Is it a really bad idea to buy a house right now?

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by the tower the one up north ..
bought one a few months back .. got a 10 yr fixed ..which leaves 2 yrs until it's paid off spent 15k on it .. intend to die here .. 54 now ..
make it your own stay for 10-15 yrs ..you might just break even or make loads of money .. but thats not the point happy family happy life ..
 
Soldato
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If the prices crash 30% I will buy another house! Really this place is so full of doom porn sometimes.

I'm not saying times aren't tough: what I am saying is that taking financial advice off anybody here is a mistake (including me). We know nothing. Nobody knows anything, ever!

It might be the worst financial decision you ever make, but the best for your health, family, life. You'll have less money in the bank, but if you've enjoyed every minute of living there, then who cares?

Money is a mechanism to maximise your fulfilment in life, not just to see a number on a screen that you can look at every day and pull your plonker over.
 
Soldato
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I feel the same, although we're further down the process than you.

FTB, offer accepted and mortgage approved on our ideal home in the ideal area. 88% LTV. 2 year fixed with the intention that our LTV will cross into the <85% threshold when we come to remortgage if the house value remains exactly the same. My job is secure and I'd like to think my girlfriend is too. We could afford the mortgage payments if they effectively doubled (although our living circumstances would obviously change). We negotiated 6k off listing and the bank valued the property in line with the agreed price.

We plan to be in this house for the forseeable, it's certainly not a 2-3 year thing. The area we're buying in had the 5th highest YoY % change in 2019, so it's desirable and sought after. Fantastic schools (even though we don't want kids), great transport connections, lovely bars & resturants and more development planned for the future.

We're currently in a rental that comes to an end in January, so we are against the clock to move.

I do worry and feel anxious about it at times. However, if the worst comes to the worst and prices drop significantly, we should be able to ride it out since we're prepared financially, have job security and plan to be in the house for 5+ years.
 
Man of Honour
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We bought just before crash the 2007/2008 crash :mad: the prices fell but we only had a mortgage for 65% of the house due to our previous house selling well . It knocked about £15-20k off the price at time but now we are £35k+ above the purchase price

Its all swings and rounabouts if staying for 10 years as other have stated your be fine

One thing I've realised is that I never really found out how much the value of our house dropped, because:
a) We've never had it valued
b) As a brand new estate, hardly any houses were sold by the first owners until after the market was on the way back up.

I think timing wise we were in the middle, there are houses of the same type that sold for around list price (£285k) back in 2007 down to as low as £225k right at the end of 2018. We paid £235k but fixtures and fittings were on the cheaper end of the spectrum. I assume the value dropped further in 2009 but there isn't really much data available as the build was wrapping up, there's a couple of different but similar valued/sized houses at £220k / £222.5k in 2009 that's about it.
So if you buy in a downturn you actually avoid some of the losses because the peak has already been and gone. It just depends what happens between now and the actual transaction taking place, right now we're not seeing falling prices but who knows what we'll find in April.
 
Caporegime
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Quite surprised how many people are saying go for it actually.

The only reason I can see for diving in now is the baby on the way.

There's so much which could change in life that cause loss of equity to become an issue. If no issues are on the horizon or if its not a FTB this isn't so important. But there is a very real risk of significant downturn.

I guess I'm just a bit surprised more people aren't cautious. It's big sums of money in a very unstable environment
 
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Soldato
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It really depends on what position they're in. If they're FTB then i would probably wait but again it depends on how long they will stay at the property for (Im currently on my 9th year at my first property). If they are upsizing and plan to stay longer than the property value is not really a financial point they should consider.
 
Soldato
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Quite surprised how many people are saying go for it actually.

The only reason I can see for diving in now is the baby on the way.

There's so much which could change in life that cause loss of equity to become an issue. If no issues are on the horizon or if its not a FTB this isn't so important. But there is a very real risk of significant downturn.

I guess I'm just a bit surprised more people aren't cautious. It's big sums of money in a very unstable environment

The problem is that over a long enough horizon, every environment is unstable. This one only feels more ‘real’ as we are all affected by it. However, just look at the last 10+ years about the amount of conflicts, constitutional crises, job uncertainty, SARS, swine flu, bird flu, Ebola, Zika...and so on. None of these turned out exactly as many thought they would.

If you waited for the perfect moment during any of these last things, you’d have well and truly missed the boat. The ‘right time’ is only possible when viewed through the rear view mirror, imo.

Not to say that there aren’t ‘better’ or ‘worse’ times, but you can never be sure which it is, until it has passed.
 
Soldato
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I've put two offers on two houses in the last couple of weeks. One went for around 35% above the valuation survey and I suspect the other one did a similar level above it. Flats in my area are selling very quickly for 20-25% above valuation.

I somewhat agree with Sonny, it's a great time to sell but probably not the best time to buy. To the posters saying to negotiate hard, you can't. Both houses we offered on had 23 offers. We bid around 15% above the valuation and we were 5th highest.

I also however echo other views, if it's a house to stay in long term and it's affordable then go for it. The market will recover if there is a drop in prices. But, be aware that it's a sellers market and don't get carried away.
 
Caporegime
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The problem is that over a long enough horizon, every environment is unstable. This one only feels more ‘real’ as we are all affected by it. However, just look at the last 10+ years about the amount of conflicts, constitutional crises, job uncertainty, SARS, swine flu, bird flu, Ebola, Zika...and so on. None of these turned out exactly as many thought they would.

If you waited for the perfect moment during any of these last things, you’d have well and truly missed the boat. The ‘right time’ is only possible when viewed through the rear view mirror, imo.

Not to say that there aren’t ‘better’ or ‘worse’ times, but you can never be sure which it is, until it has passed.

I agree you can't know the future. As in last year you'd never know this was going to happen. But right now there's a high chance of decline. Its so high many people could be locked into their recent purchases for years. I'd personally rather wait to see a bit of the dust settle.

Its unlikely a first home is going to be most peoples forever home.

I was hoping to stay in mine a few years. 5 or 6.
With how much the landscape is changing.. Particularly work from home.. I may want to spend even less time here. But obviously that might not be possible.

If you avoid falls as much as possible you just have more options.

I'm certainly thankful I didn't get a typical first house. That's the only good thing. I wouldn't feel a prisoner in this house if I can't sell
 
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Soldato
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Quite surprised how many people are saying go for it actually.

The only reason I can see for diving in now is the baby on the way.

There's so much which could change in life that cause loss of equity to become an issue. If no issues are on the horizon or if its not a FTB this isn't so important. But there is a very real risk of significant downturn.

I guess I'm just a bit surprised more people aren't cautious. It's big sums of money in a very unstable environment

It's only a surprise if you can't take a more nuanced reasoned view of the current state of the market than recession = house price crash. Look at the stock markets, why do you think they are performing the way they are?

You clearly haven't been involved in the property market in the last few months because it is absolutely insane the demand and money out there. People who have the money to buy houses have never has so much disposable income, and credit is guaranteed to be cheap for years and years to come.

Even if you assume a worst-case scenario 20% collapse, the actual combination of circumstances that would have to align to make buying a house a bad idea over a 5 year+ time window is massive. If you have a deposit and are paying rent in the meantime, the chances of not buying being the right move are incredibly small over that sort of time span.
 
Caporegime
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If the prices crash 30% I will buy another house! Really this place is so full of doom porn sometimes.

I'm not saying times aren't tough: what I am saying is that taking financial advice off anybody here is a mistake (including me). We know nothing. Nobody knows anything, ever!

It might be the worst financial decision you ever make, but the best for your health, family, life. You'll have less money in the bank, but if you've enjoyed every minute of living there, then who cares?

Money is a mechanism to maximise your fulfilment in life, not just to see a number on a screen that you can look at every day and pull your plonker over.

Everyone on here has been saying since Brexit vote go for a long fix and they were saying it before Brexit too.

They have all been wrong.

I after the Brexit vote started saying fix for 2 years and everyone else was saying go 5 or 10.

Looks like I am right because interest rates have went down since the vote, stayed down and could even go negative.

A lot of folk on here are sheep that just reiterate what everyone else does and don't go against the herd.

There are literally 10+ very good reasons not to buy right now.

It's the best time to be selling. All the folk looking to buy are buying now and the market is hot. A house 3-4 doors down from me sold within a week. All houses in my estate sell within 2 weeks apart from the one woman who wanted 30% more than the valuation.

In Scotland you need to get a home report and part of that report is a valuation.

Yeah some areas that are sought after like jordanhill people go well over the valuation as that's the only way to buy in that area. However that is happening currently in every area. There is a house that is significantly smaller than mine up for sale in my estate for 25% more than what I paid for mine 4 years ago. the market is crazy right now.

This is literally the worst time to be buying and the best time to be selling before a massive incoming crash.

Brexit, furlough, Covid, lockdowns, further waves, massive job losses, the list is endless as to why the market isn't sustainable. All the people buying now are desperate. Once they disappear and people start failing mortgage payments is when the fun begins.

It doesn't matter if mortgage interest is low. If your mortgage is £1500 a month and you have £50 job seekers coming in, it doesn't mean jack that interest is only a few quid. Interest being low means literally nothing when you have no money to pay the bill.

People need to think before using stupid arguments to support their view. What difference does interest rates make when you have no job?
 
Soldato
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Everyone on here has been saying since Brexit vote go for a long fix and they were saying it before Brexit too.

They have all been wrong.

I after the Brexit vote started saying fix for 2 years and everyone else was saying go 5 or 10.

Looks like I am right because interest rates have went down since the vote, stayed down and could even go negative.

A lot of folk on here are sheep that just reiterate what everyone else does and don't go against the herd.

There are literally 10+ very good reasons not to buy right now.

It's the best time to be selling. All the folk looking to buy are buying now and the market is hot. A house 3-4 doors down from me sold within a week. All houses in my estate sell within 2 weeks apart from the one woman who wanted 30% more than the valuation.

In Scotland you need to get a home report and part of that report is a valuation.

Yeah some areas that are sought after like jordanhill people go well over the valuation as that's the only way to buy in that area. However that is happening currently in every area. There is a house that is significantly smaller than mine up for sale in my estate for 25% more than what I paid for mine 4 years ago. the market is crazy right now.

This is literally the worst time to be buying and the best time to be selling before a massive incoming crash.

Brexit, furlough, Covid, lockdowns, further waves, massive job losses, the list is endless as to why the market isn't sustainable. All the people buying now are desperate. Once they disappear and people start failing mortgage payments is when the fun begins.

It doesn't matter if mortgage interest is low. If your mortgage is £1500 a month and you have £50 job seekers coming in, it doesn't mean jack that interest is only a few quid. Interest being low means literally nothing when you have no money to pay the bill.

People need to think before using stupid arguments to support their view. What difference does interest rates make when you have no job?

For every seller there is a buyer who must (for whatever reason) hold a counter view.

With respect - you might be correct, but you might be utterly, embarrassingly wrong. Making hyperbolic statements like 'literally the worst time to be buying' and 'all buyers are desperate' makes you look incredibly foolish; you have no privileged insight, and you should perhaps be a little more humble with the advice you give.

I appreciate that it takes two opinions to make a discussion, but if you turn out to be 'right', it is due to luck not foresight.

This might be the best buying opportunity of a lifetime. Doom porn is all the rage, and people will do it until the end of time. If you say 'the sky is falling' enough times, one time you'll surely be correct, and then think of the kudos you'll get (while civilised society collapses, we trade bottle caps, and we search corpses for rad-away).

Good luck on your house buying journey, OP. Don't listen to any advice here, including mine. I only commented because I am sick of hearing how the walls of society are going to fall down and house prices are going to be through the floor, and think there needs to be a little more balance.
 
Soldato
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It's important to bear in mind that vaccines are progressing well, there's every evidence they will be effective and by the second half of next year everything will be back open and the YoY growth figures will go through the roof as everyone gets out to spend the money they've saving during lockdown.
 
Associate
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Good point, mid_gen.

Can I run what seems like a likely scenario past you guys though, to see if it checks out:

Let's say we buy now at £220 with a £22k deposit (we're FTBs). In five years we remortgage, but the house has lost 5%/£11k of its value. But we've also paid off £25k of the principal. That means we owe our first mortgage provider £173k (£198k minus the £25k). In which case, if we were to remortgage we would have about £36k in equity in the house, which equates to us asking for a 17% LTV mortgage. Does that sound right?

In other words, although the house fell in value, we are still quite a bit better off financially than if we had stayed renting? If so, this does sound like the best option, even in a falling market. Especially if we can add some value to the house with an extension (the property has space at the rear and side for extensions, and the listing even mentions the possibility of extending, which others in the same street have done).
 
Soldato
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Good point, mid_gen.

Can I run what seems like a likely scenario past you guys though, to see if it checks out:

Let's say we buy now at £220 with a £22k deposit (we're FTBs). In five years we remortgage, but the house has lost 5%/£11k of its value. But we've also paid off £25k of the principal. That means we owe our first mortgage provider £173k (£198k minus the £25k). In which case, if we were to remortgage we would have about £36k in equity in the house, which equates to us asking for a 17% LTV mortgage. Does that sound right?

In other words, although the house fell in value, we are still quite a bit better off financially than if we had stayed renting? If so, this does sound like the best option, even in a falling market. Especially if we can add some value to the house with an extension (the property has space at the rear and side for extensions, and the listing even mentions the possibility of extending, which others in the same street have done).

Your calculations are broadly fine, but what happens over the next 1800 days remains to be seen.

What if you break up and are a forced seller in a down market? What if they decide to adopt universal basic income and everybody gets money meaning the housing market booms? What if they put a flight path over your house? What about if you have Japanese knotweed which costs a tonne to put right? What if you decide to get a homebuyers survey and then find the property has structural damage that wasn't in the survey? What if it's on a flood prone area? What if you have some inheritance? What happens if you have more children and need a bigger property? What if a family member falls poorly and you need to move to support them?

The reason I say these things is the debate about "rent Vs buy" is not as straightforward as which is the best decision financially. If you rented and some of the above happened, you'd be glad you could get out quickly. On the other hand, if the next 5 years play out perfectly as planned, except you rented, you'd be financially worse off.

It's sensible to give thought to the housing situation in the country, but the sums you are doing almost never work out the way you would predict. This comes from the minute you choose to buy: there are things which will cost more than you expect, and others less.

This is the implicit unpredictably of big life decisions, and it should be this way! If everything went exactly as imagined, how boring! :D
 
Soldato
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I should say, for context. I bought a house in 2015 for £209k, sold it during lockdown for £290k. I'm just about to complete on a £500k property, so you might say I'm in a similar position to you.

5 years ago I fixed at 5% as I was sure that things were going to get worse. What a mistake that was, but I loved every minute of being in that home. It turned out, with overpayments etc, it worked out, but if it hadn't, I'd have not resented it. I made the right decision for me, at the time, with the best knowledge I had. Sometimes you just gotta roll the dice :p
 
Associate
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I'd go for it. It's better to pay for your own mortgage rather than a landlord's mortgage!

Yeah a family member of mine is getting turfed out of their place that was a bit of a dump but meant it was really cheap and is now being done up to be all fancy or something... so they're trying to buy a house with their partner purely for that reason and to not have to deal with horrid landlords any more...
 
Associate
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Start having a good look and get to know what you are after in what area and what is a good price . Put in some low ball offers as sometimes you get a call back when the seller found a house they want.

Chances are you might lose a few houses before you get to the stage of buying one and whole process can take a few months anyway before it becomes a legal agreement.
 
Soldato
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We are looking to sell and buy at the moment. Currently mortgage free but decided to move up the ladder, so am trying to sell our house and move into something a bit larger and take advantage of the stamp duty cut but will have to take out a small mortgage.
 
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