Are we about to make a huge mistake? (FTB)

BrandNewDay

Well... we're about to buy a house. It's a 2bd terrace, and we're paying £62,000. We'll put 10% down and then get a mortgage, but I'm not exactly sure what sort of terms those will be, yet. Due to my husband's adverse credit (bankruptcy from a business failure), I believe we're looking at 7.5% fixed for a couple of years. Those payments will be less than the rent we're paying now, but the commute to my husband's job will be significanty greater. With petrol prices where they currently stand, our combined rent/petrol monthly output will be slightly less. We have no debts and we live pretty simply. I think we have quite a bit of buffer before we couldn't make our house payment if interest rates go much higher or petrol goes up a lot more. At this point, we live entirely on my husband's income, so I could get a job if interest rates and oil prices get ridiculous. Barring some horrible recession, of course. But, aren't those possibilities always out there? Would it be foolish to let those worries paralyze us?

I guess I worry that we're buying at the peak of the market. The house is in excellent condition. The roof has been done in the past year. It's all nicely decorated. We like the neighborhood. We hope to stay for some time.

But... are we stupid to buy right now? I feel like it's better to buy than to rent indefinitely. I also tell myself that the lower end of the housing market probably won't be hit as hard as the higher end. I mean, if our home loses x% for a couple of years, x% of 60,000 is a lot less than x% of 130,000.

lynzpower

Wow, I have to be honest, I havent come accross many people who are buying NOW where its less than the rent! Well done for finding it.

personally, Id go for it the only issue is obviosly OHs commute, if thats not bearable then dont bother and keep looking.

UK007BullDog

If you are worried about income etc then go the fixed route, so that you can budget.

Maybe he can use the train or bus to commute? might be a lot cheaper that using the car.

dannyboycey

62k for a 2 bed terrace!! Does it have a roof?? I'm assuming that is what you are paying and not the actual value of the house? If not, where is it?

BrandNewDay

It's in Dumbarton, a suburb of Glasgow. It's in lovely condition. Absolutely nothing wrong with it. The neighborhood is a bit "rough" but nothing we have a problem with. I mean, it's not the sort of neighborhood people dream of living in, but it has a lot of conveniences (walk to church, school, shops) and the neighbors are friendly. Lots of kids.

DH works in mid-Argyll - way out in the Highlands. There's nothing there we can afford. We rent there, now. It's lovely, but I get cabin fever in the winter and the cost of driving everywhere is hard on me. I won't have to drive at all in our new home, which will offset his commuting a little bit.

No, public transportation is not an option for his commute. His job is too remote.

However, at least we're not as vulnerable as we would be buying here. If something happens to his job, it will be easier for him to find something else down there than up here.

RAS

Couple of thoughts.

1. I would definately suggest that you look for some temporary or part-time employment. Get three months outgoings into an ISa so that you have a cushion if anything goes wrong.

Also recent work experience makes you much more employable in the future. My guess being that this has not been much of an option in argyll?

Longer term, if you can earn anything extra beyond the cushion, save it up and pay a lump of the mortgage. Once you get down a bit, there is a chance you could get a better rate.

2. Can hubby check on one of the car share web-sites whether anyone goes the same way? Even if it is only a couple of days a month, it could help you out a bit.

BrandNewDay

RAS wrote: »

Couple of thoughts.

1. I would definately suggest that you look for some temporary or part-time employment. Get three months outgoings into an ISa so that you have a cushion if anything goes wrong.

Also recent work experience makes you much more employable in the future. My guess being that this has not been much of an option in argyll?

Longer term, if you can earn anything extra beyond the cushion, save it up and pay a lump of the mortgage. Once you get down a bit, there is a chance you could get a better rate.

2. Can hubby check on one of the car share web-sites whether anyone goes the same way? Even if it is only a couple of days a month, it could help you out a bit.

I have been working... we just live off of his income so that we won't feel bound to be a dual-income household. All the money I've saved goes into an ISA, so there is an emergency fund in place. But, if interest rates/petrol goes up too high to manage on his income, then any money I earn will have to bridge the gap. My current job is cleaning houses, and I'll have to find something else when we're down there. I kinda expect to be able to find something seasonal in retail this fall/winter/Christmas.

We're still debating whether or not to try and put extra towards the mortgage. We still want to save for retirement and other things. So, we're going to save what we can and then make a decision once a year. It's a repayment mortgage, not interest-only, so that should help.

I think his credit will be repaired in two or three years and we'll be able to get a competitive rate. There's just no telling what that will be, is there?

Car sharing is probably not an option. I think it's unlikely that anybody is going that way, but it wouldn't hurt to try and find out. DH is hoping to be able to telecommute one day a week... he does computer stuff for his employer and gets a lot more done from home. In fact, when a bad accident closed the road to work a few weeks ago, he had a VERY productive day working from home. That would save us about £40 a month, I think.

bristol_pilot

Although I am a "believer" in the crash, on these figures I think you would be OK. Round where I live, an IO mortgage is up to 10 times the rent. If I could buy a 2 bed house for £62k I'd be laughing. I don't believe this will be badly hit in a crash. Its the £350k 1-bed flats city centre that are in the firing line.

bobbie78

head on over to the debt free wanna be board and post an SOA (look at the sticky threads at the top on that board) then people will advise just how tight things look for you if you go ahead or will be able to help find ways to save money on things you haven't thought of or how to make extra eg mystery shopping etc. Then you will be able to see if the mortgage did go up by 90 quid twice in 6 months if you could still cope or not.

[Deleted User]

get a long fixed period, mag to grid the petrol car and buy a £500 diesel