Buy home or wait for a few months

darksnake09

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

MultiFuelBurner

If you want to buy at the end of the year your search is today as it can take that long.

A crash, explain to me what you would define as a crash?

What is your affordability and what can you buy for your money. What would be your LTV (loan to value) have you already contacted a mortgage broker or your bank and checked what you can borrow?

Rented is always money down the drain and think of property ownership in 5 or 10 Years not what might happen as you will never purchase.

darksnake09

Thanks for the reply, in terms of crash I was refering to if the interest rates keeping going up would it lead to house prices declining in the coming year? Of course nothing near to the financial crash in 2008/2009 but something near that if things keep going the way they are. My range is below £230k for a house LTV would be around 90%. I do gave brokers sorted once I do go ahead just a bit hesitant at the moment.

[Deleted User]

How old are you? If you can take a longer mortgage that will help with higher interest rates.

CSI_Yorkshire

darksnake09 said:

Thanks for the reply, in terms of crash I was refering to if the interest rates keeping going up would it lead to house prices declining in the coming year? Of course nothing near to the financial crash in 2008/2009 but something near that if things keep going the way they are. 

Could it?  Yes.  I'd even say that it's probable or likely as a general headline pattern.

Would it?  You can't be certain.

But how much 'declining' would make a difference for you?  1%? 5%? 10%? 25%?

Every type of property in every area will be affected slightly differently, and nobody can be sure what (and by how much) will happen to each.

p00hsticks

[Deleted User] said:

How old are you? If you can take a longer mortgage that will help with higher interest rates.

OP says that they are in their late 20's...

moneysaver1978

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

What prompted this? Forget the headlines, media, and what others are doing - how much rent are you paying vs how much mortgage repayments.

MultiFuelBurner

darksnake09 said:

Thanks for the reply, in terms of crash I was refering to if the interest rates keeping going up would it lead to house prices declining in the coming year? Of course nothing near to the financial crash in 2008/2009 but something near that if things keep going the way they are. My range is below £230k for a house LTV would be around 90%. I do gave brokers sorted once I do go ahead just a bit hesitant at the moment.

Ok let's say you get a 5 year fixed rate at 5% for 200,000 over 35 years as you are young.

That's £1015 a month

What are you paying for rent now

After 5 years out of that initial £200,000 you will owe approx £189,000.

Have you looked at all the figures?

grumbler

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

MFWannabe

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

This makes no sense 
Of course you need to compare mortgage payments to rent payments 
If you’re paying £1000 per month for rental over 5 years you’ll have paid 60k in rental as opposed to paying off your own mortgage 

CSI_Yorkshire

MFWannabe said:

grumbler said:

moneysaver1978 said:

darksnake09 said:

Hi Guys,

I am in my late 20's and am very puzzled on what step to take so I home someone can shine some light.

I am looking to purchased my first time home, I know no one knows when the right time is but should I wait till the end of the year or next year and see if there is a crash in the housing market along side if interest rates come down. I am renting at the moment but it really feels like money is getting wasted.

Many Thanks !

  how much rent are you paying vs how much mortgage repayments.

IMO, it makes sense to compare the rent to the interest payments, not to mortgage repayments. Anything you pay on the top of the interest is your savings.
That said, first years interest makes the biggest part of monthly payments and the 'savings' are quite small.

This makes no sense 
Of course you need to compare mortgage payments to rent payments 
If you’re paying £1000 per month for rental over 5 years you’ll have paid 60k in rental as opposed to paying off your own mortgage 

In Grumbler's approach you only compare the 'lost' money - which is either the rent or the interest on the mortgage.

If you're paying £1000pm rent for 5 years, yes, you have paid £60k in rental = this money is lost.  If you are paying £1000pm mortgage for 5 years, you haven't paid off £60k of the loan, but much less - a (possibly large) proportion of it is lost as interest payments.  If this is misunderstood, it makes a mortgage seem much more financially beneficial than it actually is.

Looking at the 'lost' money is a sensible proposition for comparison because it is highlighting exactly that, the 'useless' part of your outgoings.

You are preferring to take the 'cash flow' approach.  Also legitimate.  It isn't the only method though.