PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

House buying worries

Options
Jojo6
Jojo6 Posts: 17 Forumite
First Post
in House buying, renting & selling
Two weeks ago my partner and I reserved a new home. We’d been trying to sell our current house for two years. The house is in an excellent location in catchment to an outstanding secondary school. The house will be bought with the support of Help to Buy. The house is 600k. Our deposit will be 80k as we will be having 120k from Help to Buy. The company will be paying our stamp duty and our legal fees. The house has been reduced in price as the ones that are the same and neighbour it sold for 25k more.
But I’m starting to worry that we’re making a mistake and need some clarity. Our new mortgage rate is 1.8%which I appreciate is low. It’s a 5 year fixed. I’m worried about what happens in 5 year time. I know I sound stupid and that in hindsight this should have been something that we’d thought about before reserving the house, but I felt under pressure to find something. I do think the house is lovely, it’s the money side! We have been stress tested and apparently we will be fine but I still feel sick. My current mortgage is fixed at 4.7%. In 5 years time, if this is the rate that we need to fix at, we will be paying over £2200 a month for our mortgage and then the help to buy repayments on top which are currently £175 a month but if the house is valued higher, will be more than that. This is not at all ok for me. We will be living far too tightly. Am I overthinking this? Has anyone got some advice or can someone give me some reassurance if there is any? :money:
«1

Comments

  • warby68
    warby68 Posts: 3,022 Forumite
    Name Dropper First Post First Anniversary
    Options
    You need to stress test yourself!!

    We have no idea what your income is, what other commitments you have or plan to have and therefore how affordable this property is.

    On the face of it, its a large jump if you only currently have £80k equity - that's the only general observation I could make. Newbuild and HTB may mean you don't easily recoup your money if you needed to move in say 3 years for some reason.

    I suppose the underlying question is are you using Help to Buy to get a property you really can't afford?
  • Cakeguts
    Cakeguts Posts: 7,627 Forumite
    First Anniversary Name Dropper First Post
    Options
    I think buying an expensive house to get an outstanding local school is more of a risk than the mortgage interest rates. That school could be down graded next inspection and then you have a very expensive house in an area with a not very good school. What will that do to the value of a nearly new house?



    I can't help you with the mortgage interest rates because when I bought my first house they were 11%.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
    First Anniversary First Post Name Dropper
    Options
    Cakeguts wrote: »
    I think buying an expensive house to get an outstanding local school is more of a risk than the mortgage interest rates. That school could be down graded next inspection and then you have a very expensive house in an area with a not very good school. What will that do to the value of a nearly new house?



    I can't help you with the mortgage interest rates because when I bought my first house they were 11%.

    Good point.
  • shinytop
    shinytop Posts: 2,099 Forumite
    First Anniversary First Post Name Dropper Photogenic
    Options
    OP, if you like the house, think it's a good price and can afford it, just go for it and enjoy your new home! It sounds like all of these apply for you. Five years is a long time and there will be other good mortgage deals available then.
  • RelievedSheff
    RelievedSheff Posts: 11,328 Forumite
    First Anniversary First Post Name Dropper Photogenic
    Options
    OP you need to make your own mind up if you can afford the payments or not.
  • kazwookie
    kazwookie Posts: 13,843 Forumite
    Name Dropper First Anniversary Photogenic First Post
    Options
    How much do you earn?


    How many of you are there?


    If you are worrying now, you are possible right to worry. Walk away from the 'deal' and find something of less ££, that won't worry you.



    But we do not have enough details to help you.
    Breast Cancer Now 2022 100 miles October 100 / 100miles
    Sun, Sea

    2024 7/28 lbs to go.
  • AdrianC
    AdrianC Posts: 42,189 Forumite
    First Anniversary Name Dropper First Post
    Options
    Jojo6 wrote: »
    The house is 600k. Our deposit will be 80k as we will be having 120k from Help to Buy.
    So a £400k mortgage.
    Our new mortgage rate is 1.8%which I appreciate is low. It’s a 5 year fixed. I’m worried about what happens in 5 year time.
    You look at the market and remortgage...
    My current mortgage is fixed at 4.7%.
    And how much are you currently borrowing?
    In 5 years time, if this is the rate that we need to fix at, we will be paying over £2200 a month for our mortgage
    And at 1.8%, you're repaying £1,650/mo. So it's ~£550/mo difference. What's your household monthly income, after tax?
  • Jojo6
    Jojo6 Posts: 17 Forumite
    First Post
    Options
    Between us, we earn around £110k a year. At the moment our mortgage is for 236k but we are able to get a 29 year term and so always wanted to make this move our big move. We didn’t want to have to spend this much on a house but the house is beautiful and the location is very good and so, despite help to buy, we decided it should be a good investment. The move means that we are able to clear a small loan and small credit card bill which means our monthly outgoings will be no different to the amount that we pay now due to the 1.8% rate.
  • Jojo6
    Jojo6 Posts: 17 Forumite
    First Post
    Options
    After tax, we bring in around 5500k
  • Cakeguts
    Cakeguts Posts: 7,627 Forumite
    First Anniversary Name Dropper First Post
    Options
    Jojo6 wrote: »
    Between us, we earn around £110k a year. At the moment our mortgage is for 236k but we are able to get a 29 year term and so always wanted to make this move our big move. We didn’t want to have to spend this much on a house but the house is beautiful and the location is very good and so, despite help to buy, we decided it should be a good investment. The move means that we are able to clear a small loan and small credit card bill which means our monthly outgoings will be no different to the amount that we pay now due to the 1.8% rate.


    A new house is NOT a good investment in terms of money. It will drop in value as soon as move in. A house in an area with a school graded outstanding now but possible downgraded to inadequate in the future is not a good investment. So forget about the investment bit it doesn't apply and work out if you like the house enough to pay for it.


    I am a landlord and I can tell you what makes a good investment and what you are buying isn't.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.2K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608.1K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 247.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards