Am I storing up trouble for the future?

Tancred

Lizling wrote: »

Not necessarily. It depends on your individual circumstances.

Well, if you earn £100k or more a year then it should be possible, but I'm referring to people on 'normal' incomes.

antrobus

Tancred wrote: »

..... How could you possibly afford to drive or take a holiday? Even a meal out or going to the cinema become a struggle!

Some people might place a higher priority on buying a home, than taking a holiday, going out, or indeed owning a fashionable motor vehicle.

Better_Days

OP, I can understand your concerns. Well done saving up such a big deposit.

A 5 year fixed rate is a good idea - this will take you well past the next election and give you time to plan and assess what is happening with interest rates after 2015.

Do consider a 10 year fixed as well. Remember that as wages increase (hopefully) the repayments will be easier as time goes by.

Do your sums. Work out how much the mortgage will cost you on a 5 year fixed (including all arrangement/exit/valuation fees etc) and compare that with what the cost will be on a 10 year fixed. Look at the overall difference in cost and work out if taking into account your attitude to risk, it is worth it to you to pay the extra for peace of mind over 10 years.

In the short term it does appear house prices will rise (although it does depend on area) - I just cannot see how additional house building will meet the demand of those given assistance when 'help to buy' is extended. Have a look at Right Move etc - what is happening to house prices in your area?

Three areas of advice:
1) Overpay as much as you can afford early on in the mortgage (make sure that the interest your lender charged takes account of any overpayments - preferably on a daily basis). If things get stickly later on it will then not be as expensive to re-mortgage and/or extend the term
2) Keep all your other debts as low as possible. No 'buy now pay later' - use freecycle, ebay etc. Pay off your credit card every month. Although from your post it does sound that you have already been very careful
3) Make sure you have a 'rainy day' cushion, possibly in an easy access ISA. This should be enough to cover at least 3 months (preferably 6 months) of outgoings. Don't forget that you will have to maintain your property when you purchase. Make sure you have enough funds to replace the boiler if it packs up unexpectedly or similar expenses.

If you live in an area where prices are going up then this is a good time to buy. If you don't there is the danger that price will increase beyond what you can afford, and you may have to wait many years for a 'correction'.

Go over to the House prices and the economy board for some varying views on what this government is up to with house prices.

GL and bear in mind that you may not know for a while if you have made the right decision.