FTB: How much % under to offer?

JenniferMcConnell

Well this sucks, I just found out as of 6pm I’m being furloughed until 1st September. We’re going to go ahead with the house viewing with the builder tomorrow anyway just so we can get an idea of cost.

dani17

MobileSaver said:

edward2113 said:

Taking a 5 year fixed mortgage now = safer, but definitely losing quite a bit of money on interest.

This is simply not true. No-one knows what the interest rates will be in 2 years time (and again 2 years after that) so you cannot possibly say anyone will definitely lose money, especially when you consider there would probably be two extra £1000 setup fees over the five year period if going for two year deals instead of a five year.

no one knows you are right. but when the bank ask you to pay for the risk when the risk is on your side it is a bit unfair. there are interest rate swap quotes on the market and you can easily see that the market is expecting rates to go down after 2 years. so 'no one knows' is not a reason to make people pay more for nothing. the 5 years mortgage quotes are just 'non sense now'. 
When you have a big mortgage, the fees are less important than the rate.
Crashy_Time said:

The economic conditions that lead to any BOE negative rate scenario will be very bad for the value of any purchase made now going forward. Low rates (beyond a certain level) are nothing to cheer about, and certainly won`t be passed on in full to those with mortgage debt (IMO) 

negative rate will not mean drop in house prices. the euro rates are negative since 5 years now and house prices keep increasing in the meantime.
daivid said:

dani17 said:

JenniferMcConnell said:

@Competsoph yes I wondered the same thing! From what I hear, 1.86% isn’t too bad and it’s better to secure that low rate for as long as possible. Unless I have that completely wrong?

Because market thinks that rate will not go up in the next few years and there is possibility that BOE rate go negative in the next meeting. I think that you should have a 15% deposit to get the rate of 1.86% for 5 years. with the same deposit you can get a rate of 1.49% for to years which make a difference of 0.37%. knowing that you have a large mortgage this may cost you around 6500£ more of interest rate during 5 years. I personally think that rates will drop more in the coming months. so the difference may be even bigger than 6500£. Now the good thing with the 5 years fixed rates is that it will protect you from being stuck in negative equity in 2 years. 

 
Don't forget to get the best rate in 2 years you may need to pay fees, and if your house price has dropped or circumstances changed (employment/childcare/another child...) it may be difficult if not impossible to get another good rate. A tracker is likely to be the cheapest, but fixes offer security. 5 years at a very good (historically) rate that you know you can afford and will hopefully be long enough to ride out the impacts of the current situation and get you to a favourable LTV will suit many. 2 years as said will be cheaper than 5 IF you can get another good deal each time the 2 years is up and like the OP savings will exceed fees to re-mortgage.

Which 'makes sense' depends on the circumstances of the homeowner. Statements like '5 year fixes make no sense' are unhelpful (not made in the post I'm replying to I know) to say the least. Lastly even if the BOE rate goes negative why would mortgage rates fall further? Lenders will not pay you to take their money, the base rate is effectively 0 and fixes have crept up very slighlty, we have already seen the lowest rates for fixes.

we already observed mortgages with negative rates in Danemark. so everything is possible.

Competsoph

JenniferMcConnell said:

Well this sucks, I just found out as of 6pm I’m being furloughed until 1st September. We’re going to go ahead with the house viewing with the builder tomorrow anyway just so we can get an idea of cost.

Sorry to hear this! How will this affect your options? It’s such a challenging time at the moment.

JenniferMcConnell

It means we’d get a much lower mortgage and have to use all the cash we have to make up the difference, so nothing left over for renovations, stamp duty. So completely impractical. 

Really sucks. The only way I can make this work is if the seller accepts a really low offer ( like 15% below asking price) but even then, it feels like too uncertain to buy a house. 

I’m keeping everything crossed the house remains on the market for the duration of furlough. 

UnderOffer

Oh no, that’s disappointing about your job. Yes hopefully it will stay on market. 

AnotherJoe

JenniferMcConnell said:

It means we’d get a much lower mortgage and have to use all the cash we have to make up the difference, so nothing left over for renovations, stamp duty. So completely impractical. 

Really sucks. The only way I can make this work is if the seller accepts a really low offer ( like 15% below asking price) but even then, it feels like too uncertain to buy a house. 

I’m keeping everything crossed the house remains on the market for the duration of furlough. 

I think there's going to be a lot of people in an uncertain position holding back for now so on a project like this i think you have a good chance its still around this autumn, and hopefully then you job comes back and puts you in a good position. Good luck.

Crashy_Time

Really really not the time to be thinking about buying a house.

MobileSaver

Crashy_Time said:

Really really not the time to be thinking about buying a house.

Serious question Crashy, when is it the time to think about buying a house in your opinion?

Splatfoot

MobileSaver said:

Crashy_Time said:

Really really not the time to be thinking about buying a house.

Serious question Crashy, when is it the time to think about buying a house in your opinion?

Exactly. We bought not long before the last crash. Selling now and it's almost doubled in value. 🤷‍♀️

Splatfoot

Also, she's buying in Surrey. If she wants it as her forever home, or 10 years at least, she won't lose.