First time buyer in London

anchor2024

Hi folks,

My partner and I are planning to buy our first property in London (likely a two bed flat in North London for 700k-800k). 

My questions are:
- Does it probably make sense to wait for whatever Labour will announce first-time buyers?
- Is now generally considered a "bad" time to buy due to high interest rates? Is this expected to fall?
- Should we get a joint mortgage or not?

Some context:
- I earn 210k; my partner earns 55k.
- I have 40k in bank for deposit; my partner has 400k (so doesn't need to take mortgage in theory).

Really appreciate any help - thank you.

Mark_d

I wouldn't wait for Labour to announce anything.  I can't see them doing anything which would benefit a first time buying with a £210k salary buying an £800k property.

I think now is quite a good time to buy. Interest rates are not ridiculous,  They might come down slightly but this would be counterbalanced by an increase in house prices.

Personally I would go for a joint mortgage and have the property in joint names.  It keeps things as simple as it can be.  But you probably want something legal drawn up to clarify what would happen with the property if you and your partner were to split.

gwynlas

You could wait to buy  until government sets next budget and see what happens to interest rates however you could start looking now and might spot a bargain. You should each protect your deposit with a deed of  trust in case of later break up as well as wills. Mortgage companies will require you both to be named.

ACG

If/when interest rates drop, that will improve affordability - the knock on effect of that will likely be higher house prices.
However, on the flip side unemployment is on the up and so less people in work might reduce house prices. 

Hows that for sitting on the fence. 
Basically its pretty difficult to plan for the best time. You might be buying at the peak, you might find you are buying before the next peak. There are people on a lot more money than I am on to predict the future and its rate they get it right. 

If you are comfortable with the house prices you are looking at and the alternative is that you are renting you might as well be paying off your mortgage than someone elses. If you are living at home, it makes it a tougher deicsion... In my opinion. 

I would not wait for anything the govt announce personally, you could be waiting forever and anything they do prove will like only skew house prices up... unless it is a plan to build 300,000 homes in the next 2 years. 

DullGreyGuy

We weren't looking to buy X years ago in this area of London but when we did first consider buying 2 bed flats around here were £250k, when we actually got round to buying they were almost £600k, a couple of years ago they were up to nearly £700k but the current price index have them back down to around £600k. 

The problem is there is always something that could happen, new government, next financial crisis, pandemic, war etc etc and either you take a punt at sometime or you continue renting forever. 

Windofchange

As someone who brought in January 2020 just as the world shut down and everyone was forecasting a huge recession, I can concur that there is never a right time to buy. We took the plunge and of course property prices have rocketed since before falling back a bit in the past year. We wouldn’t now be able to afford the house that we currently live in so I’m damn glad we just thought what the heck and went for it. There will always be something in the pipeline. There will always be a what about xyz. Just get on with it in my view, particularly given the financial position you’ve outlined - a 400k deposit gives you an enormous amount of protection against negative equity / will get you top rates based on LTV.  

Edi81

Oh and there is no your half and be their half. You definitely need some proper advice on how to protect yourselves in case of breakup with such unequal deposits. 

ReadySteadyPop

DullGreyGuy said:

We weren't looking to buy X years ago in this area of London but when we did first consider buying 2 bed flats around here were £250k, when we actually got round to buying they were almost £600k, a couple of years ago they were up to nearly £700k but the current price index have them back down to around £600k. 

The problem is there is always something that could happen, new government, next financial crisis, pandemic, war etc etc and either you take a punt at sometime or you continue renting forever. 

What level were interest rates at when flats near you were 250k?

ReadySteadyPop

Windofchange said:

As someone who brought in January 2020 just as the world shut down and everyone was forecasting a huge recession, I can concur that there is never a right time to buy. We took the plunge and of course property prices have rocketed since before falling back a bit in the past year. We wouldn’t now be able to afford the house that we currently live in so I’m damn glad we just thought what the heck and went for it. There will always be something in the pipeline. There will always be a what about xyz. Just get on with it in my view, particularly given the financial position you’ve outlined - a 400k deposit gives you an enormous amount of protection against negative equity / will get you top rates based on LTV.  

It would be better invested elsewhere, a 2 bed flat in London isn`t really a good store of wealth at these delusional price levels, as we know from previous crashes things can turn very quickly, then you can`t get your money back.

Newbie_John

Also have a think how much rent you pay now, if it's STH like £3k - that's £36k saved every year if you buy NOW.

10 years time it's £360k spent on rent. 

But as mentioned earlier get proper advice how to agree on dividing assets - as as bad as it sounds nearly 50% of marriages in UK end up in divorce.

ReadySteadyPop

Figure out how much income your pooled savings bring monthly, a money market fund could be giving 5 - 6%, and consider that when this is dropped into a flat in no longer brings you income and is at risk of loss if the housing market turns down. Why not find a much better deal outside London or rent more cheaply?

https://www.landc.co.uk/calculators/interest-calculator