Buying House - Offer Accepted - Brexit Advice

cgfw201

Hi all
Appreciate there will be a lot of similar threads on the go about this given recent events, but everyone has slightly different circumstances so feel the need to post one of our own.

Firstly, like most people I never thought we'd be stupid enough to vote to leave the EU and we enjoyed a painless process of viewing properties and putting an asking price offer in on one we liked as the market was fairly quiet in London over the last couple of months whilst people waited for the referendum result.

Our offer's been accepted and solicitors are doing their thing at the moment.

Now we're leaving the EU and there's headlines all over the place about house prices being about to fall 25%.

Some facts on our situation:

- Property value is £575k and is pretty near the top of our limit affordability wise
- We have a 50% deposit
- We've had a 2 year fixed mortgage offer accepted with Nationwide
- There were 3 offers on our property at asking price, ours was accepted as there is no chain for us being first time buyers
- Good job security

We're now in a situation where we've got a house we like and ticks all the boxes, everything is in place to move in during August.

BUT it's not proving easy to decide how best to proceed.
- We can lower our offer but there's a high chance one of the other parties may be willing to pay the full value and we lose the house
- We can pull out and see what happens, losing what we've already spent on legal fees and find a new rental property
- We carry on as planned and risk being £100k+ out of pocket in negative equity in the not too distant future
- We carry on as planned and prices go up or down negligibly in the short to mid term and it turns out to be a load of hype and little changes (currently leaning towards this one)

I keep reminding myself that we pay £20k a year rent as it is anyway and anything that stops that must be a good thing, but the prospect of six figure losses in property really puts that into perspective.

I know nobody knows what will happen, and we may even not end up leaving, but any sensible advice much appreciated.

marksoton

cgfw201 wrote: »

I know nobody knows what will happen, and we may even not end up leaving

Whatever makes you think that?

Your position is not Brexit centric, whenever you purchase property a certain gamble is taken.

All this talk of 25% price drops is pretty self prophesying.

hazyjo

tbh, apart from the deposit, see if this thread helps. Thing is, we're all saying the same thing on most similar threads.


https://forums.moneysavingexpert.com/discussion/5485177


Bear in mind you may find interest rates increase, or lending criteria tightens.


I don't think there's enough evidence (or 'any' for that matter) to warrant people dropping prices. For anyone that's got cold feet, by all means pull out and wait. If anyone reduced their offer on mine (if I were selling) I'd put it straight back on the market as there's still lots of people willing to buy a house for the marketed price where I am.


Jx

GipsyHillClimber

I'm in a rather similar situation and after much back and forth and consideration i won't be changing my offer price. You may be different so i'll shortly spell out the reasons i decided to stick:

1) I plan on staying in the property for around 10 years, which should hopefully weather any market slow downs or downturns. Like you i'm purchasing in London so i imagine it would take a real hit to drop the value for that amount of time (and historically it's never happened for longer than a couple of years in London).

2) I really like the property and i know i'll be happy there, i wouldn't risk losing it as I've looked at a lot of similar properties which just didn't fit the bill. Looking around for 4 months again doesn't sound appealing, and as you say, as a FTB i'm essentially losing 20k a year on rent also.

3) Lastly and potentially most importantly, nobody knows what is going to happen at all. If you lowered the offer, the vendor pulled out and then prices didn't shift it would have a bigger short term effect on you than a loss (or dip) in value which is only one scenario anyway!

Also with a 50% deposit you aren't likely to get stuck in negative equity (if you do the whole country is more than screwed as the housing market will have gone belly up) so remortgaging won't me a nightmare if prices do dip and not recover before your 2 year fix expires.

This may not have been helpful, as i say, these factors have helped me decide.

Good luck and if you do stick with the property then enjoy it, it's a big moment!

ManofLeisure_2

cgfw201 wrote: »

- We carry on as planned and risk being £100k+ out of pocket in negative equity in the not too distant future

As you are able to provide 50% as a deposit, a loss of c£100k will not put you into negative equity. Any loss you might incur if property prices were to fall would only affect you if you were to sell. If you were to sell, other properties would probably be lower in value too.

Good Luck with whatever you decide

Money_saving_maniac

cgfw201 wrote: »

Hi all


Some facts on our situation:

- Property value is £575k and is pretty near the top of our limit affordability wise
- Good job security

We're now in a situation where we've got a house we like and ticks all the boxes, everything is in place to move in during August.


I keep reminding myself that we pay £20k a year rent as it is anyway and anything that stops that must be a good thing, but the prospect of six figure losses in property really puts that into perspective.

If you plan on staying in the house long term, if you stay roughly 10 years in it prices would have to fall by 50% for you to be losing money on it. How likely do you think that is? I believe prices will fall, but I dont think a property bought now is going to be worth 50% of its current price in 10 years.

Crashy_Time

cgfw201 wrote: »

Hi all
Appreciate there will be a lot of similar threads on the go about this given recent events, but everyone has slightly different circumstances so feel the need to post one of our own.

Firstly, like most people I never thought we'd be stupid enough to vote to leave the EU and we enjoyed a painless process of viewing properties and putting an asking price offer in on one we liked as the market was fairly quiet in London over the last couple of months whilst people waited for the referendum result.

Our offer's been accepted and solicitors are doing their thing at the moment.

Now we're leaving the EU and there's headlines all over the place about house prices being about to fall 25%.

Some facts on our situation:

- Property value is £575k and is pretty near the top of our limit affordability wise
- We have a 50% deposit
- We've had a 2 year fixed mortgage offer accepted with Nationwide
- There were 3 offers on our property at asking price, ours was accepted as there is no chain for us being first time buyers
- Good job security

We're now in a situation where we've got a house we like and ticks all the boxes, everything is in place to move in during August.

BUT it's not proving easy to decide how best to proceed.
- We can lower our offer but there's a high chance one of the other parties may be willing to pay the full value and we lose the house
- We can pull out and see what happens, losing what we've already spent on legal fees and find a new rental property
- We carry on as planned and risk being £100k+ out of pocket in negative equity in the not too distant future
- We carry on as planned and prices go up or down negligibly in the short to mid term and it turns out to be a load of hype and little changes (currently leaning towards this one)

I keep reminding myself that we pay £20k a year rent as it is anyway and anything that stops that must be a good thing, but the prospect of six figure losses in property really puts that into perspective.

I know nobody knows what will happen, and we may even not end up leaving, but any sensible advice much appreciated.

The vote has already started a chain reaction (Italian banks, UK builders for example) we are out, however much some idiots want to cling to a fake internet petition. Our politicians are going to mess about endlessly trying to get deals done making the contagion worse, and taking the UK closer to some sort of currency crisis and interest rate hikes to protect the pound, which will be a double whammy for anyone borrowing peak bubble money to buy property now. IMO of course. Oh, and I think some lenders are scaling back the amounts and terms they will lend on, so some people will be saved from their own stupidity by this miraculous intervention of reality. Good luck!

Cakeguts

I think you need to ask yourself this question. Do you want to live in that house? If the answer to that is yes then now is the time to buy it.

Crashy_Time

Cakeguts wrote: »

I think you need to ask yourself this question. Do you want to live in that house? If the answer to that is yes then now is the time to buy it.

You should also ask yourself if you like living on beans on toast, because this situation could get very tricky for people who over-pay for property.

Prothet_of_Doom

cgfw201 wrote: »

- Property value is £575k and is pretty near the top of our limit affordability wise

- We have a 50% deposit

- We've had a 2 year fixed mortgage offer accepted with Nationwide

us being first time buyers

- Good job security

I keep reminding myself that we pay £20k a year rent .

You are VERY unusual first time buyers.

Apart from the bit about good job security, which is ballocks, because "!!!!!! happens" - but you can insure against it, should you wish to, the rest is all good.

With £280K equity, even if the SHTF you'd still have equity, which means you are unlikely to loose your house for arrears, and you can always downsize to Hull, where you could rent for £4000 a year.

Interest rates might go up. They once went to 15% - thanks to the Conservatives in the early 90's - my take home was £120 a month more than the interest. :mad:

I say go for it. Ignore the doomsayers, and enjoy life (whilst you still can)

One question - How did you save £280K ?
and another - Why not buy something for £280K and NEVER worry about interest rates.

Cakeguts

Crashy_Time wrote: »

You should also ask yourself if you like living on beans on toast, because this situation could get very tricky for people who over-pay for property.

It is always tricky for people who over-pay for property.