Offer accepted on house

Jammin138

Hi,

A few days before the eu referendum we we had an offer accepted on our first house. We managed to get some money off the asking price and as the house is in need of modernisation we felt is was a good investment.

Unfortunately the outcome of the referendum has left us in a difficult situation - do we proceed or do we withdraw our offer?

I'm trying to work out what's best for us and any advice would be greatly welcome. We plan on being in the house for 8+ years.

Negatives

1. The mortgage is a two year fixed term. This means when the two years is up it will coincide with us leaving the eu and could prove an issue for the remortgage.

2. The house prices will likely drop, although it's hard to know by how much, but we do not want to be in negative equity.

Positives

1. The mortgage is a 5% deposit, it's unlikely we would be able to get this again if the house market crashes.

2. The house would be a good investment (in today's money) and allows us to grow into it.

3. There is a lot of demand for this size of houses in our area (3 bed and able to extend to make it 4 bed), so even though house prices may fall, supply still outstrips demand, which makes me more inclined to proceed with the purchase.

I know there is no "crystal ball", but as I'm new to this it would useful to hear other people opinions.

Thanks for any replies,
Ben

hazyjo

To Buy

Negative equity will affect you if you need to sell. If you're looking for a home not an investment, go for it.


In your shoes, I would think about a 5 year fix though.


What else are you going to do - rent?


I presume you're buying with a partner/spouse.


Jx

marksoton

Given what you have said i think you'd be mad not to proceed.

TBagpuss

To Buy

You are planning to be there for 8 years, so even if prices fall, you will have time to pay down your mortgage and build up equity, so if house prices fall and stay low over that time, you would not necessarily be in negative equity, just with less equity than might be the caseif house prices rise or stay static.

Given the historic low mortgage rates we have at present I'd be looking to go ahead, and to overpay on the mortgage (if the terms permit) r to be putting money aside to allow you to redice the mortage.

If you are worried about the 2 year fix ending in a period of uncertianty then you could speak to your lender about changing to a different product with a longer fix.

You alkso mention that it is a 3 bed so you are much less vulnerable to ending up stuck in a house too small for your needs than might be the case iof you were bying (say) a 1 or 2 bed flat.

In your position, I would go ahead.

pinkteapot

Jammin138 wrote: »

. The mortgage is a two year fixed term. This means when the two years is up it will coincide with us leaving the eu and could prove an issue for the remortgage.

Just to clarify, and you may be aware of this already... You don't HAVE to remortgage after the two years. The mortgage doesn't only last for two years - it lasts for 20, 25, 30 years - however many you applied for. It's just that you have a particular interest rate for the first two years and after that the rate is variable so the monthly payment will change (usually go up).

You can keep the mortgage and just start paying the variable rate instead. The downside being that the variable rates are normally higher than the cheapest fixes available.

As others have said, if you want more certainty go for a five year fix instead. Just didn't want you thinking that two year fix means you HAVE to remortgage after two years.

hanb

To Buy

In the same boat. Although we haven't heard anything since the offer was accepted a few weeks ago. Just staying quiet at the moment and trying to figure out what's best!


We're lucky to have a 40% deposit and the mortgage would be mostly on BR (employee deal) and the rest fixed for 5 years. So I think we're in a good position to take advantage of cheap rates and making overpayments in the uncertain times but we're buying in a what has been a busy market with crazy price increases so, I'm presuming, there's likely to be a drop and although we plan on staying for at least 5 years, a drop of 20% would be 60k which is no small some of money!


I'm leaning more towards going ahead but part of me thinks waiting it out would be more sensible!

chelseablue

To Buy

We moved into our house in Feb this year on a 2 year fixed rate, as said above you don't have to re-mortgage in 2 years, you can just carry on with your existing lender at the variable rate.


We bought a 3 bed that we would be able to live in at least 10 years, so I think your plan of being able to stay there a long while is a good one.


2 years goes very quick, I think when our fix is up in 2018 I'd want to fix for at least 3 years next time (maybe even 5 if the deals are good)


Just hoping we can keep our jobs

Grenage

For 8+ years, I would continue.

We're exchanging contracts on a house this week. I did momentarily consider the sanity of the purchase, and of pulling out. We're taking a 10-years fixed - I'm not prepared to spend the next 5 years of our lives in limbo.

chelseablue

To Buy

Grenage wrote: »

For 8+ years, I would continue.

We're exchanging contracts on a house this week. I did momentarily consider the sanity of the purchase, and of pulling out. We're taking a 10-years fixed - I'm not prepared to spend the next 5 years of our lives in limbo.

Here, here! Keep calm and carry on

MerrilyA

If you want to buy then I think you should go ahead with the purchase.

If you do face any challenges get advice from professionals, it would be useful to get advice from people who have extensive property knowledge and understand various economic conditions e.g. solicitors and mortgage brokers that are property investors themselves. They are out there, it's a matter of doing research and asking around.

Whilst you're looking a home and not an investors these professionals could assist you but that's a bridge that you should cross if you get there.

NewHomeOwner_2

You can either put your life on hold for the next 2/3 years and see what happens. Or you can get on with your life and buy now.

It depends on your personal circumstances and your life right now what you want to do. If you're happy where you're living now and happy with how your life is now then wait it out.

If you hate where you're living now and just want to get on with your life then buy.

What's right for one person isn't always going to be right for the other.