To get a mortgage or not

Dk1989

I’m a first time buyer and due to the increasing interest rates a mortgage would be costing us nearly an extra £200 a month. Just wondering what everyone’s opinions would be. Should we find somewhere to rent for a few years until the interest rate goes down or do we bite the bullet pay the extra each month if this is just how it’s going to be for the future? I’m all new to this and I find it all a bit confusing. 

propertyhunter

Can you afford £200 a month? 

What will renting stop you from doing that house buying will allow you to do? Sometimes, people buy houses because it allows them to move on with their life (e.g. can have more space for children, closer to schools for the kids, closer to work/job prospects, closer to elderly parents, want to put your own stamp on a place). If the pros of owning outweigh the costs (assuming you can afford them without compromising your quality of life too much), then buy the house. My advice would be to buy a house you have every intention of staying in for 5 years at least, as it will be a bumpy ride for the property market in the next 2-3 years. 

Remember with rent, you are paying someone else's mortgage, rather than your own. Also, you can't time the property market - plus what you pay in a lower purchase price during the fall out of a crash you end up paying more in interest payments (house prices need to fall 28% to be equivalent to 2021 outgoings apparently). 

Zoe02

All depends on your circumstances and affordability.

In the short-term interest rates will be high, might come down in the next 2 or so years.

If you find a reasonably priced house and is affordable might be worth buying now. Rents will also be going up and the uncertainty of having to move if the landlord wants their property back etc. 

dander

There's every reason to believe that the super-low interest rates are gone for good. Just waiting a "few years" probably won't be an answer on its own. There are likely to be other changes because of the interest rates rising - house prices could stagnate, drop a bit, crash - no-one knows which yet. Banks are likely to get much more sensitive about "affordability" - you likely will find the amount they would have lent you 6 months ago is different from today. Interest rates on savings are also going to be increasing - meaning if you're saving for a deposit your money will start growing a bit more quickly.

Personally, If I was a first time buyer I wouldn't choose to buy right now - I'd bide my time a bit to see how things were settling down. I'd pile my deposit into the highest return savings vehicle I could find and watch what happens. Everything seems pretty chaotic now as people are shocked by the mortgage changes, even the banks, but in a few months you might have a bit more information to make decisions with.

[Deleted User]

As others have suggested, it depends very much on your circumstances, priorities, affordability etc. I am also a FTB and had a mortgage lined up for a house I had an offer accepted on in September. The rate was fixed for 5 years at 4.08%. Unfortunately, I lost the house to the next offer down who were more accommodating of the seller's need to move in November (that's another story, though).

I have considered whether to buy now that the rates are nearing 6% and I likely wouldn't get a rate like the one I had for a while. I've decided not to buy in the next year or so and to see what happens. I imagine house prices in 2023 will drop somewhat or at least, the market will slow (houses in Scotland seem to be reducing in price more and more and it seems there is less frantic competition as there was a few months ago). However, rising mortgage rates make buying my first house less of an appealing prospect. 

Dk1989

Sorry I miscommunicated. When we looked at a mortgage in august it was £800 a month it is now looking to be £1000 a month. Our rent is currently £600.