Currently living rent-free with my parents - should I buy or wait until a "better" time?

Seandlee24

After 5 years living in London, I moved back in with my parents (near Manchester) in order to save the final portion of my deposit.

At present, I have about £40k saved and earn a decent salary, so getting a mortgage for the kind of properties I'm looking at won't be an issue. For a 35-year mortgage, my monthly mortgage will be around £1,200 (approx 35% of take-home pay). 

My main question/concern is, should I continue living at my parents, saving c.£1.5k per month and building a larger deposit whilst I "wait out" the current situation, in the hope that house prices and interest rates begin to drop in the first half of next year, or look to buy a property as soon as one comes up that I like the look of, knowing that I'm potentially overpaying in terms of both prices and potentially interest rates for fixed period? 

Worth saying, I'm looking for answers from a financial viewpoint. There are clearly the obvious social/cultural/expenses benefits and drawbacks of living with parents/moving out - I'm lucky in that I get on relatively well with my parents. 

Thanks in advance!

lookstraightahead

Will you definitely be staying in the area or will you maybe want to sell after a few years / move with work etc?

It's a difficult one. I think there might soon be some 'bargains' out there. But Interest rates are higher than before, but still only 'average' - who knows what will happen.

personally I would look at your lifestyle and your mid to long term plans  and then buy or don't buy to fit in with it. Life isn't always just about home ownership, and you don't want it to be a ball and chain around your ankles. Alternatively, if you're ready to settle, it could be a good long term investment. 

Seandlee24

lookstraightahead said:

Will you definitely be staying in the area or will you maybe want to sell after a few years / move with work etc?

It's a difficult one. I think there might soon be some 'bargains' out there. But Interest rates are higher than before, but still only 'average' - who knows what will happen.

personally I would look at your lifestyle and your mid to long term plans  and then buy or don't buy to fit in with it. Life isn't always just about home ownership, and you don't want it to be a ball and chain around your ankles. Alternatively, if you're ready to settle, it could be a good long term investment. 

All good points.

I guess I'm relatively settled for the short-term, say 3 years (probably for longer that that, but who really knows?!). Buying on my own so there's always a chance that I'll need to sell in the future for variety of reasons. 

Mojisola

Seandlee24 said:

After 5 years living in London, I moved back in with my parents (near Manchester) in order to save the final portion of my deposit.

At present, I have about £40k saved and earn a decent salary, so getting a mortgage for the kind of properties I'm looking at won't be an issue. For a 35-year mortgage, my monthly mortgage will be around £1,200 (approx 35% of take-home pay).

I would keep an eye on what comes up for sale in your area - if something that ticks all your boxes goes on the market at a price you are happy with, pursue it.

If not, keep stashing the savings away and you'll be able to buy with a higher deposit and cheaper on-going costs.

km1500

house prices are likely to fall a bit, and mortgage interest rates maybe ease a bit but who knows !

tunde10

35 year mortgage seems like a long time.

Are these properties affordable on a 25 years mortgage? If so and you're ready, i'd move as its a home, not necessarily an investment. 

If you can only just about afford it and on a 35yr mortgage. Best to keep savings and hope house prices stay the same or fall and you'd be in a stronger position with almost 50% more deposit in a years time

Gycraig

Personally I can see houses dropping as people stop moving due to higher interest rates. I know it’s a small sample but loads of my family and friends where looking at houses but now are redecorating and sticking. 

If I was sat on a healthy deposit banking 1.5k a month I wouldn’t be buying a house in current turmoil tbh. Mortgage for the house I wanted has gone from 650 to 1150, nah thanks 

lisyloo

Gycraig said:

Personally I can see houses dropping as people stop moving due to higher interest rates. I know it’s a small sample but loads of my family and friends where looking at houses but now are redecorating and sticking. 

If I was sat on a healthy deposit banking 1.5k a month I wouldn’t be buying a house in current turmoil tbh. Mortgage for the house I wanted has gone from 650 to 1150, nah thanks 

I think you are saying there will be a lack of buyers.
Doesn't this also mean a lack of sellers.

So stagnant and uncertain.
I think the risks are to the downside but not sure that lower prices automatically follow.

Gycraig

lisyloo said:

Gycraig said:

Personally I can see houses dropping as people stop moving due to higher interest rates. I know it’s a small sample but loads of my family and friends where looking at houses but now are redecorating and sticking. 

If I was sat on a healthy deposit banking 1.5k a month I wouldn’t be buying a house in current turmoil tbh. Mortgage for the house I wanted has gone from 650 to 1150, nah thanks 

I think you are saying there will be a lack of buyers.
Doesn't this also mean a lack of sellers.

So stagnant and uncertain.
I think the risks are to the downside but not sure that lower prices automatically follow.

Maybe not but I just don’t see where people are going to pull another 4-500 a month from on top of quickly escalating energy bills as well. 

Add another 3-400 a month on the lower end mortgages, add another 1-200 a month to energy bills and suddenly couples on 40-50k are walking away from the 200k + houses they would happily have bought 6 months ago. 

Personal opinion but I lived with my wives parents while we saved a deposit, saving similar figures, if they was happy for me to stay and market was how it is now I’d probably stay another year or so see what happens. Buying a house that is potentially about to drop a lot using a mortgage with the highest rates seen in years doesn’t sound appealing 

lookstraightahead

Gycraig said:

lisyloo said:

Gycraig said:

Personally I can see houses dropping as people stop moving due to higher interest rates. I know it’s a small sample but loads of my family and friends where looking at houses but now are redecorating and sticking. 

If I was sat on a healthy deposit banking 1.5k a month I wouldn’t be buying a house in current turmoil tbh. Mortgage for the house I wanted has gone from 650 to 1150, nah thanks 

I think you are saying there will be a lack of buyers.
Doesn't this also mean a lack of sellers.

So stagnant and uncertain.
I think the risks are to the downside but not sure that lower prices automatically follow.

Maybe not but I just don’t see where people are going to pull another 4-500 a month from on top of quickly escalating energy bills as well. 

Add another 3-400 a month on the lower end mortgages, add another 1-200 a month to energy bills and suddenly couples on 40-50k are walking away from the 200k + houses they would happily have bought 6 months ago. 

Personal opinion but I lived with my wives parents while we saved a deposit, saving similar figures, if they was happy for me to stay and market was how it is now I’d probably stay another year or so see what happens. Buying a house that is potentially about to drop a lot using a mortgage with the highest rates seen in years doesn’t sound appealing 

Banks stress tested to these amounts. The mortgage rates are average at present.

it's not appealing, but no one should see their property as a money tree - it's to live in. House ownership has its ups and downs, it's just that no one has experienced 'normality' for years. It's been madness out there, with sellers just plucking prices out of thin air and buyers bidding way over and paying silly amounts. Something had to give. 

Gycraig

lookstraightahead said:

Gycraig said:

lisyloo said:

Gycraig said:

Personally I can see houses dropping as people stop moving due to higher interest rates. I know it’s a small sample but loads of my family and friends where looking at houses but now are redecorating and sticking. 

If I was sat on a healthy deposit banking 1.5k a month I wouldn’t be buying a house in current turmoil tbh. Mortgage for the house I wanted has gone from 650 to 1150, nah thanks 

I think you are saying there will be a lack of buyers.
Doesn't this also mean a lack of sellers.

So stagnant and uncertain.
I think the risks are to the downside but not sure that lower prices automatically follow.

Maybe not but I just don’t see where people are going to pull another 4-500 a month from on top of quickly escalating energy bills as well. 

Add another 3-400 a month on the lower end mortgages, add another 1-200 a month to energy bills and suddenly couples on 40-50k are walking away from the 200k + houses they would happily have bought 6 months ago. 

Personal opinion but I lived with my wives parents while we saved a deposit, saving similar figures, if they was happy for me to stay and market was how it is now I’d probably stay another year or so see what happens. Buying a house that is potentially about to drop a lot using a mortgage with the highest rates seen in years doesn’t sound appealing 

Banks stress tested to these amounts. The mortgage rates are average at present.

it's not appealing, but no one should see their property as a money tree - it's to live in. House ownership has its ups and downs, it's just that no one has experienced 'normality' for years. It's been madness out there, with sellers just plucking prices out of thin air and buyers bidding way over and paying silly amounts. Something had to give. 

This isn’t “normality” though is it, this wage to house price ratio and interest rate combined isn’t normal and never has been, interest rates have been higher but houses where cheaper. 

There is a massive difference between my bank stress testing me up to a 1200 pound a month on my mortgage and me and others actually wanting to pay that. 

Plenty of people I know who where ready for “the next step” are now staying where they are. Only time will tell but I don’t see how it’s gonna be sustainable long term to have these interest rates / energy prices before everything crashes around us.