Delays in house purchase and getting cold feet - looking for help weighing up options

T120R

Hi all, I'll try not to waffle too much here but want to provide context. I'll also say I appreciate nobody has a crystal ball but I'd love some perspectives to see if there are pros/cons I've not considered.

I'm (very) late thirties, employed in a stable (as can be) career and earn £75,000. I'm debt-free and have savings of £26,000.

I've historically been pretty frivolous with money, mainly on extortionate rents in London when I wanted to minimise my commute and paid through the nose for the privilege. However since moving about an hour outside of London a few years ago I'm now paying £1100 pcm to rent a really lovely house. 

I'm happy renting, and historically have very much enjoyed the flexibility it comes with- I had to leave my previous flat when damp became so severe it became a health-risk, and the one before I moved due to absolute nightmarish neighbours. 

However! I'm very much keen to not be paying rent into retirement, and can completely see the sense in owning somewhere. So I'm in the process of purchasing a £350k house. I'd like to be within 1-1.5 hours of London for trips in for work, so £350,000 doesn't buy a huge amount in that radius as we all know. Given my savings need to cover stamp duty too (I've been paying fees etc with salary), I only have a 5% deposit but have a mortgage offer with Barclays, which is a 5 year fix of 2.9% (the alternative was a 2-year at 2.6%).

I've never been totally comfortable with the purchase, it's felt like I'm buying because I 'should' rather than because I want to. The house is currently an AirBnB, and because the seller's have it booked up frequently, they're dragging their heels on the process and just taking forever to reply to emails from the Solicitor etc. This has given me a lot of time to think, and over-think, and I'm not really not sure I want to proceed.

However the fear is that if I don't buy, interest rates will rise at such a rate that my budget for an affordable house will shrink to the point I will miss out. 

My head is telling me to proceed with the purchase, my heart is saying to keep renting (I can sign another 12-month tenancy at £1100), see what happens with the market, save another £15k and revisit in a year or so.

Again, I know nobody knows what's going to happen with house prices but I'm wondering if there are other factors I could consider to help me make a decision either way.

Many thanks

T120R

I forgot to add in the original post, I've owned property in the past, about 10 years ago when an ex-partner left a week after completing and I couldn't afford to mortgage it on my own. We sold the house at a loss and between mortgage penalties and selling fees I lost all of what I'd put into it.

That means I won't get a stamp duty discount on the current house.

Brie

On the one hand it's normal to get nervous before a sale goes through. You'd have to have nerves of steel.  

On the other hand you need to love your new home.  Is there no twinges of excitement?  No wanting to go furniture shopping or wondering how your sofa will look in that new lounge??  If there is absolutely nothing then I'd walk away and wait for something better.  

BUT what would be the worst that could happen?  You buy the place and decide it's not right, so in a year or two you sell and move back to renting or to another new to you home.  

T120R

Thanks for the reply!

I definitely don’t love the house I’ve bought but I must admit I haven’t loved any I’ve viewed. It’s a ‘good, sensible house’ for sure, and it’s got its charm. I think I’m spoiled by my current place which is much larger, closer to town and has a lot of the internal finishes I’d probably want to do myself.

I think it’s more my lack of enthusiasm for owning rather than anything being wrong with the house.

I suppose in terms of what could happen, because I don’t get a stamp duty discount, if I sold in 2 years I’d lose a lot of money. Between the £250 a month more than my rent, the interest paid on the mortgage, fees paid to buy, fees to sell and my mortgage exit penalty I’d pretty much wipe out my deposit and more.

Obviously that assumes the house doesn’t continue to increase healthily in value.

I’m definitely not seeing the house as an investment, and I completely get that renting is just throwing money away compared to paying a mortgage.

I’m just struggling a bit to feel comfortable with buying even though it is obviously the most sensible long term option.

I’m also not getting younger so waiting is reducing my potential mortgage term.

Brie

T120R said:

I’m also not getting younger so waiting is reducing my potential mortgage term.

Mortgage terms can go right up until you're 70.  Don't ask me how I know.

But home ownership isn't for everyone.  Lots of Europeans never own a home but happily rent.  And owning your own place can be expensive - again - don't ask me how I know!!

SarahB16

From what you've posted I think ideally you would like to purchase the house (or something similar) that you currently live in.  Maybe don't think of the house you are buying as being your forever home. Yes, it's sensible to buy rather than rent but perhaps just see this move as being a step on the housing ladder and there will be other house purchases further down the line or up the housing ladder so to speak. 

It's up to you and I'm just going to see what you think about this suggestion as it's not for everyone but have you thought about renting a room out in the house (use rent a room relief as the income is tax free).  Try to overpay as much as you can afford on your mortgage (but not incurring any penalties) and perhaps in c.5-10 years you could move to a home that you would fall in love with.  

Would the house you are considering buying be practical to rent a room or would it be better to move to a home that has two decent sized bedrooms and two bathrooms?  Do you think you could rent a room out in the area where you are moving to?     

You may read this and think absolutely no way could you rent a room out but just thought I'd see what you thought.  If I were in your shoes if I saw this as a temporary move I may feel better about it.      

T120R

Thank you, I really appreciate all the posts.

You’re absolutely correct I’d love to buy my rental house. I’ve offered multiple times but sadly the owners are not keen to sell. It’s worth more than I can afford really too, about £425k I’d have thought.

I’d be open to letting a room but unfortunately the second room is very much too small. 

 

SarahB16

I think you've got a decision to make and if I were in your shoes I'd go with option B.  

Option A - the house you are thinking of buying is only £75k short of perhaps what may be your ideal home so it's not out of your reach in time to be able to purchase a home similar to the one you rent.  Perhaps try to save a bit more if you can do and overpay your mortgage by c.10% a year.    

Option B - have a look on Rightmove to see if there are homes in your price bracket where you'd be happy to live with two decent sized bedrooms.  One bathroom is fine.  As well as the rent being tax free your energy bills would be lower too.  Overpay on your mortgage by c.10% and try to save up more money too.  Then you will have a bigger deposit to put down on your next home.  One hopefully similar to the one you currently live in.  If you can't see anything on Rightmove you could go with option A or Option C.  Personally I'd go with option C.    

Option C - look on Rightmove and do the same search as option B and include sold subject to contract.  If there are homes with two decent sized bedrooms but sold STC no harm in contacting the estate agent and saying you're interested if the sale was to fall through. 

I wouldn't sign a 12 month contract.  I'd contact your landlord and suggest a six month contract and just be honest about your situation.  You sound like you've been a decent tenant and hopefully they'll agree to this.  

I do hope you give your contact details to your landlord/the owner of your home so in case they ever did decide to sell that they would contact you and set up an alert on Rightmove which would include the home you currently live in.  

T120R

Thanks yes they all seem like smart options. Not seeing it as a long-long term thing is definitely great advice.

lookstraightahead

Wow how lovely that you have such freedom of thought. You way up some good pros and cons to house ownership, and it's true that it appears only in this country is it so high up on the agenda.

It is confusing though isn't it. I own again but rented for a long time having had my fingers well and truly burnt with the realisation of how much a property can set you back if life stuff happens (to me it was a divorce / negative equity / high interest rates etc). I loved renting and for me it was freedom.

I've now bought a doer - upper but liveable innable 😆. It was well within budget (because it needs work) so I can rest easy on that score, but it also means I don't have to move again if I don't want to. I think given the current situation we're not far off a buyers market (although no-one truly knows), so you may time it just right. Is there anything a bit quirky around?

This house you're thinking of buying - doesn't sound like your heart is in it though?

T120R

Many thanks.

Hehe, yeah I work in the design industry so I suppose I’m employed to think creatively… not always a good thing when it means I also think creatively about every outcome of homebuying…

So many pros and cons indeed.

Thanks again