Another "about to exchange" thread

mikegib

We are FTBs, buying a flat. My OH's parents contributing a quarter of the purchase price towards deposit (no interest and we do not have to repay it until we feel comfortable to do so). We knocked down 10% of the asking price (but we think it was overpriced anyway, by about 5%) and further 3% after we received the survey report (nothing critical though). Also adding our own deposit of 5%.

Based on these figures, our interest only part of repayment mortgage would be equal to current rent payment for this type of property.

The flat itself is not ideal, with quite a little space, but the location is one of the best ones in our area (good schools, transport links, entertainment, low crime).
Originally we were thinking of staying here for a couple of years until my OH gets a proper job and I move to the next level in my carrier, and then buy a proper house. Now, if all the things people say about happen, I doubt we will be able to do that at the bottom of the market.

To make things worse, if we wait 1-2 years, we would not be able to buy even this flat, even if prices fell by 20%: the help we are getting from OH's parents very likely to be unavailable then and I want to become a contractor (3 years of accounts required to be considered by mortgage lenders as per rules now).

My OH really wants our own place (paint walls, change kitchen etc.) but I personally do not fancy the prospect of living in this place for the next 5-10 years due to possible negative equity or close to that.

On the other hand, if we do not buy now, it is unlikely to happen within next 3-4 years and we are fed up with renting. Not mentioning losing 2-3K in fees that we have paid already.

What are the possible solutions to this situation ?

TBeckett100

if in doubt pull out.
you have said yourself that the flat is not ideal. you are in a great position and not in one to make sacrifices at this stage, particular with prices falling everywhere.

janegal

In my personal opinion - based on your circunstances I would go ahead and buy it. However given the headlines in the news and the generalised feeling around the house market, I would go back to your seller and put forward a reviewed and final offer - most probably, the vendor would accept. You have nothing to lose - if they say no, you can always carry on buying it.
Good luck!!

ncooper1974

i agree with janegal.....put in a revised offer and see what they say.
if it were me, I would continue with the purchase as long as you can afford the repayments and its a HOME!

dont worry about becoming a contractor. I bought my 1st flat with less than 6 months accounts. This was about 8 years ago. Although the rules were different then, there is nothing to say it wont change again!

PasturesNew

Reading everything you've said, I'd say there's no point in buying now because your life will be changing over the next 4 years or so quite significantly.

It's better to remain free of commitment during changing times.

But I don't see why the deposit is available now on a "pay us back when you can" basis, yet not available in, say, 4 years' time. If they don't need the money back then it should still be available.

My opinion is: don't buy. Rent. There's plenty of time. See how the new job goes, see how the contracting goes. Decide again in 3-4 years based on what your situation is then.

mikegib

ncooper1974 wrote: »

i agree with janegal.....put in a revised offer and see what they say.

Is it possible to pass it through solicitors? I do not feel good about asking EA about further reductions. As I mentioned, we have got 12% off already which is nonsense for this area, I checked recent sold prices they are more like 1-2% off rightmove price.
I know this was a BTL property for the vendor, bought a long time ago - so no drama for him, but still feel bad about gazundering.

mikegib

PasturesNew wrote: »

Reading everything you've said, I'd say there's no point in buying now because your life will be changing over the next 4 years or so quite significantly.

That's the thing, as everything else is changing we want something permanent to be our "base". As someone has mentioned in grand designs "if your home is a mess then your whole life is a mess", that's exactly what we feel now while renting ..

mrs_deadline

PasturesNew wrote: »

But I don't see why the deposit is available now on a "pay us back when you can" basis, yet not available in, say, 4 years' time. If they don't need the money back then it should still be available.

My thoughts exactly - it doesn't seem very fair to say now or never. Makes you wonder if there's a hidden agenda.

mikegib

mrs_deadline wrote: »

My thoughts exactly - it doesn't seem very fair to say now or never. Makes you wonder if there's a hidden agenda.

I tried to make it simple, fair or not that is it.

Pez2

If I read this correctly, your deposit is going to be equal to 30% of the property value. So you may avoid getting into serious negative equity.

However, buying with the aim to move again in a couple of years is not necessarily a wise idea in the current market, and you need to accept the possibility that you might end up stuck there longer than you think. Whether it's worth risking that in order to get out of rented accomodation is a personal judgement that only you can make.

Doozergirl

Just because house prices go down, doesn't mean that nobody is going to be able to move. Sometimes you have to. If you have higher salaries, the next place up that you buy will also be cheaper so it might become easier to buy.

Prices go up, they go down. If you have enough equity and can afford the repayments, there's not a great deal to worry about if you are not planning to sell up and profit (literally, not in the 'I've made this much but the house I want to buy next has increased by double that' sense)

If you buy for £100k and put down £30k and prices drop by 20% then you have a £70k mortgage on a place worth £80k.

If you decide to move, the house you wanted was £150k but now it's £120k. You need a £110k mortgage but only have £10k equity.

But if the house you want to move to was still £150k, you'd need a bigger £120k mortgage but somehow you feel richer because you have £30k in equity. The equity is doing nothing until you sell up permanently or die.

Waiting is a gamble too however to some degree. Prices may drop, they might not, they may stagnate. You spend on rent, you have to move around to the whim of your landlords or simply to avoid them and in 2 or 3 years time, house prices have barely moved. You don't have that 25% deposit to invest elsewhere because it isn't yours until you buy. You have to decide on what sort of price drop would warrant you waiting and decide what the likelyhood is of that.

Different areas perform differently in both boom and bust. It's not easy to call. Plenty of people have seen the price of their new build investments fall flat whilst others have seen their inner London, slightly scabby area flats rise by silly amounts over the last couple of years. Meanwhile in average market town where I live has done nothing for years. Risen with inflation, if that.

There's no hard and fast rule to making money. You just look at that deposit as an incredibly kind gift and investment in your future and you choose whether to accept it with open arms. Hopefully you've already bought at less than it might be worth and your deposit is protected a little more.

So, no real advice from me, just pointing out that things aren't as clear as other people might have you believe.