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Should we stretch ourselves for the perfect house?
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AppleCore
Posts: 215 Forumite
We've been looking for a house for a couple of months now and have decided on a small village we definately want to live in in Hertfordshire. Unfortunately houses seem to still be selling at 2007 prices and we're unlikely to pick up a bargain.
Its become clear that the type of house that would be our 'forever' house in terms of size, layout, location etc is just above our budget by 5 - 10k. This would be enough to increase our LTV and put us on a higher rate mortgage but we would not need to ever move.
We could settle for a nice enough smaller house in a less desirable part of the village at the lower end of our budget. We'd be likely to outgrow this in a few years but we would be able to afford this comfortably.
What should we do? I don't feel particularly comfortable with the idea of paying a high rate mortgage at the moment, what happens in a few years when the base rate increases? But then again we'd rather not have to uproot again in a few years, the cost of moving and stamp duty is costing us about 20k and we wanted to avoid this by not moving again.
Any advice?
Its become clear that the type of house that would be our 'forever' house in terms of size, layout, location etc is just above our budget by 5 - 10k. This would be enough to increase our LTV and put us on a higher rate mortgage but we would not need to ever move.
We could settle for a nice enough smaller house in a less desirable part of the village at the lower end of our budget. We'd be likely to outgrow this in a few years but we would be able to afford this comfortably.
What should we do? I don't feel particularly comfortable with the idea of paying a high rate mortgage at the moment, what happens in a few years when the base rate increases? But then again we'd rather not have to uproot again in a few years, the cost of moving and stamp duty is costing us about 20k and we wanted to avoid this by not moving again.
Any advice?
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Comments
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Here is a link to about a dozen articles in Moneyweek in the past 2 to 3 months on UK properties.
http://www.moneyweek.com/investments/property/uk.aspx
My concern about buying now are twofold:
1. Interest rates are at an historic low where they have never been. OK, they might stay this low for the next year or two but eventually they will go up again.
2. The Public Sector cuts are yet to hit - 600,000 jobs going in the next 5 years is bound to affect house prices IMPO.
This is not financial nor property advice.This is not financial nor legal nor property advice. Consult a paid professional if in doubt.0 -
Sounds like you're buying for you guys rather than cos you believe the property is going to race up in value, which is good.
It's a risk, but what in life isn't? I like the advice that if you've really investigated and committed to a risk it becomes less risky due to your belief and commitment. You are theoretically more likely to make it work for you.
Is there any way you can raise the extra £5k? What can you sell? Can you take an extra job? How much do you spend on holidays? Can you be a bit crafty with a 0%credit card for a fixed time and raise cash that way?
I'm surprised you say stamp duty is about £20K as that suggests you are paying just above the £500K threshold. It's unlikely anyone marketing their house for £500500 will actually expect to get that as it'll cost the buyer an extra £5K (it's £15000 on a £500000 property and £20020 on a £500500 property).
The only people who can know if it's the right thing for you to do is you. Are you FTBs or under offer? Just look at everything, do your sums and negotiate.
Good luck
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marmitequeen wrote: »
I'm surprised you say stamp duty is about £20K as that suggests you are paying just above the £500K threshold.
Its actually the combined cost of moving that will come to 20k, stamp duty, mortgage fees, EA fees, etc.Are you FTBs or under offer? Just look at everything, do your sums and negotiate.
We've sold to FTB and expect to exchange in the next week or so. we'll be moving into cheap rented for the interim so will be able to save a bit of £, we've cut back on everything to start saving now.
We don't know how long we should leave it for. There are currently 2 houses on the market that would be perfect for us, both we could get if we offered about 10k over budget. It seems that prices are rising again in this area so don't know if it's sensible to rent for too long incase we get priced out of the market. I wish I had a crystal ball!0 -
Personally I would go for it as long as you are sure you will never want to move again.
If you bought a cheaper house and then want to move again in a few years time it will probably cost you more in ea, stamp duty, moving fees than 5-10k.
We bought last year and could have bought a much cheaper house, however we stretched ourselves slightly (not too much lol) and now have our forever home which I doubt we will ever move from.
You need to factor in certain things in your decision though, ie, is your job as secure as it can be? what if a baby comes along etc, etc.
CC debt at 8/7/13 - £12,186.17
Barclaycard £11,027.58
Halifax £1,158.59
5 year plan to live unsecured debt free and move home0 -
Its actually the combined cost of moving that will come to 20k, stamp duty, mortgage fees, EA fees, etc.
aHH, that makes more sense. Sorry for being pedantic!There are currently 2 houses on the market that would be perfect for us, both we could get if we offered about 10k over budget.
Why not offer your budget and see what happens? You are in a great place to proceed. Is it naughty and bad to offer on both or make it clear that if you don't get one you'll go for the other? (sorry, my evil twin is clearly in charge today).
MQx0 -
We've put in 3 offers on one house already which have all been rejected. The vendor has come back with a price that is 10k over our budget, they might meet halfway (unlikely) but that's still enough to take us into the higher mortgage rate. We're just waiting at the moment, hoping that they may give in to us
We haven't offered on the other house yet but the AP is even more on that one so we're not holding out too much hope. I'm drafting a letter with a first offer to send but the AP is 390k and our max is 345k on the better mortgage rate so I can't see that one happening!0 -
Sounds like you're doing the right thing in holding on. You've nothing to lose by making your offers, but offer what you are happy with and make it clear that's your final offer etc etc.
Good luck - something will work out for you.x0 -
If you're sure that it could be your forever home, it could be worth it. Then throw everything you have at the mortgage for 2 years (when the initial agreement ends), by which time you'll hopefully have knocked enough off of the capital to be able to remortgage to a better deal.0
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Two issues,
The extra cost is low compared to another move so thats in vavour of buying the better place to avoid another move.
Affordability, how tight was you upper budget, if allready at the limit then with increaed cost due to LTV and higher borrowing that points to waiting a bit.
Since you are allready commiting to rent that's 6 months waiting time to start with.
I would hang on and put in offers at your prefered LTV to try and get the better rates. If the places don't sell you will have saved a bit more to up the offers and the vendors may become more flexable.
What sort of mortgage deal are you looking at and what rates?
If you have 2 places to offer on and you are only £10k off a deal with the first make offer on the second lower than your current best offer on the first and make sure they get to know about it(small village usualy word gets round quick), don't respond to the request for £10k more.
Then sit back and wait but keep looking. Even consider looking at places outside the village, don't show your we are moving into the village and no where else hand.0 -
Some great advice, thankyou. I think its clear that going for the house we're likely to stay in longterm is the most sensible thing to do.getmore4less wrote: »
Since you are allready commiting to rent that's 6 months waiting time to start with.
We're in an excellent position in that our FTBs are chomping at the bit to move in to our house and we have a flat lined up with no minimum term so will soon be chain free. I'm hoping that if we keep reminding the vendors of this they might finally relent to a lower offer.
Thanks again for all your help0
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