House Buying whos pulling out

Kctc2016

We are in the process of buying a house (paperwork all with the conveyancer) and I'm worried.

The house was a lot of money for us and the mortgage total will be high, but based on current value and repayments we know we can afford it.

Our issue is that we have planned to put in only a 15% deposit in order to pull out some equity to do work to the house, some essential (new heating, roof repairs etc) some to make the house work better (kitchen extension as currently not a kitchen/diner).

We had planned a 2 year fixed rate mortgage so that we could have the improvement works done and add back to the property the equity we had pulled out (we got money off as we knew that getting 30k off and putting it back into the house would mean the house would be worth 30k more due to the planned changes), remortgage in two years and have our payments go down again. Short term pain for longer term gain! We want to be here for a long time but need this initial plan to work to make the house work for us.

As I see it there are now two issues, one is that house prices may go down (10-18% from what I've read) and so even if we put this money into the house in improvements at the end we may not be realising any more value on the house, and two at the end of the two year fixed term interest rates may have jumped up making the mortgage unaffordable (especially if we have not increased the equity).

We are buying in a Cambridgeshire village where not many properties come onto the market and prices have gone up at an alarming rate over the last year or so.

I would love people's advise here as I'm really not sure what to do?

dirty_magic

If you're buying a house at your maximum budget you will always run the risk of it becoming unaffordable if interest rates go up. They're rock bottom at the moment. The only way is up, brexit or not!

I would be wary of going for a 2 year fix, I think 5 would be better to allow time to stabilise, but then we had a 5 year fix 2 years ago and interest rates haven't moved and prices have gone up.

If everyone starts pulling out of purchases this itself will cause the prices to drop. We'll probably still be in the EU for 2 years!

booksurr

cashbackproblems wrote: »

The MS job cuts are a matter of when not if, they have already announced it and many more expected

You might feel you have not overpaid, but as prices fall you will be in negative equity and realise the purchase you paid was overinflated after all

nonetheless he will still be living there and paying his mortgage just the same as he was before. Negative equity is irrelevant until you sell - so are you planning to sell?

I suggest you read this thread...

https://forums.moneysavingexpert.com/discussion/5484264

dexterwolf

If people pull out and sit tight yes you may get an intial drop in price. But isn't everyone or most people going to wait on their own sale as their own price would be affected . So less homes on the market means people who want to move and have the money will be paying the price for the house. As there would be less choice. If my buyer said he drops the price by 10k then I would go to the person sellingto me and ask for 10k off. So really it is not going to do too much in my opinion.

Clutterfree

dexterwolf wrote: »

If people pull out and sit tight yes you may get an intial drop in price. But isn't everyone or most people going to wait on their own sale as their own price would be affected . So less homes on the market means people who want to move and have the money will be paying the price for the house. As there would be less choice. If my buyer said he drops the price by 10k then I would go to the person sellingto me and ask for 10k off. So really it is not going to do too much in my opinion.

I'm in exactly the same position.
So unless someone in our chain asks for a price reduction and it then has a knock on effect, then I'm happy to exchange on the agreed purchase price.

However, if I was a FTB then I could understand their concerns.
That said, if I was a FTB I would have waited until after the referendum before offering on a property anyway to avoid any uncertainty.

jimbog

Kctc2016 wrote: »

We are in the process of buying a house (paperwork all with the conveyancer) and I'm worried.

The house was a lot of money for us and the mortgage total will be high, but based on current value and repayments we know we can afford it.

Our issue is that we have planned to put in only a 15% deposit in order to pull out some equity to do work to the house, some essential (new heating, roof repairs etc) some to make the house work better (kitchen extension as currently not a kitchen/diner).

We had planned a 2 year fixed rate mortgage so that we could have the improvement works done and add back to the property the equity we had pulled out (we got money off as we knew that getting 30k off and putting it back into the house would mean the house would be worth 30k more due to the planned changes), remortgage in two years and have our payments go down again. Short term pain for longer term gain! We want to be here for a long time but need this initial plan to work to make the house work for us.

As I see it there are now two issues, one is that house prices may go down (10-18% from what I've read) and so even if we put this money into the house in improvements at the end we may not be realising any more value on the house, and two at the end of the two year fixed term interest rates may have jumped up making the mortgage unaffordable (especially if we have not increased the equity).

We are buying in a Cambridgeshire village where not many properties come onto the market and prices have gone up at an alarming rate over the last year or so.

I would love people's advise here as I'm really not sure what to do?

Whereas it is understandable to be anxious consider the alternative - you have pulled out wondering (fretting?) whether you did the right thing and then house prices remain more or less the same over the next few years (fairly probable)

loufsun

The flat I own now was purchased by the previous owners in 2008 and I bought it in 2012 for only £10k more than what they paid for it. Between 2008-2012 the flat only went up less than 2% year-on-year. Now I am selling the flat and we agreed on a price with about 10% increase year-on-year. So that's the first risk people are facing now; your new property with the price you paid might stay around that price and not see the crazy increases seen in the last few years. You can find many similar examples, just search the sold house prices. It might be enough for many people if it recoups the expenses spent on the property. Others might be planning for more gain. Second risk for me is, I am in the process of buying a house which gained even more than my flat and being more expensive the numbers are bigger regarding tax and interest paid. So I am hoping we can agree on a small change in the price. If not, 7 properties came back to the market in the area I am looking right now. I guess I need to consider alternative options before exchanging contracts if we don't agree on something. You also need to consider the type of property. I am in south east. Small apartments are finding a lot of interest from investors and with the pound falling they will be even more attractive I suppose.

Bossypants

I am still planning on going ahead, assuming that the survey and valuation come back okay in the next week or two.

LottieLou

A good friend of mine had her buyer pull out almost immediately yesterday (in the north west - exchange was planned for next week) they then said they are willing to go ahead with a 15% reduction in price (63k) :eek: She swiftly declined and this morning has already had a full asking price offer from a family who has everything in place. Only time will tell if that will all go to plan. The one thing I do hope is that this will change some peoples attitudes towards housing. Buy a house when you want to make it a home and live in it. Not to put a bit of dulux on the wall, live in it for a year and expect to sell it for much more than you paid.

LottieLou

indianabones wrote: »

Your greedy parasite of a friend is no different to all those others who have got us into this horrible mess in the first place. I don't wish ill on anyone, but for the greater good of the population I'm willing to make an exception.

I wish sales collapse all over the country and there is a state of chaos in the housing market. Hopefully house prices drop by 30% around the country and by 100% for London.

The ones who suffer are the low income class and the young trying to get on the ladder.

You say people should buy a home when they want to live in it, they would if they could afford to.

What an absolutely disgusting thing to say! neither a parasite nor greedy my friend is selling a forever home she has renovated for many many years working extra and saving every penny. As a low income class might I add to as a cleaner and a nurse. You clearly do wish ill.

I'm not entertaining a further discussion with you, but wishing a state of chaos upon the housing market is not going to solve any problems.