Is there a point in buying at all?...

Fly_Baby

Hello everyone, would be grateful for your views.

My OH and I are in our early to mid-thirties, have two young children. We have been renting for 7 years and built up around 75K of deposit through saving. OH earns 38K, I bring in 12K (I work from home to avoid childcare fees which in our area would amount to £1000+ for full-time care).

We have decided that we are prepared to buy but the big priviledge and the big problem is that we live in SE. So 3-bed houses start at 220K and for something half-decent you can expect to pay 250K+.

So even with the big deposit we are looking at a mortgage of 180K with repayments starting from £1100 with what is currently offered (unless I am looking in wrong places).

We currently rent a 3-bed house of the kind that we would like to buy, in the desirable area, for £850 (lucky).

So what's the best course of action in our situation? To continue renting, get both children in good primary schools and then buy whatever we can afford? But then there is an issue of secondary schools and right now we are close to the best one in our town. If we want to buy in this area then it is a mortgage of £1100 per month and God knows how much when interest rates rise.

Is a mortgage of 180K something to be scared of? I am not sure anymore that prices will be dropping further (not that they have done so considerably in our area anyway) but interest rates will rise at some point. To try and build up even more deposit? My youngest goes to school in 2 years' time so that's expensive childcare on me until then.

And I would love to own my house but only if that's something I like for the huge money it will cost, not for the sake of just buying...

Hope I wasn't confusing.

Bufger

How many years until both of your children would be in school? If you're in the catchment area of a good school at the moment i would be tempted to stay put and continue saving until they are in that school, then your second income will allow you to comfortably pay the mortgage + bills etc without worrying about childcare costs.

I think house prices wont rise much for a while but you're right that interest rates can only go one way at the moment. The point here though is that with them rising will you then be able to afford repayments or will it be too much of a strain?

gabyjane

Hi can understand where you are coming from but we are in a diff situation now..

We were on the SO (shared ownership) list for years and got nowhere..we tried saving for a deposit but tbh where we live it is impossible, small cottages, 2nd homes type holiday village where we began to realise we would be buying to break our necks each month trying to pay off a huge mortgage so we stuck with the SO route..just as we had given up we got a call about some new builds and we now own one of those..not an easy decision as SO but again the best we are going to get for our needs and income.

I still wonder how friends of ours who bought a little before us will ever buy their homes and how at times they afford it..ours is a very cheap mortgage and rent and we have that security that owners have yet we have a life too which is what we wanted. Friends with some slightly bigger houses that cost £30k upwards more baffle me as to how they will ever 'own' their house..not sure we ever will but we have 3 options
Buy it all and hope we can afford the huge chunk we commit to
Buy bits then the rent goes down and see how it goes
Overpay the mortagage and combine 1 and 2 possibly.

At the end of the day can you afford the outgoings?
When the childcare stops will you be ok, much better off etc..can you get through those times till then?
Fixed mortgage was the way for us as has settled me no end! could have done better with the rates dropping etc but i am not a gambler and like to know what's coming and going each month!
I LOVE the fact we own but can see where your securitys lie in a house perfect for you etc..i guess it's all a guessing game at the end of the day..scary but im so so glad we did it..
Sure someone else will be slightly more helpful!..sorry!

Bootski

Fly_Baby wrote: »

Hello everyone, would be grateful for your views.

My OH and I are in our early to mid-thirties, have two young children. We have been renting for 7 years and built up around 75K of deposit through saving. OH earns 38K, I bring in 12K (I work from home to avoid childcare fees which in our area would amount to £1000+ for full-time care).

We have decided that we are prepared to buy but the big priviledge and the big problem is that we live in SE. So 3-bed houses start at 220K and for something half-decent you can expect to pay 250K+.

So even with the big deposit we are looking at a mortgage of 180K with repayments starting from £1100 with what is currently offered (unless I am looking in wrong places).

We currently rent a 3-bed house of the kind that we would like to buy, in the desirable area, for £850 (lucky).

So what's the best course of action in our situation? To continue renting, get both children in good primary schools and then buy whatever we can afford? But then there is an issue of secondary schools and right now we are close to the best one in our town. If we want to buy in this area then it is a mortgage of £1100 per month and God knows how much when interest rates rise.

Is a mortgage of 180K something to be scared of? I am not sure anymore that prices will be dropping further (not that they have done so considerably in our area anyway) but interest rates will rise at some point. To try and build up even more deposit? My youngest goes to school in 2 years' time so that's expensive childcare on me until then.

And I would love to own my house but only if that's something I like for the huge money it will cost, not for the sake of just buying...

Hope I wasn't confusing.

You could buy my house! Depending on where you live and work. With that deposit you've almost bought half of it already. You might have higher expectations but the areas is good and the schools are great. you'd save a lot on rent and have a small mortgage and could move on in a few years anyway.

You'd be on the ladder. could get a good fixed rate now for the remaining mortgage before Interest rates rise.

OK - I've removed the link - I just don't understand what you want and when you're gonna want it. After 7 years renting and with that amount saved I certainly would stop paying someone elses mortgage - you'd save a fortune, even in the short term! ?????

I won't be offended if you don't want it but do have a look and think of the short term. Your savings won't be getting much interest and by Christmas 2011 you could be looking at stepping up the ladder. It is ex local authority but large 3 bed. suit you fine!! Ground rent and insurance about £110.00 PA and 100 years left on 125 year lease!!

Little garden for the kids and or dogs, near all major routes and in the middle of the Chiltern Hills - officially designated an area of outstanding natural beauty.

??? XX

Bootski

South facing garden??

tizhimi

If your happy renting, just rent. There is so much stigma attached to renting, you aught to just be happy in your rented house and keep saving

SouthCoast

Actual sale prices for #4 can be found here:


http://www.nethouseprices.com/index.php?con=sold_prices_street_detail&street=HONOR+ROAD&locality=PRESTWOOD&town=GREAT+MISSENDEN&cCode=EW&year=All&house_style=All&house_age=All&search_radius=15&outcode=HP16&incode=0NJ&eastingToSearch=48750&northingToSearch=20060

Bootski

SouthCoast wrote: »

Actual sale prices for #4 can be found here:


http://www.nethouseprices.com/index.php?con=sold_prices_street_detail&street=HONOR+ROAD&locality=PRESTWOOD&town=GREAT+MISSENDEN&cCode=EW&year=All&house_style=All&house_age=All&search_radius=15&outcode=HP16&incode=0NJ&eastingToSearch=48750&northingToSearch=20060

Yes, but you don't know under what circumstances they were sold nor what condition they were in and amount of work needed - I, however, do know and won't let that reduce the amount my property is worth.

Always a good idea not to generalise about houses in the same road, type. They vary considerably - so don't bypass them.

Jonbvn

Bootski wrote: »

After 7 years renting and with that amount saved I certainly would stop paying someone elses mortgage

Sorry but this is just a sound-bite. Until you pay of your mortgage completely, house ownership is akin to renting from the bank. With only one way for interest rates, the interest you pay could be substanitially more than your rent.

The amount the OP borrowed would be at the limit for several lenders (3.6 x joint income). This brings into question affordability, with the mortgage taking a large chunk of income. The key issue the OP has to address is how to deal with unexpected events such as redundancy. Given the uncertainty with jobs and the economy ATM, I would continue renting and saving, at least until the children are well established in their school. IMHO, house prices are mostly likely to stagnate for a while, meaning that your decision may not be time critical.

Fly_Baby

Bootski wrote: »

You could buy my house! Depending on where you live and work. With that deposit you've almost bought half of it already. You might have higher expectations but the areas is good and the schools are great. you'd save a lot on rent and have a small mortgage and could move on in a few years anyway.

You'd be on the ladder. could get a good fixed rate now for the remaining mortgage before Interest rates rise.

OK - I've removed the link - I just don't understand what you want and when you're gonna want it. After 7 years renting and with that amount saved I certainly would stop paying someone elses mortgage - you'd save a fortune, even in the short term! ?????

I won't be offended if you don't want it but do have a look and think of the short term. Your savings won't be getting much interest and by Christmas 2011 you could be looking at stepping up the ladder. It is ex local authority but large 3 bed. suit you fine!! Ground rent and insurance about £110.00 PA and 100 years left on 125 year lease!!

Little garden for the kids and or dogs, near all major routes and in the middle of the Chiltern Hills - officially designated an area of outstanding natural beauty.

??? XX

Your house is lovely (and the price is even lovelier!) but way too far from where we live!

In terms of "what we want". My OH is in academia and he has never had a permanent contract. So we were weary of buying until we know for sure that he is going to stick with his job. His contract wasn't renewed this year and he was getting interviews all over the UK, including Scotland and Wales. So there was no certainty that we would be able to stay put. That's for one.

And, as I wrote before, with local prices buying anything is just not possible for a FTB unless you save for a big deposit first. So we just couldn't afford anything even if we were willing to take a risk with OH's job.

Now he is on contract again - will I ever have SOME stability?.. No fun paying someone's mortgage, I am with on it absolutely.

Fly_Baby

tizhimi wrote: »

If your happy renting, just rent. There is so much stigma attached to renting, you aught to just be happy in your rented house and keep saving

I am happy with the house we live in now. But I am not happy renting. All the "perks" are here - no decorating, no holes in the walls, putting up with existing carpets, garden layout etc.

And I cannot help but feel a bit of a loser for not owning my own home despite us having a good joint income and family.