Buy now?

Worried

I know, I know, I know, how can anyone really know whether now is the right time to buy, but I just wondered if anyone could offer some advice to help me make a decision. OH and I are wanting to buy this year. Have a deposit of around 25k, which is growing by approx. 1k a month. We are in the north kent/ se london area and prices seem to still be increasing steadily here. The kind of house we're looking at seems to have gone up about 20k from when I started taking an interest this time last year.

Because of OH's lease on rented place, our options are to start looking for a place in the next few months and aim to be in by Oct, or start looking in Oct and aim to be in for March 08. It would suit us better to wait a bit due to personal circumstances, but I am concerned about rising interest rates and house prices. It seems to me we are getting in a worse position as time goes by and maybe we should get on with it sooner rather than later. It seems to me that if we wait until the autumn to start looking we are just going to be paying 5-10k more for a place and paying back on a much higher rate.

Can anyone think of any advantages in waiting until Oct to start looking, or do people think that a matter of 5, or 6 months won't make much difference to our situation and we should just do what suits us best. Any advice would be appreciated, as we are going round and round in circles with this one!

seraphina

You say you are saving 1k a month.

If you save 1K a month from now until October, that's £8K + interest.

You say prices may be between £5K and £10 K higher, but you're deposit will have grown to match.

You hit the nail on the head when you said you need to do what's best for you - keep saving and if it suits you better to buy in October, I'd buy in October. Your deposit can only get larger.

bloomsberg78

You need to think about where you think the hosuing market is heading. I've sold to rent so you can probably guess my thoughts on the near future. In my view houses can not keep rising above inflation indefinitly and there are some big signs of the market slowing down.

I would suspect that even if the market has a good year this year, with the amount you are saving, the prices shouldn't fall out of your reach.

However, if the house you're looking if going to be a long term purchase (i.e something you feel you could stick with for the next 15 years), then any slump in the housing market shouldn't worry you as much.

And in answer to your question, I believe there are great advantages in waiting until October, With the recent and impending interest rate rises on the way, no way(in my opinion) is there going to be any significant spike in House Prices within such a short space of time.

Worried

I guess my deposit will have grown to match, so we're not in a worse position in that sense, but we're still paying more for what we can get cheaper now (although the mortgage will be the same size) and what about interest rates? How likely is it that we will find a good fix rate deal in October? It's really the bottom end of the house market we're looking at. I'm just worried about houses moving beyond our reach if we wait a further six months, because the repayments would be so much more. I don't want to have to start looking at top end of flat market instead. Do you think my fears are realistic?

Worried

Thanks bloomsberg. But it seems like many of my friends have been saying the same thing and waiting for the past couple of years, only to find themselves in as much worse situation and not being able to afford what they could a year or so back, despite having a bigger deposit. I guess I'm scared of waiting and prices and rates increasing as they have been, but also of buying now and something dramatic happening. We would be looking at it as the a long term place, so I guess it doesn't matter so much, as long as we dont go into negagtive equity! i just feel very confused!

irnbru_2

Worried wrote:

concerned about rising interest rates and house prices

You're not alone!

Worried wrote:

Any advice would be appreciated, as we are going round and round in circles with this one!

1. Know your market. Which areas and which properties are selling poorly/well.
2. Negotiate. Interest rates have gone up .75% since 08/2006 (IIRC). Remind any VIs when making offers.
3. Make sure any savings are working hard for you until you need the deposit.
4. HIPs should cut down your costs.
5. Don't panic
6. See 5!

Worried

Thanks for the advice. Sorry, what are HIPs?

irnbru_2

Worried wrote:

Thanks for the advice. Sorry, what are HIPs?

HIPs are being brought into England and Wales.

reformedspender

We're in pretty much the same position as you are as first timers, saving a similar amount a month and suffering the same dilemma.

We are still scanning the websites/local newspapers and actively searching but we are only seriously considering places we will be happy to stay in for a minimum of five years - possibly more.

We're not looking for any old place just so we can buy a house; we know we've missed this particular boat and if we buy somewhere it's probably only going to make modest increases in price - if anything. We are looking with the attitude that we're nesting and not investing.

We're also being cautious about our budget and trying to keep our repayments at a sensible level. We're not over-stretching ourselves in the belief we're going to be sitting on a goldmine in five years time! Until we find the 'right' house at a price we're happy with we're sitting on our hands.

Good luck with your searching.

abaxas

There has never been a 'good time to buy'.

Just a few tips
1) make sure you can afford the mortgage at 7-8% interest rates (just incase)
2) have 2-3 months of payments saved, just incase you lose you job
3) fix your rate for a few years (3 maybe) until you find your feet
4) do a cash flow spreadsheet (with ins and outs) see if you can actually afford it
5) dont buy a dfs sofa :P