Is it crazy to buy a house right now?

welly_59

I am going to buy in the next 3 months, but I might be in a different situation than most of the country.
My earnings to house price multiplier is going to be less than X2.

I think the housing market will see the demise of people on lower incomes buying at huge multipliers of x4 or x5

Bobziz

All depends on your circumstances and how much you're looking to buy for relative to your income. Worth stress testing your plans to see what impact a significant fall in house prices would have. How would it impact your LTV and mortgage payments?

brownbagsFTB

Not at all, it might be a good time if you can afford it as there’ll be less competition and you’ll probably avoid a bidding war, so will pay a fairer price. I would see a broker and find out what two year fixes you can apply for so you’re forewarned about the monthly cost and don’t stretch yourself. It took me about 40 viewings before I found my house so it could be a couple of months anyway before you put an offer in, it’s worth starting the search now. 

J1one

Thank you all. Some good points to consider. I never had a good money role model growing up so I am late to the game, but I want to make better more balanced choices than what I’ve seen others do. So thanks for helping me thrash it all out 

mi-key

One sensible thing is to set yourself a maximum budget, and also make sure this is less than the maximum amount lenders say you can borrow ( When I bought my first house I was offered up to £250K but decided I didn't want to spend over £175K just in case ). If you build in some comfortable wiggle room then it protects you against future chages and means you aren't stretching yourself to buy

BikingBud

Very difficult for others to propose what you should do as your circumstances and priorities especially your perspective and comfort in dealing with future risk are what will drive your decisions.

I would commend being absolutely clear what your budget is and then consider those areas where it may come under severe stress. I would always look to under commit by a comfortable margin with the intent of driving down the commitments as soon as possible. Whereas others would advise take the largest and longest loan as house prices will always go up. 

We are seeing now that "perfect storms" are not black swans and do occur, if you put yourself in that position then be sure to educate yourself and be fully aware of the potential outcomes.

JacJac1

lisyloo said:

What is crazy is to stay renting.
you only have so much time In your life and the quicker you start the quicker you’ll get to a position of being mortgage free.
if you’re happily living with parents then that’s a different matter, but If you’re renting then I don’t see why your questioning it?
of course during uncertain times people circs or plans May change, for example someone in the chain could get made redundancy, but that’s not a reason not to forge ahead.
there are ways to mitigate concerns e.g. fixed rate, life insurance, sickness Insurance etc.

I'm not young either, but have decided to stick with renting for the time being, despite having enough for a deposit. Every situation is different but unlike the OP, I like where I live, and feel lucky that my rent is very affordable at around a quarter of my take home pay (which is good for London I think!) - a mortgage for somewhere equivalent or slightly better will be much higher at current rates. If anything breaks, my landlord (a large company) fixes it swiftly. Yes it's a "waste" to be paying money for someone else's property, but for me personally I think its worth the lower level of stress...for now. I can use the next few months to boost my deposit and cushion, and meanwhile see where the economy/market goes. The OP said that they wanted to/needed to move, so I guess that's a strong incentive, but I just wanted to offer a perspective from a 'crazy' renter!

jj_43

Yes, it would be crazy buying now, unless prices have fallen reflecting lower valuations or your buying a property that you can improve its value.