Am i crazy? - rolling the dice?

shaunhouse

I've read a few posts on the forum and i'm a follower of everything house prices and mortgages.

The long and short of it is:
I'm now 30. I purchased my first house in a middle of road sort of area 6 years ago for £150,000. It is a fairly standard 3 bed semi corner plot with parking for 3 cars and a great south facing garden. The inside of the house is very average, no character but we've put our mark on it over the years, put in a new kitchen and decorated all the rooms. We had considered extending, our friends across the road have done this.
I did fairly well to get the house in the first place, 2 years out of uni with no money to start with I built my first business and used the profits to fund the purchase with a 30% deposit. 5 years into owning the property I paid off the mortgage in full.



My daughter was born 2 years ago and we starting looking for a larger house. In the area (like many others) good houses are scarce and its took us a full 2 years to find somewhere we really love. We sold our house STC within 3 days for £212,000. The house I love i've managed to sort a private deal at £420,000. If it went on the open market it would be on for 500k and most likely selling for around 450 - 460k (lesser houses have recently). I have lined up - 50% deposit - mortgage fixed for 5 years 1.9%... meaning monthly payments at around £700 per month. I would still have 50k+ in the bank and around 75k in company funds to draw upon.


All this being said, I would be stupid to not have doubts considering alot of infomation not just on this forum and confidence is slowly starting to shift.


What do people think? Am I mad to go through with this purchase?

Cakeguts

What are you buying? A money making machine or a nice home for you and your daughter?

AlexMac

Go for it.

Long term, buying the best house you can afford will not be a mistake; quality of life short-term. Potentially more gain long term (not that you should ever just buy a home for future profit).

I know House Price inflation has flattened. So what?

I've lived through 2 price crashes - 1987/8 and 2007/8 - when in some areas, prices dropped 20%.

Made no difference long term.

Stop fretting

And don't listen to advice from random strangers on the interweb

ThePants999

You paid off a £105,000 mortgage in 5 years. (I question that decision given how easy it is to get better returns than your mortgage interest rate, but that's besides the point.) I hardly think you're going to find yourself in any particular difficulty if house prices drop a bit.

shaunhouse

ThePants999 wrote: »

You paid off a £105,000 mortgage in 5 years. (I question that decision given how easy it is to get better returns than your mortgage interest rate, but that's besides the point.) I hardly think you're going to find yourself in any particular difficulty if house prices drop a bit.

It was always my intension to move up the ladder so paying off the mortgage and using it as the deposit on next step which could have cost us 500k.

As it turns out its going to be exactly 50% 210k down, 210k borrow at 1.9% for 5 years.

shaunhouse

Cakeguts wrote: »

What are you buying? A money making machine or a nice home for you and your daughter?

Yes agreed, I might be over thinking this one, just worried if rates go up and house prices go down we will struggle to keep the roof over our heads and it will lead to stress.

Crashy_Time

AlexMac wrote: »

Go for it.

Long term, buying the best house you can afford will not be a mistake; quality of life short-term. Potentially more gain long term (not that you should ever just buy a home for future profit).

I know House Price inflation has flattened. So what?

I've lived through 2 price crashes - 1987/8 and 2007/8 - when in some areas, prices dropped 20%.

Made no difference long term.

Stop fretting

And don't listen to advice from random strangers on the interweb

The first crash ruined many people for a very long time, as you probably know, the second one wasn`t really a crash, just the first rumblings of what is coming. The policies put in place to stop the inevitable unwinding that started in 2008 have brought us social and political turmoil with far right parties on the rise, it would have been better if they had just let the correction happen IMO.

shaunhouse

And do you predict the same again crashy? Or do you think in my case where I have a 50% deposit and funds to spare that I could perhaps ride the storm as I plan to live in the house for a very long time?

bob_bank_spanker

shaunhouse wrote: »

And do you predict the same again crashy? Or do you think in my case where I have a 50% deposit and funds to spare that I could perhaps ride the storm as I plan to live in the house for a very long time?

Crashy has been predicting a crash for 11 of the last 10 years. Stopped clocks are always occasionally correct, but take whatever he says with a massive pinch of salt.

shaunhouse

What I keep going back to is if it gets as bad as what hpc doomsdayers are saying then there are people that are taking far greater risks than what I am, take new builds - I have several friends who have put down tiny deposits and have mortgages for 2k per month on houses that have been built poorly, won't stand the test of time and people will only be interested in buying at a massive discount without incentives.

Scotbot

If you are paying 9% less than the market price and you plan to be there long term the only issue is interest rates. As you have fixed for 5 years that's not really an issue either. Plus you seem to have a large rainy day fund. I don't understand why you are worried.