Should We buy now or wait?

oilrag

Hi All

Our situation:

- income 1 = £25.3k income 2 = £19.5k

- deposit in bank is £17k as first time buyers

- area is Oxford (surrounding areas), house price around £200k

- mortgage amount offered by nationwide a year ago was £175k before pay rises (our joint was 37k previously)

- currently renting @ £750pm

- we are 28 and 24 yrs of age and want to get married in the next year or two then kids a year or two after that hopefully :j

The problem:

We were planning to buy when our current rental contract expires April 2014 but have just been given some money from my parents to add to our deposit.

We now have the option to look at buying with a 95% mortgage but just have a few questions for you lovely people.

1. The mere mention of house price bubble worries me. We know house prices in the area and I am worried we will buy just for the value to go down. Do you think this bubble will happen and if so would it be soon? I understand no opinion can be concrete here.

2. Ive been trying to find info on the new help to buy guarantor scheme but as it is new I cant seem to find costs or notice any major drawbacks to it. Would it be worth going for?

3. If we move now we will lose either our deposit or a months rent (£750) but can start the long road to paying a off a mortgage. But if we wait another 6 months we might be able to get to around 23k savings which might be enough for 10% deposit inc fees which I know will help on the rate

:eek: Any advice would be great! thanks!

HAMISH_MCTAVISH

oilrag wrote: »

Any advice would be great! thanks!

6 months is a tough call....

On the one hand, yes you'll get a better rate if you can reach 10% deposit.

On the other hand, prices will almost certainly have risen markedly by then.

As for a bubble, no need to worry.

If prices are rising because demand exceeds supply, as they are in the UK, then by definition it is not a bubble.

shortchanged_2

A quote from Danny Alexander to the treasury committee

He also rejected criticism that the government should be tackling a house supply shortage, rather than demand. "All the housebuilders tell us is that what is holding them back (building more houses) is a lack of demand," he said. "There are lots of other policies that this government is doing to tackle demand."

Now some will say it is lack of mortgage lending and others will say it's because housing is overpriced, hence the need for all these schemes to give people a 'helping hand' into the property market.

oilrag

Thanks for the replies guys.

We want to avoid new houses. The issue for us is not that the new houses are not available, it is that the new houses are pretty poor value! lol

In our area there are new house developments in quite a few towns (bicester, didcot etc) but after looking they are very small and most start at £250k!

My brother in law has also worked on developments like these and says the quality is terrible, thin walls and built in a hurry...

ognum

It could well take you six months (the rest of your rental contract) to find a home and get through the legals before you move in.

With regards to house price bubble, who can say, are you going to stay there for a long time? If you are and it's your home then historically over 10 - 20 year periods prices have risen, if you want to stay a couple of years it's your call.

I would say, don't buy a starter home, try to make it to a second step home where you can stay to have your family.

Know that you are going to stay in the area as moving is difficult and expensive.

Hope this helps!

oilrag

ognum wrote: »

It could well take you six months (the rest of your rental contract) to find a home and get through the legals before you move in.

With regards to house price bubble, who can say, are you going to stay there for a long time? If you are and it's your home then historically over 10 - 20 year periods prices have risen, if you want to stay a couple of years it's your call.

I would say, don't buy a starter home, try to make it to a second step home where you can stay to have your family.

Know that you are going to stay in the area as moving is difficult and expensive.

Hope this helps!

yeah that is grea thanks. I read that in the long term if you want to live somewhere for long time, short term house prices are not an issue.

I would want us to live in the house we buy for at least 5 years!

J_i_m

It seems to me that this house is going to your family home, and you're not viewing it as a entrepreneurial exercise, well done you.

In which case I'd ignore the so called bubbles, crashes or whatever and focus on your own financial position. Predicting what the market and economy is going to do is a fickle exercise and in your position I'd be minded to ignore all that and buy when you are in good position to do so whatever condition the market happens to be in at the time.

There's little point in putting your life on hold whilst you wait for the market to reach a state that it may well never reach.

dimbo61

Keep saving and look for an older house big enough for you and a family!
Forget the new help to buy ( only for new builds)
If you can get the mortgage then overpay if at all possible while you are both working.

AndyGuil

If you need to get out of your tenancy offering to pay the admin fee and continue to pay rent until new tenants are secured is normally accepted.

dinofabio

Nobody can give you an answer only an opinion.

In my opinion, the economy is on the up, growth figures have been revised upwards, lenders are borrowing again, and there are signs in most areas of the country that the houses are starting to sell quickly and a lot nearer the asking price.

Even where I live in the midlands (usually a dead spot), property has started to take off over the last 6 months.

I would think about getting on the ladder sooner rather than later.

You could save a few ££ by waiting a few months, but if house prices take off in the mean time, you could be significantly worse off (by having to pay a lot more for the same property)

18 months ago I would have said keep saving. I wouldn't say that now. ....but that's just my opinion. Others will disagree. We will see who was right in a few months from now!

HAMISH_MCTAVISH

dinofabio wrote: »

18 months ago I would have said keep saving. I wouldn't say that now. ....

Indeed.

The risks of waiting are now much bigger than they were for most people in most areas.

Although in fairness, in a few of the more depressed areas, they may have a bit longer yet.

If you're looking at a 50K house in a grim ex mining village hours from anywhere, chances are it may only be 51K or 52K in 6-12 months.

But if you're looking at a 150K house within an hour of decent employment, it could easily be 175K in 6-12 months, which changes the costs and risks of waiting dramatically.