Buy the most expensive you can afford? - am I being silly?

JJR45

Mickey666 said:.

But that's the key point isn't it?  They've not lost out already and they won't have lost out by the time they've paid off their mortgage and can live the rest of their lives with no housing costs.

TBF a fair few sold at a loss, not everyone can just sit in the same house for 13 years. Circumstances change.
So not really the key point, the key point is that you can lose out. It depends where you buy in the cycle.
I would say we are close to the top in this cycle.

Bluebell1000

I'd say look across your price range and keep your options open. Some we looked at were at the top of our budget; in the end, the house that was about £50k under our maximum was the one that we really loved and decided to buy ☺ 

Mickey666

JJR45 said:

Mickey666 said:.

But that's the key point isn't it?  They've not lost out already and they won't have lost out by the time they've paid off their mortgage and can live the rest of their lives with no housing costs.

TBF a fair few sold at a loss, not everyone can just sit in the same house for 13 years. Circumstances change.
So not really the key point, the key point is that you can lose out. It depends where you buy in the cycle.
I would say we are close to the top in this cycle.

I'm not saying you CAN'T lose out, especially over the short term, only that the upside benefits far outweigh the downsides if you're really forced to sell early.   But as long as you CAN continue to pay your mortgage then even a negative equity situation is of little consequence, rather than the 'disaster' it's often painted as being.

Sure, if circumstances change and you can't afford to pay the mortgage then you'll lose your home, which is clearly not ideal . .  . but if you can't pay the same amount as rent either then you'd lose your rented home as well.

If rents were significantly lower than mortgage payments, then I could understand the concern about buying, but given that they're about the same cost then why would you choose a lifetime of rent vs 20-30 years of mortgage and free living thereafter?

And of course the reason that rents are about the same as a mortgage is because in many (most?) cases, the rental payments ARE paying for a mortgage . . . the Landlord's mortgage, the one who accrues all the capital benefits of property ownership.  There's only one thing better than buying a house and that's getting someone else to buy it for you

JJR45

Mickey666 said:

JJR45 said:

Mickey666 said:.

But that's the key point isn't it?  They've not lost out already and they won't have lost out by the time they've paid off their mortgage and can live the rest of their lives with no housing costs.

TBF a fair few sold at a loss, not everyone can just sit in the same house for 13 years. Circumstances change.
So not really the key point, the key point is that you can lose out. It depends where you buy in the cycle.
I would say we are close to the top in this cycle.

I'm not saying you CAN'T lose out, especially over the short term, only that the upside benefits far outweigh the downsides if you're really forced to sell early.   But as long as you CAN continue to pay your mortgage then even a negative equity situation is of little consequence, rather than the 'disaster' it's often painted as being.

Sure, if circumstances change and you can't afford to pay the mortgage then you'll lose your home, which is clearly not ideal . .  . but if you can't pay the same amount as rent either then you'd lose your rented home as well.

If rents were significantly lower than mortgage payments, then I could understand the concern about buying, but given that they're about the same cost then why would you choose a lifetime of rent vs 20-30 years of mortgage and free living thereafter?

And of course the reason that rents are about the same as a mortgage is because in many (most?) cases, the rental payments ARE paying for a mortgage . . . the Landlord's mortgage, the one who accrues all the capital benefits of property ownership.  There's only one thing better than buying a house and that's getting someone else to buy it for you

On a money saving site though it is always best to promote buying at the right time, or at least the right price.
I will be buying the wrong time this time, but at least it will be the right house at the right price.
Just worry a fair few will buy the wrong house at the wrong price simply because they think they have to find somewhere fast (just sold etc.)

md258

OP- when you said no kids etc, are you expecting to be single your whole life (fine if you are, but it changes things).

Is there a chance that you'll meet someone who already has a house too or that you'll want to buy together? Or are you confident that whatever happens the house you're buying is the one for the next 20 years?

I would say that you're still young and things may change a lot over the next 10 years. I'd say go for the cheapest house that you'd be happy in for the next 10-20 years (which may be as much as you can afford or could be lower), playing out lots of  different scenarios to assess the properties properly.
Ie. If you met someone with a classic car that needed to be kept in a garage, does the property have one or is that sufficiently unlikely to happen as your different interests mean that your paths probably wouldn't cross.
Repeat for an enthusiastic chef (big kitchen), musician (music room), no one, 6 months between jobs etc

You may feel the chance of this happening is low and if it did happen you'd sell and buy somewhere more suitable together, but it would be cheaper to stay put if possible.

Carrot007

I would not go anywhere near half of what the banks would lend me, even now they have become stricter.

However your area might make such "wants" not possible. I like living slightly out of it, within a nice 30 mins commuting distance (not that I have an office currently, I'm sure they will get one again soon!).

Mickey666

JJR45 said:

Mickey666 said:

JJR45 said:

Mickey666 said:.

But that's the key point isn't it?  They've not lost out already and they won't have lost out by the time they've paid off their mortgage and can live the rest of their lives with no housing costs.

TBF a fair few sold at a loss, not everyone can just sit in the same house for 13 years. Circumstances change.
So not really the key point, the key point is that you can lose out. It depends where you buy in the cycle.
I would say we are close to the top in this cycle.

I'm not saying you CAN'T lose out, especially over the short term, only that the upside benefits far outweigh the downsides if you're really forced to sell early.   But as long as you CAN continue to pay your mortgage then even a negative equity situation is of little consequence, rather than the 'disaster' it's often painted as being.

Sure, if circumstances change and you can't afford to pay the mortgage then you'll lose your home, which is clearly not ideal . .  . but if you can't pay the same amount as rent either then you'd lose your rented home as well.

If rents were significantly lower than mortgage payments, then I could understand the concern about buying, but given that they're about the same cost then why would you choose a lifetime of rent vs 20-30 years of mortgage and free living thereafter?

And of course the reason that rents are about the same as a mortgage is because in many (most?) cases, the rental payments ARE paying for a mortgage . . . the Landlord's mortgage, the one who accrues all the capital benefits of property ownership.  There's only one thing better than buying a house and that's getting someone else to buy it for you

On a money saving site though it is always best to promote buying at the right time, or at least the right price.
I will be buying the wrong time this time, but at least it will be the right house at the right price.
Just worry a fair few will buy the wrong house at the wrong price simply because they think they have to find somewhere fast (just sold etc.)

A money saving site should surely encourage the most cost-effective option?  Given that everyone needs somewhere to live for their entire lives, wouldn't the best option be to buy a home as soon as possible?  Attempting to time the market is all very well if you're into property speculation but that's not the same thing as buying a home for life (though not necessarily the same physical home, obviously).  A home is not like a TV, which isn't an essential item so it doesn't cost you anything to delay if you delay its purchase for a year or two.  You can't just 'opt out' of having somewhere to live (well, not comfortably anyway), so it costs money not to buy a home, in the form of rent.  The longer you delay buying, the more rent you pay.

@crashy_time has, apparently, been waiting seven years to 'time the market' and is still waiting for the crash.  How much do we think that has cost him to date?  Definitely his seven years of rental payments, plus seven years of house price inflation.  Let's guess he's paying £500 to rent his bedsit, so that's £42k in rent alone.  Plus, according to this data https://www.statista.com/statistics/751605/average-house-price-in-the-uk/ the average UK house price in Jan 2014 was £178k and in Jan 2020 was £232k (ie, +30%), so that's another £54k.  So his 'timing the market' has already cost him the best part of £100k.  Doesn't seem like a good money saving strategy to me . . . unless of course average house prices fall back to £132k (a fall of 43%), which would mean back to around 2003 prices . . . in which case he'll only be breaking even anyway!

Tokmon

The_Real_Cheddar_Bob said:

I haven't read the entire thread, so if this is a repost I apologise. 

I'm not a fan of income/illness insurance. (i have life - mortgage requirement) We have become nation of insurance for everything. 

Consider this, the most expensive house may not be the right house for you. (biggest, smallest, location, etc.)
Buying the biggest house you can, or most expensive when you are young buys you time to sort things out. You do however need to make sure you are more in the earn £1, spend 50p than the usual, earn £1, spend £5 crowd. (in brief you need to spend less than you earn.)
I consider mortgage debt not to be debt, as you need to live somewhere and you would need to pay rent, so i generally forget how much it is i owe. (£440k). My mortgage is stretched out for as long as it possibly can be with the lowest monthly payments. I do not make overpayments. EVER. I am not interested in trying to reduce the lifetime interest payments today, I am interested in building wealth. I define wealth from a book i read, someone might quote the title, but being wealthy is being able to survive without income in a number of months. EG you have 1 years worth of money, thats 12 months wealthy. The fact your mortgage would eat the whole lot up in one go is irrelevant, you just don't give it to the bank. 

Now if interest rates were much higher, id take a different view. 

So in my opinion, buy what you can afford, fix your mortgage for at least 5 years if you are at the upper limit, put any extra in an account for you and don't spend it, its extra, not savings for spending. (extension / holidays/ cars/ nothing) use other money for these. If you don't have other money, you can't afford the house you are looking at.

If you get ill, and if its serious, your life insurance will pick up the mortgage bill and your family will benefit. If you are too ill to work, in the short term, use your funds you have been saving and if it was a very long illness you would lose your home (more than likely) anyway, so ride that wave and let the system catch you. (it won't be pleasant but its there.)

Lots of people including me will tell you how to spend your money. My only word of advice, and from experience, do not wipe every penny out you can and expose yourself to hand to mouth living. 

The problem with that way of thinking is that if you make your mortgage the longest term to get the lowest monthly payments and put any extra into the bank for an emergency fund then your effectively borrowing that money from the mortgage because it will result in you paying more interest. 

You would be better off going with a mortgage company that allows you to "borrow back" overpayments if you needed too. So this would mean you could overpay your mortgage and reduce the interest your payment plus have the money available if you ever needed it for an emergency.