Buying in the current climate

Uther

Uther

Uther

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My son is currently looking at mortgages, but is understandably worried about what could happen in the next year or so. I suggested a 5 year fixed rate to hopefully ride out any possible interest rate disasters over the next few years.
Is anyone one else worried or put off by the current situation, or plowing ahead and buying regardless?
 
Just go ahead and buy as normal, go for a 5 year fix to help cover.

In all honesty can the country survive with massive interest rates increases and houses crashing? I really don't think they could make this happen...never say never but as long as he passes the affordability calculations they do and he doesn't push himself too far then I wouldn't worry.
 
In theory if we get high interest rate, pay rises will generally follow. This is how people could afford mortgages in the 70's and 80's with 15% interest rates. Though most mortgages at the time were limited to 3x salary if the margin is larger than this the effect will be harder.

The main worry would be negative equity if overseas investors start to pull out of the market, this is likely to have more of an effect in London and the home counties, but there would likely to be some knock on effect in other areas.
If they did get into negative equity moving and/or remortgaging with another provider could be a problem.

So really it depends now tight their current budget is and could they afford to pay a few £100's extra in 5 years time?

In most cases still better than paying rent.
 
I bought about a year ago, with a 5-year fix thinking much the same... Whatever issues occur due to brexit, will hopefully have steadied out by the end of my fix, so it shouldn't cause too much of an issue. Obviously house prices may be effected, but again, will hopefully be returning to normal by the end of the fix.

I think the only thing that's pretty much for certain (imo), is that it'll get worse for a while in the interim, before it recovers. The main thing you want to avoid is trying to buy in that period (although if prices drop, you could potentially get a bargain, but only if not using a mortgage).

As Sasahara said, it's pretty much always going to be better than paying rent, so at this point, I think it's still the best course, if you can afford to do it.
 
Lol, please all post again in a few years, you'll either be stuffed or laughing, it's a gamble,

No one can predict what will happen,

Do you have a guaranteed income? Can you guarantee your health,

Toss a coin and hope for the best.
 
Prices won't fall until there's drastically more supply of housing. Those building houses have no incentive to build them too quickly. So I can't see prices ever falling by much tbh.
 
I purchased this year in may/june

5 year fixed rate first time buyer mortgage with 10% deposit. Virgin money mortgages

Better to cover yourself through the Brexit stuff with a 5 year
 
The way i've always looked at it is if the fixed rate seems reasonable then even if rates go down i'm happy paying for the security of knowing i have it covered whatever.

Perhaps it stems from my parents faces in the 70s as the rates just went up and up. Not a pretty sight.

Set and forget.
 
Always gone for a tracker, I can't see the rates rising by more than 1% over the term which would put me in a worse position than if I went fixed. Also gives flexibility of overpaying more than 10%
 
We didn't do great over our first 5 years, we purchased before houses starting picking up in price but ended up paying a bit more than we needed to if we had fixed for a shorter period of time. The initial rate rate wasn't great due to a high LtV and being first time buyers. But due to a combination of the house price shooting up by 45% in 5 years and us paying a off 5 years worth we have gone from the worst LtV to the best. We are putting the savings made from the lower rate back into the over payments we are making, saving a bucket load int he long term. The best way to reduce the cost though is to not overburden yourself with the initial loan and overpay, overpaying early saves a huge amount of cash in the long term.

That being said I just fixed for 10 at a silly low rate for my re-mortgage, really can't see it getting lower than it is right now but the risk of it going up is pretty high. The rate needs to only go up slightly and I will be quids in over the term.
 
Adam said:
Are you more concerned about the impact of brexit or interest rate rises? These are 2 different issues.
Click to expand...
I think the two go hand in hand. Negative equity wouldn't be a huge issue, he's looking at houses up to 200k with a 70k-90k deposit (we're helping him)
 
Negative equity is only an issue if you want to sell, otherwise you just pay what you expected to pay when you bought the house.

If things go wrong I would expect interest rates to remain low to stimulate the economy.

That is assuming your income remains as is though.
 
b0rn2sk8 said:
Negative equity is only an issue if you want to sell.
Click to expand...

Exactly, I hear so many people predicting the doom and gloom of a housing market crash and everybody will be left with negative equity, if you buy a house and the value falls you may not be able to move so quickly (some people do buy houses with no intention of moving as well) but my view is if you are looking to buy and let things like .25% interest raise or possible value falls then put you of then potentially you could be sat on the fence for ever.
 
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