Is it worth buying just to get on the property ladder?

Lungboy

As the title says really. My wife and I currently live with our newborn baby in my mum's house. We pay no rent or bills as I'm a carer for her. It's allowing us to save like crazy, which is great. However, my wife is feeling increasingly trapped with the lack of space and an expanding family. There's a new build development just up the road which looks very nice, and with Help to Buy we'd be able to get something very nice.

Personally, I'm not too fussed about moving, and worry that now is a bad time to buy with prices high and interest rates possibly going up soon. Is getting on the ladder worth it and ride out any short term dip, or is staying put and saving even more the better way? The latter feels the more sensible option to me, but I'm rather risk averse, and I can see the allure of a nice new house with the room for us to expand into.

emmatthews

Keeping your wife happy is always the best option!

Out,_Vile_Jelly

How will you know when it's the guaranteed perfect time to buy?

There are pros and cons to renting and buying; they suit different people at different times of life and different circumstances.

If you've been able to save you're in a strong position. No need to rush into it just because there's a shiny new house just up the road. Do your research, check all local options rather than the nearest new development. Do a budget for if your wife has maternity leave again in the next few years.

HouseBuyer77

A house isn't only a financial decision, it's a lifestyle decision too. Having your own space to start your family is hard to put a price on.

From a financial point of view with an interest rate hike on the horizon now may be a better time to get a mortgage. Provided you're happy to stay there for several years you can get a good fixed rate deal running for 5 or maybe even 10 years. The deals might not be so good next year.

Davesnave

Why buy a new build and pay the premium price for it if there are newish and reasonably up-together houses nearby?

I can sympathise with your wife. The nesting instinct is so strong that it often overrides caution & patience, but here the introduction of a young baby seems likely to cause friction anyway, so IMO the best solution all round would be to find your own space.

People always try to predict the housing market, but in the long term bricks & mortar have always proved a decent investment.

Ozzuk

If you are viewing as a long term home then it doesn't really matter what prices do. Mortgage rates will likely only go one way (so you need to plan for that).

Personally, I've always pushed myself to have property and view it almost like my pension - plus in theory you own the house after say 25 years and won't have anything to pay, whereas if you always rent, you'll always have to pay.

I move house quite a lot, but I always keep the mortgage term the same so it isn't resetting back to 25 years each time.

You have much more freedom with rent, I think that is the main benefit.

Cheeky_Monkey

If you move out, who will 'care' for your mum?

Davesnave

Cheeky_Monkey wrote: »

If you move out, who will 'care' for your mum?

I'm sure you mean well and I'm equally sure the OP has considered this, but it's not part of the question asked.

There are other forums much better suited if the OP needs advice re their caring role.

I was my Dad's carer for a number of years, but I didn't live with him. Every situation will be different.

richardman

While I have a prefessional job with prefessional skills, I am a frequent trader in stocks, forex, futures, spreads, etc. I have most of saving in stocks like Vodafone, SSE, AstraZeneca, Sainsbury's, etc. I keep buying them whenever they are "relative low" based on technical analysis. I then collect dividens which over years I get at least 5~7% annually payouts. During short term spikes I would cash out (like Verizon Vodafone acquisition) and come back later when it become technical relative low again. FTSE100 has 100 stocks so I can always go around cycles between them, don't have to loyal on one or two. Dividens are the major objectives, anything else I would just treat them as bonus. Over the years the way I invested, profits I made are many many folds more than I would have made if I invest in houses. However, if I could start over again, I would probably get a mortgage as early as I could to build up capital gain in early stage.

Anyway, you see, with my background, to me houses are a "high risk" investments at the moment: difficult to liquidate, long term interest rate uncertainty. God can make predictions, I'm just a human being, so I take action on facts, results, not predictions (that's gamble to me), but that's just my style, an investment style works for me.

I don't have a house (yet), because I didn't believe in it and never pay attention to it before. However, I am purchasing one now because of family reason similar to yours. To me, this is a "realatively wrost time" to buy one, because: rising house prices in the last few years (past is past, not a guarantee of the future), interest rate (uncertainty). If direction of my stock market investment changed (e.g. stop paying dividends), I can liquidate/cut loss/hedge within days. For houses, I could probably only hedge them, but I don't think I can just walk away easy if I want/need to.

As not a smart and clear thinking person, I have only recently come to a conclusion that, when buying a house, it is a just for personal reasons, and for my family. As long as I can get one and afford it, anything else won't matter. If house price rises, think of it as bonous; if house price falls, it won't matter if I am not selling. My family thinks stock market is a very high risk thing. I keep telling them, risk is a function of knowledge you have on it; they don't know about equality market so they think is risky, just like I think houses are risky because I don't know much about them.

FTSE100 is close to 6700 points now. What's the worst thing could happen to it? Drop down to 0. What do you think its going to happen when FTSE100 is at 0 point? The country is doomed. What is safe when the country is doomed? Nothing!

So in short, my own opinion right now is buying a house is for my life, my family and what I can afford. My family wants one NOW, and I can afford it even if the interest rate rise in the next 25 years, so I will buy one, and keep learning about what I'm actually buying, plan and take actions in the next 25 years! Anything else, prediction wise, that's God's thing, not mine.

jacko74

You might find it's more of a property hamster wheel rather than a property ladder these days...

The current stagnant property market conditions across most of the UK appears to be largely due to peoples inability to be able to afford to move up the 'ladder'

Unless your earnings are likely to considerably increase at some point in the future you'll probably find that what you can afford now will be as good as it gets for you.

Lungboy

emmatthews wrote: »

Keeping your wife happy is always the best option!

Yeah, it's definitely turning out that way!

Out,_Vile_Jelly wrote: »

How will you know when it's the guaranteed perfect time to buy?

There are pros and cons to renting and buying; they suit different people at different times of life and different circumstances.

If you've been able to save you're in a strong position. No need to rush into it just because there's a shiny new house just up the road. Do your research, check all local options rather than the nearest new development. Do a budget for if your wife has maternity leave again in the next few years.

I guess I'll never know, it just seems particularly bad at the moment. Renting isn't an option, it's either stay put or buy. I agree about no need to rush, I'm taking this very slowly. Even making the decision on whether to buy is going to take weeks or more, let alone picking an actual house. Staying as local as possible is the preferred option so I can still look after mum. A budget is obviously the next step, to see where we'll stand and whether interest only or repayment would be the way to go. It gets complicated with Help to Buy repayments kicking in after 5 years too.

HouseBuyer77 wrote: »

A house isn't only a financial decision, it's a lifestyle decision too. Having your own space to start your family is hard to put a price on.

From a financial point of view with an interest rate hike on the horizon now may be a better time to get a mortgage. Provided you're happy to stay there for several years you can get a good fixed rate deal running for 5 or maybe even 10 years. The deals might not be so good next year.

Very true, and that's why it's so tempting. Staying put for several years after buying is no problem, so a 10 year fixed deal might be a good option.

Davesnave wrote: »

Why buy a new build and pay the premium price for it if there are newish and reasonably up-together houses nearby?

I can sympathise with your wife. The nesting instinct is so strong that it often overrides caution & patience, but here the introduction of a young baby seems likely to cause friction anyway, so IMO the best solution all round would be to find your own space.

People always try to predict the housing market, but in the long term bricks & mortar have always proved a decent investment.

New builds are pretty much the only things for sale within the very close vicinity, and I want to stay close to look after mum. I'd happily buy something else if it were better value for money and still close enough.

Ozzuk wrote: »

If you are viewing as a long term home then it doesn't really matter what prices do. Mortgage rates will likely only go one way (so you need to plan for that).

Personally, I've always pushed myself to have property and view it almost like my pension - plus in theory you own the house after say 25 years and won't have anything to pay, whereas if you always rent, you'll always have to pay.

I move house quite a lot, but I always keep the mortgage term the same so it isn't resetting back to 25 years each time.

You have much more freedom with rent, I think that is the main benefit.

Very true, but if something unexpected happens and we need to move quickly, taking a big hit on the equity would be nasty, although softened somewhat under Help to Buy as I understand it. Again, rent isn't an option and I agree with you that it would be throwing money away in this situation when compared to paying off a mortgage. Freedom doesn't come into it due to being tied by mum.

Cheeky_Monkey wrote: »

If you move out, who will 'care' for your mum?

Still me, just from a small distance. She has other carers too, that she pays for, and by me not being here eating food and using her utilities she'd be able to afford more care. I'd continue to do the things I currently do that carers can't/won't, like banking, household maintenance etc.

Davesnave wrote: »

I'm sure you mean well and I'm equally sure the OP has considered this, but it's not part of the question asked.

There are other forums much better suited if the OP needs advice re their caring role.

I was my Dad's carer for a number of years, but I didn't live with him. Every situation will be different.

It's a fair comment, and taken as I hope it was meant.

jacko74 wrote: »

You might find it's more of a property hamster wheel rather than a property ladder these days...

The current stagnant property market conditions across most of the UK appears to be largely due to peoples inability to be able to afford to move up the 'ladder'

Unless your earnings are likely to considerably increase at some point in the future you'll probably find that what you can afford now will be as good as it gets for you.

This is a very good point. My income is likely to be stagnant for quite some time, with little upwards movement possible for the forseeable. My wife could have beeter opportunities, but she might well be on maternity for some time, limiting her too. The more we save now the less impact that will have.