesn't really want a job so puts a price in that would make it really worth their while if the customer chose them to do the work!).

House prices are low and fixed rates are on the up at the moment, certainly base rate doesn't have too far to go as far as cuts are concerned and the smart money is certainly not on that anyway, this is where the "u will miss the boat if u dont buy now" argument comes from.

If you are really concerned that the interest on a mortgage over 20+ years is such a lot of money then possibly long term borrowing isn't for you, the alternative doesn't paint a particularly rosy picture either....a rock and a hard place I think it's called. Certainly the fact that borrowing large sums of money over long periods of time is an expensive business won't go away.

Personally I think it's more emotive than that, if you see a place you love, can afford it and can get the funding then there really is only one option. I would keep saving and keep an open mind with what opportunities present themselves in the mean time.

Ditto

Mini_Bear wrote: »

also have u thought about overpayin ur mortgage each month? look on the mortgage free wannabe forum, they have excellent advise. it may be wise to go for a mortgage that allows overpayments every month. this will cut down massively on the interest u pay over the full term and could mean ur mortgage free 10 yrs early!

This is what I'm thinking as well, if you can comfortably afford the mortgage you can overpay each month to bring down the years. I know paying a mortgage over 20 years scares me so I hoping to get a mortgage for 10 years (I reckon I will have slightly more than 50% ltv, I'm looking for a house around £100,000) and hopefully be able to overpay and possibly bring it down to 8 years. I am looking to get a 5 year fixed rate mortgage.

SelbyJay_2

I would buy now while fixed rates are relativly low - they're already on the up - and make overpayments on the mortgage as soon as you can. You can make a HUGE difference with the overpayments.

I took a £40k mortgage and if i hadnt have bothered with the overpayments, i would have finished paying nealy £80k back. This is nearly always the way with mortgages i guess. Best not to think about it!!

Pee

I would keep saving but start to really focus on the market in the area that you want to buy, so you can see a house that is cheap or expensive and then work out why. If the right house comes along, then if you can afford it, go for it, but the longer that takes... I can't see house prices falling much lower, but neither can I see them going up in the next two years.