About to buy but is it the right thing to do?

lizzymouse

Hello, i am new to the forum and am hoping people here could give me their advice in my current situation: I am about to buy a house with my husband. We will be taking on a 126K mortgage and have put down a 10% deposit.(house cost 140k) The completion date is iminent - in about 3 weeks time. My husband and I are both 37 so getting on the property ladder is something we need to do fairly quickly if we want a house to be paid off before we retire.
We both are quite concerned about the current housing market in that it looks like prices are going to stall, possibly drop and fear we are buying at the wrong time. Also worried mortgage rates will increase after the 2 year fixed term deal we have comes to an end because of credit crunch which may push borrowing rates up.
We are getting help from my parents to subsidise the monthly payments so after all bills/food paid for, we would have £1137 per month left to pay for leisure time/lifestyle/holidays/clothing etc etc.
the big fear for me is that as we also want to try for children, and that i would have to go back to work as we could not survive on one income, and we would have to pay out for childcare as no family local enough to provide 'free' childcare, we are going to come unstuck and not have enough money coming in to pay for our monthly costs. Especially if mortgage rates do go up. so we are thinking about pulling out and continuing to rent - this way the money my parents are going to give us would subsidise childcare rather than buying a house.(there isnt money to pay for both, its one or the other!) Or, should we stick with the house and hope interest rates dont go up and that house prices dont drop enough for us to be in negative equity if we should have to sell the house if we cant afford to live in it anymore because we cant afford cost of child and cost of living in house?
what do people advise? many thanks

lizzymouse

I should also add that we are going for a repayment morgage over 25 years and that if we did pull out at this stage, we would loose the solicitor's costs, mortgage arrangement fee and survey fee. (although actually this is my parents money too, as they are paying our 10% deposit and all fees). they are happy for us to make whatever decision we think is right as they will still give us the 10% deposit to invest should we pull out. We just dont know what the right decision is, and we are slowly going insane....

mr218

lizzymouse wrote: »

Hello, i am new to the forum and am hoping people here could give me their advice in my current situation: I am about to buy a house with my husband. We will be taking on a 126K mortgage and have put down a 10% deposit.(house cost 140k) The completion date is iminent - in about 3 weeks time. My husband and I are both 37 so getting on the property ladder is something we need to do fairly quickly if we want a house to be paid off before we retire.
We both are quite concerned about the current housing market in that it looks like prices are going to stall, possibly drop and fear we are buying at the wrong time. Also worried mortgage rates will increase after the 2 year fixed term deal we have comes to an end because of credit crunch which may push borrowing rates up.
We are getting help from my parents to subsidise the monthly payments so after all bills/food paid for, we would have £1137 per month left to pay for leisure time/lifestyle/holidays/clothing etc etc.
the big fear for me is that as we also want to try for children, and that i would have to go back to work as we could not survive on one income, and we would have to pay out for childcare as no family local enough to provide 'free' childcare, we are going to come unstuck and not have enough money coming in to pay for our monthly costs. Especially if mortgage rates do go up. so we are thinking about pulling out and continuing to rent - this way the money my parents are going to give us would subsidise childcare rather than buying a house.(there isnt money to pay for both, its one or the other!) Or, should we stick with the house and hope interest rates dont go up and that house prices dont drop enough for us to be in negative equity if we should have to sell the house if we cant afford to live in it anymore because we cant afford cost of child and cost of living in house?
what do people advise? many thanks

so you have 1137 left per month after getting subsidised by your parents. i am not sure from your post whether you regard this as a small or large amount. it is a big amount and if you have a mortgage of 126 K , you would pay about 600 pounds on interest only mortgage. in your happy position, i would put in atleast half the leisure amount into this mortgage and overpay and get it reduced in term.

but coming back to the original point, my feeling is that if you are not able to afford (although considering the amount left over each month you probably are) the payments on your own, then you should not go for a mortgage. there is some uncertainity in the market and the fears of missing the bus are less these days as quite a few people are expecting a downturn in the market.

so by not entering the property market now, you will give yourself more options in the future. why not rent now and save ferociously. then in a year or 2 you can possibly afford a bigger place at the same price. also you can have children in rented accommodation. it will give you more flexibility to move to a bigger place when you have kids easily.

chelseablue

from the circumstances you describe I would not buy.

As you are 37 Im assuming you want children sooner rather than later (sorry if that sounds blunt, its not meant to be!) and Childcare costs a lot

I would stick the money your parents are giving you in a high interest account and enjoy the freedom of renting.

I think that house prices have more chance of going down than they do of going up.

sham63

You say completion is in 3 weeks - does this means that you have already exchanged contracts?

Curv

lizzymouse wrote: »

the big fear for me is that ... we are going to come unstuck and not have enough money coming in to pay for our monthly costs.

Hi lizzymouse.

I really don't mean this to sound harsh, but would it not have been a good idea to think about that before you started looking at houses, let alone making offers, possibly becoming part of a chain and then getting to three weeks away from completion before wondering if you can afford the mortgage?

I'm not suggesting you should go ahead with a purchase you genuinely can't afford, but before you pull out, be sure that you haven't just got cold feet... it's a common phenomenon which often occurs just before making huge commitments.

littlesos

lizzymouse wrote: »

Hello, i am new to the forum and am hoping people here could give me their advice in my current situation: I am about to buy a house with my husband. We will be taking on a 126K mortgage and have put down a 10% deposit.(house cost 140k) The completion date is iminent - in about 3 weeks time. My husband and I are both 37 so getting on the property ladder is something we need to do fairly quickly if we want a house to be paid off before we retire.
We both are quite concerned about the current housing market in that it looks like prices are going to stall, possibly drop and fear we are buying at the wrong time. Also worried mortgage rates will increase after the 2 year fixed term deal we have comes to an end because of credit crunch which may push borrowing rates up.
We are getting help from my parents to subsidise the monthly payments so after all bills/food paid for, we would have £1137 per month left to pay for leisure time/lifestyle/holidays/clothing etc etc.
the big fear for me is that as we also want to try for children, and that i would have to go back to work as we could not survive on one income, and we would have to pay out for childcare as no family local enough to provide 'free' childcare, we are going to come unstuck and not have enough money coming in to pay for our monthly costs. Especially if mortgage rates do go up. so we are thinking about pulling out and continuing to rent - this way the money my parents are going to give us would subsidise childcare rather than buying a house.(there isnt money to pay for both, its one or the other!) Or, should we stick with the house and hope interest rates dont go up and that house prices dont drop enough for us to be in negative equity if we should have to sell the house if we cant afford to live in it anymore because we cant afford cost of child and cost of living in house?
what do people advise? many thanks

I don't quite understand your concerns, you have over £1100 every month for fun stuff, and you're worried???? Have I read this correctly?

We have just bought a new house and taken on a £125k mortgage (our old house was mortgage-free). Our repayments are £727 per month. We also have two children, the eldest at school now, but the youngest (12 months) is in nursery mon-thurs this costs us £550 per month (we have no local family either). I work Mon -Thurs, my husband works full-time and we manage fine. We've never had as much money as you left over each month, but I can honestly say we've never really really struggled.

What would rental payments be? If they are close to £700 it makes no difference whether you are renting/owning, the costs of a child will still be the same.

I panicked when we decided to have a child, I thought we'd never afford it, and when we decided on to have another I must have gone through the bank statements a million times to prove we couldn't afford it. We have managed fine, I have to keep an eye on things, but it's not impossible.

lizzymouse

hi all

thanks for the replies.

I have had it going round in my brain since we found this house if we can actually afford it. With my parents help, and whilst it is just me and my husband, we can comfortably afford it, as we end up being £7 per month better off buying rather than renting the house we do at the moment.

we dont want to stay in the house we are in because of issues with the landlady that wont be resolved and the fact that we dont currently have a garden , so will want to move anyway.

My big worry is what happens if a child comes along. I am just really worried that we will not be able to afford the mortgage (if interest rates go up a great deal, we are on a 5.79% fixed deal to start with), and maybe we have to sell the house because we cant afford it and then we fall into negative equity.

cant decide what to do and really need to decide now

redimp98

No rise in mortgage interest rates in the foreseeable future. Savings should be attracting 6% gross at the moment.
As for house prices, its not as simple as ppl make out. Some areas have shown remarkable short-term rises and properties are clearly overvalued. Factor in a 20%-25% drop in those prices.

Other areas, eg oop narth, have shown a steady fall in prices over the last 6 months as movement has ground to a standstill. 2/3 bed semi for £125k is realistic now (no stamp duty payable). Such a house would have had an asking price of £140k a year ago. Chains are stuck.

poppy10_2

If it's a house you'll be living in for the long term, don't worry woo much about price falls - they don't affect you until you come to sell.

At 37, you are running out of time to start a family - this needs to be your priority.

lizzymouse

in answer to previous question - no, havent exchanged yet