First time buyer - buy now or wait

Laura2510

My DH and I are first time buyers. Due to a very fortunate circumstance where the start-up I worked for got bought (and I had shares) - we are quite suddenly with a nice chunk of deposit - about 25% to buy a decent 3 bed house in the area we are currently renting in. 

I'm keen to buy in the next few months. Lock in an interest rate around 3.5% on a 5 year fix ideally. It wouldn't be our forever home but gets us out of the rental market and wasting five figures a year on rent (we rent in London). 

My husband thinks the housing market is going to crash and we should wait 12 months even though we would likely then be hit with higher interest rates AND we'll have to move house into another rental in the meantime because our LL is putting ours on the market to sell and our tenancy ends in January. 

If you were a FTB in our shoes - would you buy now or wait? 

macman

Your tenancy does not end in January, if you do nothing then it rolls over from a fixed term tenancy to a periodic one.Sale of the property does not end a tenancy either, it continues under the new owner.
Only you or a court can end a tenancy.

AskAsk

I keep hearing about recession and property crash.  it's like a jingle and it doesn't always come. 

I would buy if I were you, as waiting for that property crash to come may be a long wait as property has a habit of behaving differently to what people think it will do, and as you are in rental accomodation, the benefit of locking into a fixed mortgage deal and stop paying rent, which is increasing because of demand and less supply and inflation, is the best option rather than wait to see if property price drops.

lika_86

We were paying over £17k a year for a one bedroom flat with no outside space in London. We bought the other year and pay about the same on a mortgage for a two bedroom house with courtyard space two tube stops further out and around £10.5k of that goes into our equity at present. Ignoring the money being paid off the mortgage, even if our house dropped by 10% in value we only have to have been here for three years for us to be square with what we would have paid in rent. With the deposit you have I would buy as soon as you can.

comeandgo

There has been talk of the housing market failing for ever, it may happen but it also may not.  You pay a lot of lost money in rent, that in itself would be pushing me to buy now.

RelievedSheff

The sooner you buy your own home the quicker you start paying off your mortgage.

Bendy_House

Who the hell knows?!

The past 4 years have been crazy, and defied all expectations (well, mine at least). I know folk are saying - have been saying - "It cannot go on...", but, up until now, it has. It's NUTS!

Are folk really that crazy? To keep on buying at inflated prices? Keep jumping on the house-buying bandwagon? Yup. They are. And that's why it happens.

All the time folk read about the state of our economy, they still walk around and look at things and decide, "Things look normal! I see no recession!".

But I don't think many folk have an inkling of just HOW bad the state of the country is, and that it isn't going to change any time soon. And the public are not being made aware of just how serious it is, because that just won't make you 'popular'. You know what/who I am talking about.

So, this is just my opinion, Laura, but it's based on at least two of my historical properties being bought in the troughs of a recession, much to my own personal benefit, but not at all pleasant for the folks who were repossessed. If I were you, I'd wait. That's all I'm saying - it is what I would do in your position.

(I'm not going to suggest that my house-buying decisions were clever or well-judged, as they largely were not. They were 90% simply very timely and fortuitous. Based on them, however, if now in a position to choose, then I think I know what I'd do. But I'd counter that by having to accept that I'd have been completely wrong for the past 3 years, so would still be waiting for the 'inevitable'!)

Yes, interest rates will likely be higher, but I think the Gov will do more to try and keep interest rates down to 'sensible' levels than they will anything else. So, they might double. Or more. But that is more likely to be manageable, and more temporary - especially if you have saved ~£100k or whatever on this house. (No idea what sort of sum you are looking at, but a 3-bed house in London?!)

Having said that, Lika's post about is pretty persuasive!

This will be largely a gamble. Of course.

Woolsery

We can't discuss house prices or the likelihood of an economic recession here; we must all be 'safe' and friendly, whatever that means.

However, as several people have said they question whether house price falls may come and that being in rented is basically a fool's errand, in the interests of balance I'm forced to confess we sold to rent in the last serious recession and bought right at the bottom in May 2009. Couldn't possibly afford to buy this place now.

Not an opinion or a discussion, just the facts. Make of them what you will! 

MFWannabe

Laura2510 said:

My DH and I are first time buyers. Due to a very fortunate circumstance where the start-up I worked for got bought (and I had shares) - we are quite suddenly with a nice chunk of deposit - about 25% to buy a decent 3 bed house in the area we are currently renting in. 

I'm keen to buy in the next few months. Lock in an interest rate around 3.5% on a 5 year fix ideally. It wouldn't be our forever home but gets us out of the rental market and wasting five figures a year on rent (we rent in London). 

My husband thinks the housing market is going to crash and we should wait 12 months even though we would likely then be hit with higher interest rates AND we'll have to move house into another rental in the meantime because our LL is putting ours on the market to sell and our tenancy ends in January. 

If you were a FTB in our shoes - would you buy now or wait? 

I’d buy as you’re wasting money paying off someone else’s mortgage 

Woolsery

macman said:

Your tenancy does not end in January, if you do nothing then it rolls over from a fixed term tenancy to a periodic one.Sale of the property does not end a tenancy either, it continues under the new owner.
Only you or a court can end a tenancy.

Just to re-iterate this. It's probably the most useful thing said so far.

boxer234

I’ve just bought a house after 3 years renting following a divorce and house sale.  I quite liked renting less stress about repairs a bit more flexibility.

However my rent kept going up.  Rentals are in high demand and moving to another would have been difficult because I have two big dogs.  Why choose me when I’d be up against people without. 

I’ve fixed for 5 years.  I’m not planning on moving if houses prices drop horrendously.  If recession hits im in a line of work that is hopefully secure.  Even if I lost my job I’d be just as stuck if I was renting.  I’m trying to spend the next year as frugally as possible so I can get a buffer behind me then I can buy some new furniture. 

Who knows what is right or wrong at the moment it’s such a strange time.