The opposite - silly not to continue post brexit?

hanb

Morning all,

Firstly, apologies for the long winded post.. I'm trying to make sense of my messy brain at the moment!

I've been keeping an eye on here and have been interested in all of the 'shall we pull out/reduce offers ' threads that have been popping up. (Aware some aren't genuine.)

As a FTB'er, I too have been a little concerned about buying right now but I think I've finally decided this morning that we should continue based on the below info and sums.

Buying in an area that has been very much a sellers market - houses go for way over asking and the increases year on year have been high. There is so much more demand than supply, especially of the period properties that we have had an offer accepted on. So I personally believe if there is a dip it will go back up again. There's only been 1 house come back up on rightmove and the new ones are still in the same price range they would have been a week ago.

So the numbers are:
290k offer accepted
90k deposit

The mortgage is then split:
151,976 - would be on base rate (as an employee benefit)
48,024 would be on a 5 year fix at a good rate

The numbers that swung it for me were the cost of our rent (if we stay put) over the 5 year term of the mortgage would be £70,300!

The employee mortgage allows as much overpayment as you like and the other allows the standard 10% to be overpaid each year. Our mortgage payments would be £200 a month less than our rent (increasing year on year).

We would plan to stay put for at least those 5 years and so even if the market did dip and hadn't yet picked up, we would be unlikely to be in negative equity meaning we could move whilst the next house along would also be cheaper as well as not having paid all that rent.

I'm half posting this to get it all out of my brain and to try and make sense of my thoughts in text and to also see whether you think I'm missing anything glaringly obvious in my workings out or if you'd still say that holding out would be better in the long run. I should also say that it's all very quiet with this purchase as the vendors haven't found anywhere so it could yet fall through but we're still looking too.

cloo

Certainly if you want to buy a place and are in it for the longish term it would be silly not to go through with it, I'd say.

HappyMJ

hanb wrote: »

Morning all,


So the numbers are:
290k offer accepted
90k deposit

The mortgage is then split:
151,976 - would be on base rate (as an employee benefit)
48,024 would be on a 5 year fix at a good rate

The numbers that swung it for me were the cost of our rent (if we stay put) over the 5 year term of the mortgage would be £70,300!

Rent £1,175
Mortgage £975 (£200k average rate of 3.25% over 25 years) plus fees to purchase, stamp duty, insurance, maintenance, fees to sell etc.

Financially it's actually a close call over 5 years but it would be your house to do with as you please without having to put up with the landlord's decoration.

Remember to calculate the loss of interest on the £90,000 deposit that you will no longer be getting. I personally get at least 3% on my savings so that would be a loss of £225 per month which then makes renting the cheaper option.

TrickyTree83

I don't know why everyone is asking questions about buying after the vote. It's quite plain to see that no one knows what is going to happen. So it's a personal choice:

- if you're buying a home for a family or to start a family, probably better to go for it. Over the course of raising a family (20 years+?) you will be unlikely to remain in negative equity if issues do occurr in the economy over the course of that time period.

- if you're buying as an investment, probably not a great idea right now. Every investor hates uncertainty.

- if you're buying a home and you want it to also be an investment, you've got your wires crossed and need to take a look at your priorities again.

ManofLeisure_2

[QUOTE=hanb;70904989



So the numbers are:
290k offer accepted
90k deposit

The mortgage is then split:
151,976 - would be on base rate (as an employee benefit)
48,024 would be on a 5 year fix at a good rate

The numbers that swung it for me were the cost of our rent (if we stay put) over the 5 year term of the mortgage would be £70,300!

The employee mortgage allows as much overpayment as you like and the other allows the standard 10% to be overpaid each year. Our mortgage payments would be £200 a month less than our rent (increasing year on year).

We would plan to stay put for at least those 5 years and so even if the market did dip and hadn't yet picked up, we would be unlikely to be in negative equity meaning we could move whilst the next house along would also be cheaper as well as not having paid all that rent.

.[/QUOTE]

You seem to be in an excellent position as long as you are pretty confident that your employment is secure.

Good Luck

HouseBuyer77

We could see a market dip, maybe even a significant one (but then we might just see business as usual, it's impossible to say right now).

You have a 31% deposit and a 5-year fix. When it gets round to remortgage time you won't be in negative equity (unless this country has totally destroyed itself!). Though perhaps you will have 'lost' money in sense that if you'd stayed renting your net worth would be higher, but you still wouldn't own any part of a home.

Still owning a home has a whole range of benefits you loose when renting. Maybe you'll not be as rich as you could have been in 5 years but you're not going to fall off a financial cliff and you'll have enjoyed the benefits of being a home owner.

So I'd say you're just fine

Mr_Costcutter

[QUOTE=TrickyTree83;7090516



- if you're buying a home and you want it to also be an investment, you've got your wires crossed and need to take a look at your priorities again.[/QUOTE]

What poor advice. Buying a home is the greatest investment the majority of us will ever make.

hanb

HappyMJ wrote: »

Rent £1,175
Mortgage £975 (£200k average rate of 3.25% over 25 years) plus fees to purchase, stamp duty, insurance, maintenance, fees to sell etc.

Financially it's actually a close call over 5 years but it would be your house to do with as you please without having to put up with the landlord's decoration.

Remember to calculate the loss of interest on the £90,000 deposit that you will no longer be getting. I personally get at least 3% on my savings so that would be a loss of £225 per month which then makes renting the cheaper option.

Thanks!


The mortgage repayments (as long as base rate is .5% would be £850 per month). Our tenancy agreement has an annual increase of 4% so at the moment we pay £1040 but that goes up in September and then each September we're there so the total 5 year rent spend includes the annual increases that are guaranteed. We're also aware that should we move to a similar size flat in a similar location the rent would be higher so there's a chance of a bigger raise than the annual one. We're also on a rolling tenancy so in theory could be asked to leave at any point.


The deposit is from both of us and we don't receive as much interest as that but good to keep in mind.


Should the base rate actually drop to 0% as has been suggested by some, we'd be in a better position with most of the mortgage following BR. I'd also hope that it's not going to shoot up but we're not tied in so if it does, we can move it to the fixed rate mortgage which is a comfort.

cashbackproblems

I think if you feel prices will drop by a significant amount which most people are confident WILL happen (though the true extent is uncertain), it makes sense to hold off or offer according to a potential drop e.g. 20%

Either way there is no harm in keeping an eye on the market and watching how it develops over the next6-12 months.

Missus_Hyde

OP, you sound as if you've given the matter a lot of thought and are well prepared for most eventualities.

If you buy your house as a home to live in for a while and prices go down, then one would assume that the price of any future house you buy would also be lower.

If you buy your house as a home to live in and stay there for many years, you'll probably find that the value will go up and down over the years, but will most likely stabilise, so you won't be out of pocket. There is also the added bonus that you'll still have the advantage of owning your own home, as opposed to renting and having nothing to show for your payments, with the uncertainty of having to leave with two months notice.

If you buy the house purely as an investment ( and I realise this isn't what you're actually proposing, before all the clever clogs on here point this out to me! ) then even so the highs and lows will even out unless you sell very quickly and I would always consider investment in property to be a long term investment.

Bossworld

We're still hoping to complete soon, mortgage offer has been sent out today according to the IFA, so I guess it's all really in the hands of our buyers. Nervous times but this is hopefully our forever home.