I'm currently buying, but getting cold feet...!

Bishop87

Hi all,

I'm new to this group, although have been reading it for a while now.

I've been looking to buy for about a year and a half now, have never really been able to buy an ideal starter home for me and the fiancee, and perhaps a kid in the future.

A year and a half ago for 100k I could only afford a 1 bed flat, then a year later I got a more money from work and could get myself a 115k terrace with yard and 2 bed, now I'm looking at a 4bed terrace with yard for 103k and have had a successful offer - down from 120k!.

The thing that I'm wondering is, I was considering pulling out with all this crash biz going on (i'm only 25, never saw the last one, although my dad did and said he only lost 20k on his 140k house at the time), I've been looking at renting alternatives, so I can get a 3 bed semi for 650~ a month.

But my mortgage for this 100k terrace is 590 a month (95% mortgage), now if I were to rent for say 3 years (or possibly more if the very long waiting crash takes upto and over 5 yrs and some ppl say!) that's a total of approx 24k for 3yrs renting!!! And houses may still be going down for another two years after that, assuming I could still get a mortgage then with these somewhat low interest rates.

Now say house prices DO go down lots, say 20% - that's 20k off my mortgage! but that's still 4k up from if I brought the place. Although the sting is that when and if I re-mortgage, the loan to value would probably be above 100% meaning either I stay there until things even out of get a high interest rate!

So I'm stumped, I know alot of ppl on here say don't buy they'll crash, doom gloom destruction and others say it depends on circumstances, but I'm not looking for an investment, BTL or cash cow alternatives, I just want my own home, where I can have pets, redecorate, not worry about rental increase (which is what has just happening to me, tiny 1 bed flat, sea view, 550 a month, was selling for 125k before) and feel at home!

It's in Scarborough, YO12 area, prices have come down a little, the terrace I'm buying came down from 120k to 110k, they I got them to 103k with fridge/freezer/washer/table and other bits.

This is a house opposite:
http://www.rightmove.co.uk/viewdetails-184...=1&tr_t=buy
mine looks better inside IMO and the loft/attic has only been boarded and mine has storage heaters.

Basically, am I doing something really stupid here?

Thanks for your opinions in advance!

maryotuam

Prices are likely to drop more but I remember the joy of moving into my own house for the first time. Quality of life is a factor that is worth taking into consideration. I f you feel you would be happy to live in that house for at least 5 years then in your shoes I would take the plunge.

clutton_2

if you can afford it - why not - none of us can forecast what is going to happen in the property market - as mary says - quality of life is a factor to be taken into account.

there is no feeling like that first night in your own home.....

bw

m00m00

in your situation where there is only a token increase in expenditure for purchasing, on a property which is likely to last you for a long time (4 beds is a lot of space), and given the motivation you have for actually wanting a place. I can see no reason for you not to go for it

franklee

Hi Bishop,

Your sums are flawed as you have forgotten that a large portion of the 590 a month mortgage payment is interest, only a small bit of that pays off the loan. Therefore it's flawed to count the whole of the 24K for 3yrs renting as a loss if you rent without also counting the interest on 3yrs mortgage payments as a loss if you buy. Once you take the mortgage interest into account too you won't be the 4k up in the scenario you describe.

The way you should do this is to work the sums through completely for each case a) if you buy now and b) if you continue to rent for 3yrs. If you can't do it all set out what you can. Also state the details you are using e.g. type of mortgage, interest rate etc. Don't forget to include the interest you are achieving on your deposit money.

At the end of this calculation you would know how much you still owe on your mortgage in 3yrs time and then you can compare that against what you think the house may be worth then with different sizes of "crash"..

Bishop87

Hi,

Thanks for your replies, that does re-assure me.

Franklee you're right, this will look bad I bet!

My mortgage is a 5yr fixed rate at 6.4%, so over 5yrs:-
Mortgage - £35,400
Capital per each month = £75 over the 5 yrs = £4,500 (I think this is wrong...)

Rent - Taking into account rises over the 5 yrs - £40,500

I would have at least done 5 years going the mortgage route, while with renting I believe I would find is difficult to save a 10% deposit while renting if that were the case in 5yrs.

I would assume after 5yrs, this slump will haev happened, even out, and stabilized?

Thanks!

tradetime

I've been looking at renting alternatives, so I can get a 3 bed semi for 650~ a month.

Not sure why you would rent a 3 bed semi? Buying, I can understand, making plans far into the future with regards to location, space, consideration of future family etc, but for renting, from your post I think there are just the two of you, so surely it would make far more sense to rent a smaller property, say 2 bed terrace, and save the difference towards your deposit. Obviously this only counts if you decide to rent. As far as buying, from what you say you are buying a home, assuming you have the stability of circumstance for 5+ years and you are getting a good price for a house you both really like, then why not.

themaccas

I would also go for it. we recently sold our house and bought another one, we could have sat on our equity and moved into a forces married quarter with VERY cheap rent, but in my mind being in our own home is worth every penny I pay on my mortgage. I want to enjoy my life with my family not sit on a mountain of equity counting my pennies. The house we live in now I couldn't have dreamed we could afford a year ago, thankfully we got it down to within our budget just as we reduced the price for our buyers to be able to afford our home. We plan to stay here longterm and we have fixed our mortgage for 10 years so I couldn't give too hoots about talk of negative equity.

Bishop87

Hi,

The reason I'm looking at a 3 bed semi is because there isn't alot of rentals going in Scarborough, in fact there's very little that isn't a flat!

I don't mind flats, but I've had enough of them, want a family, pets, and don't want to be lumbered with maintenance/service charges.

Two bed terraces are hard to come by in good areas here, and if they are about they are going for around 600, so for the extra driveway, larger yard and proximity to town I'd go for a £650 3 bed semi for that extra.

tradetime

Fair enough.

neverdespairgirl

themaccas wrote: »

I want to enjoy my life with my family not sit on a mountain of equity counting my pennies.

I just don't get this British obsession that you can only enjoy life if you owe a packet to the bank for the house you live in!

OH and I rent, with our son, and enjoy our family life hugely.