Is now the time to buy? (& other questions)

RadHead

Hi all,

I've been lurking on these forums for quite sometime now and I have a couple of questions I'd like to ask- I fully appreciate that some of the questions are quite subjective.

After saving for around 4 years I have been able to save a substantial deposit for my first home and with the price range that I have set myself (property prices are very competitive in my area), I have enough saved to access 75% LTV mortgage (whilst leaving enough for buying costs and furnishing).

With talks that the market for savers transitioning to an even worse state and mortgages being highly competitive at the moment. Is now the time to buy or do I continue to save? I live with my parents at the moment and there is no pressure to flee the nest but if now is the right time, I rather take the opportunity rather then regret it.

Also is there any rule of thumb regarding what % of my post tax, NI and pension wage I should spend on repayments? Taking a mortgage out over 10years would see me paying 42% on repayments, is this too much or just right?

I understand its difficult to say without me posting my financial information for all the world to see but any thoughts would be much appreciated.

RadHead.

Thrugelmir

If you are in no rush to leave home then continue to do so. Keep saving.

lisyloo

If it's affordable then now is a good time.

When you apply for a mortgage they will look at your commitements and check the affordability. 42% sounds a little high to me but as you say it depends on your outgoings e.g. children, childcare, cigarettes, loans, pets etc.
Some people have far higher outgoings than others for example children or loans.
The bank will check your affordabillity but you can also do it for yourself.
Be aware that you'll have bills to pay that you don't at the moment like - coucil tax, buildings and contents insurance, gas, electricity, water, repairs etc.
You could ask your parents if you can see their bills.

But overall you should go for it and perhaps look to lock in a great 10 year fixed rate. The population in this country is only going one way, so demand for housing looks set to increase and no large scale building plans underway.

Ha Ha - just read thrugelmirs post - expect opposing views :-)
Perhaps you should check how people are doing before considering their advice?
I'm 48 and have a 5-bed house with no mortgage (people can of course say what they like on the internet, but if I was making it up I'd have a massive portfolio).

RadHead

Thanks both for your replies- although I'm in no rush, it's something that I need to do eventually. I don't want to be in a position where my savings are stagnant whilst property prices continue to rise.

Further info- I'm single and I'll be buying a home by myself, no children, no debts, none smoker, occasional drinker. When I've used the household budget calculator on the competitions' website (this is money)- using national average prices (3bedroom houses) from google, I end up with something like £150 left at the end of each month.

Thrugelmir

RadHead wrote: »

I end up with something like £150 left at the end of each month.

Worth bearing in mind that interest rates won't remain this indefinately. Also owning property is the same as a car. As it ages it will require maintenance.

lisyloo

I don't want to be in a position where my savings are stagnant whilst property prices continue to rise.

The two main things that might change are interest rates could rise and properties could go up. Those are probably your biggest risks. Of course it could go the other way, but there's not a lot of scope for interest rates to go down much.
I would say don't take a risk. If it's affordable then why risk it not being affordable in future? A long term fixed rate would guard against interest rates going up once you're in.

Also owning property is the same as a car. As it ages it will require maintenance.

My own experience of new build property with upvc windows was that I have had to do very little. I've owned new build for 25 years now and pretty much my only expense is an a annual boiler service which my local man charges £35 for.
Others with vistoriam properties told me they cost a fortune to maintain so I would point out that this varies hugely depending on what type of property you buy, but with new build most people have to do very llittle unless they choose to.

Caz3121

RadHead wrote: »

Taking a mortgage out over 10years would see me paying 42% on repayments, is this too much or just right?

I would maybe look at a longer term mortgage that you can overpay. It gives you some flexibility if life gets in the way and you want to pay less for the times you need to (holidays, wedding, baby, new car, job change etc etc) and overpay when you have funds to do so but without committing you to the higher payment every month

AnotherJoe

What Caz said, 10 years leaving only £150 a month free leaves you too exposed. If you took out a 15-20 year mortgage but overpaid, you can do that to your schedule pretty much (there will be limits as to how much you can overpay so check that) without being absolutely committed to that.

I would not advise a 10 year fix, (1) I think you'll needlessly end up paying more over the term than if you took shorter term fixes each time one finished and (2) in terms of "life events" 10 years is a long time to be locked into an Early Repayment Charge.