The nervous wait to exchange....

Caporegime
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What are the implications of owning a property during recession? Or in the process of buying one?

The current risks are:

1. Loss of income. Is your (and your partner's, if relevant) job likely to be secure in the recession? If not, then defaulting on the mortgage can cost you a lot.
2. Rapid rise in interest rates. Likely to be a significant problem for many, but as a new buyer you have the option of taking a fixed rate mortgage that should take you through to the other side. Ensure you borrow at a level where 5% or 7% interest rates after that fixed period aren't going to cause you issues.
3. Negative equity. Recessions usually lead to a fall in house prices. If you think you may want to move again (or are forced to) in the short to medium term this may be a big problem, however if you think this is your long term home then it'll come out in the wash in the coming years.

It's up to you how much you care about these potential issues.
 
Soldato
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Lorville - Hurston
The current risks are:

1. Loss of income. Is your (and your partner's, if relevant) job likely to be secure in the recession? If not, then defaulting on the mortgage can cost you a lot.
2. Rapid rise in interest rates. Likely to be a significant problem for many, but as a new buyer you have the option of taking a fixed rate mortgage that should take you through to the other side. Ensure you borrow at a level where 5% or 7% interest rates after that fixed period aren't going to cause you issues.
3. Negative equity. Recessions usually lead to a fall in house prices. If you think you may want to move again (or are forced to) in the short to medium term this may be a big problem, however if you think this is your long term home then it'll come out in the wash in the coming years.

It's up to you how much you care about these potential issues.
For point 2. doesnt the fact that i would have paid 5 years worth of mortgage repayment help with any increase in rates as my LTV after 5 years will be lower than 85%?
 
Soldato
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  • How secure is you job and/or that of your partner (if you have one). not secure, im a freelancer but the field i work in is in high demand for my skillsets at the moment. My partner is in a very very stable perm job though .
  • What’s your LTV like? 85%
  • How long-term do you see the property you’re buying? 10+ years at least
  • Could you cope with a few years of negative equity if the housing market dipped? cope as in how? Would my mortgage repayments go up etc during the fixed term? Or go up when its time to renew? Does it make sense to overpay as much as possible during the 5 years?
  • How long is your mortgage rate fixed for (if at all) and could you afford a higher rate when the fixed comes to an end? 5 years if this offer goes through the finishing line
  • Are you relying on the property as an investment? no not on the short term. Its going to be our home for a while
  • Do you have savings or an emergency fund to cover the mortgage for a few months? Plenty. enough to pay the bills for a couple of years or more if im honest
  • What would the alternative be? Renting at a rate higher than the mortgage payments? Living with family or in shared accommodation? Renting


Yes i rent right now and looking to buy my first place
Your payments can’t go up in the fixed term. After that will depend on the rates at the time.

If we go into a recession, rates may well drop again to encourage economic growth.

Honestly, if I was renting, I’d want my own bricks and mortar regardless.

If you work in a high demand field then while the current gig is not secure, I’d assume getting another job is not going to be a problem even if the labour market contracts?
 
Soldato
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Lorville - Hurston
Your payments can’t go up in the fixed term. After that will depend on the rates at the time.

If we go into a recession, rates may well drop again to encourage economic growth.

Honestly, if I was renting, I’d want my own bricks and mortar regardless.

If you work in a high demand field then while the current gig is not secure, I’d assume getting another job is not going to be a problem even if the labour market contracts?
Yea should be fine my field unless everyone magically stops using apps on there smart phones lol
 
Soldato
Joined
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14,051
  • How secure is you job and/or that of your partner (if you have one). not secure, im a freelancer but the field i work in is in high demand for my skillsets at the moment. My partner is in a very very stable perm job though .
  • What’s your LTV like? 85%
  • How long-term do you see the property you’re buying? 10+ years at least
  • Could you cope with a few years of negative equity if the housing market dipped? cope as in how? Would my mortgage repayments go up etc during the fixed term? Or go up when its time to renew? Does it make sense to overpay as much as possible during the 5 years?
  • How long is your mortgage rate fixed for (if at all) and could you afford a higher rate when the fixed comes to an end? 5 years if this offer goes through the finishing line
  • Are you relying on the property as an investment? no not on the short term. Its going to be our home for a while
  • Do you have savings or an emergency fund to cover the mortgage for a few months? Plenty. enough to pay the bills for a couple of years or more if im honest
  • What would the alternative be? Renting at a rate higher than the mortgage payments? Living with family or in shared accommodation? Renting

Yes i rent right now and looking to buy my first place

I’m obviously not a financial advisor, but based on your replies I would say you’re in a reasonably strong position. Personally, I wouldn’t put off buying because of a potential recession.

You’re in it for the long term, so even if the value dipped in the next year or two, it’s likely to recover over a 10-year horizon.

If you have a decent chunk of savings, you could overpay the mortgage to reduce the LTV when your fixed deal comes to an end.

Your partner being in a secure position is a positive, even if you went a few months without work, but if you’re in demand that should offset the inconsistency of freelance life.

If the alternative is renting, you’re gambling on prices dropping due to the recession and interest rates dropping, otherwise you could find the value is lower but the rate you’re borrowing at is higher, negating the “benefit” of the drop in price. The flip side is that prices could stay level or increase slightly and if rates increase, you’re worse off double.

“Time in the market is better than timing the market” and all that.

For point 2. doesnt the fact that i would have paid 5 years worth of mortgage repayment help with any increase in rates as my LTV after 5 years will be lower than 85%?

If paying those five years (plus any overpayments) drops you into the next LTV band, you could get a better rate, but no one knows what rates will be like in five years — you’re better LTV band rate could still end up higher than your current rate when you come to remortgage, although that would still be better than if you were in the 85% band. Does that make sense?
 
Caporegime
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Nordfriesland, Germany
For point 2. doesnt the fact that i would have paid 5 years worth of mortgage repayment help with any increase in rates as my LTV after 5 years will be lower than 85%?

Yeah, it should, although if houseprices have fallen maybe not so much. In any case, it's not usually all that major a difference - checking on Money Supermarket right now, going from a 90% to 50% LTV changes the rate by about 0.4% and that's about what I'd expect. Useful, but not game changing.
 
Soldato
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London
If you're renting, the only perfect time to buy is yesterday.

I'm being slightly facetious there, but as above there never really is a perfect time to buy. We were worried a bit buying last year, what with talk about house prices dropping (especially as everyone moves out of cities to remote work - apparently) but here we are fortunate enough to have fixed for 5yrs at a super low rate watching everyone scramble around. Even if the worst happens we are still paying a similar amount on our house per month as we were when renting our flat so talk of negative equity, "losing" money doesn't really come into it as we're here for the long term. Our savings were doing naff all for ~15 years and we just got fed up of it. If you're buying a home to live in for the long term then as long as you can pay the mortgage every month, you shouldn't worry yourself with what's happening in the wider economy too much.

Also, you talk about the potential of losing your job etc. At least with a mortgage there are a number of support mechanisms from the banks to help e.g. switching to an interest-only mortgage, deferring payments etc. Do you think your landlord would do such things? No. You'd be out on your ear :o
 
Soldato
Joined
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Fareham
In my view, best idea for people with good fixes is to overpay from the balance prior to next renewal.

This improves equity in the home (could lead to going up an LTV band later), cuts down on eventual interest paid, and also means the next renewal even if at a higher rate, should be tempered.

Easier said than done for a lot of people I know, but if you have the capital to overpay even a bit each month it's worth considering.
 
Man of Honour
Joined
21 Nov 2004
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41,988
Waiting for the final person in the chain to approve next Friday as a completion date. Fingers crossed for an exchange tomorrow!

Edit: EA thinks we’re ready to go and that our solicitor can release contracts in the morning. We’ll find out I guess.
 
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Soldato
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Not Aberdeen
Pulled out of our 3rd place the other week. Seller was a lying sack of ****, to both his agent and even his solicitor.

Then threw all toys out of the pram when pushed as to why he kept making excuses and refusing to sign the exchange of contracts. Every excuse came out, then the final straw was, on the confirmed date he would have it signed, his wife got COVID so they would have to hide for 2 weeks.

Then he got found out after his solicitor confirmed he knew nothing about an ongoing property purchase (apparently had been gazumped etc etc) as he was going to move into a holiday home then had a confirmed rental.

Refused to give any info to his agent or solicitor, then when we pulled out he blames everyone for causing him stress then pulled the house off the market also screwing his agent.


Luckily we saw another property with his agent the day before it all went nuclear. Offered same day, had it accepted the next after a small bump up and got a better house, less work needed, bigger plot, master suite balcony over garden, triple garage and has a Mediterranean type terrace above the garage for outdoor eating and chilling with the last of the sun....Plus over 25% cheaper than other property...

Don't think I'm gonna bother with a survey as I can do the same myself within an hour. It's not like they're particularly useful unless you splash out on a full structural one.

4th time lucky we're hoping in this silly English system :D
 
Associate
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Oxfordshire
Our sellers had enough of their seller (as this is now his 2nd property he’s dropped out of) and pulled out of their purchase.

However…they’re seeing a vacant property that already has probate granted and if they go ahead could still complete before end of September…so we’re not dead in the water hopefully
Sellers offer on their new purchase accepted and confirmed it’s probate has already been granted so their targeting to exchange mid September.

Some good news and relief going into the weekend!
 
Man of Honour
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Frustratingly we didn’t exchange today, nor did we have an update from anyone. The wife is starting to question whether we should pay off the mortgage instead. Can’t blame her, it’s a really uncertain time to be taking on an additional financial burden. I’ll leave it to her to decide otherwise I’ll never hear the end of it.

Edit: looks like any percentage increase doesn’t make much difference to our monthly payment, so we’re all good.
 
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Caporegime
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20 Sep 2006
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We had our eye on a new house, it's a new build by Bellway and due for release next summer. We viewed the show home, had a good look around the plot/area. It's got the best school in the area within it's catchment area, double garage, loads of floor space, bi-fold doors, high ceilings etc. They said they'd be in touch in August when they are released for sale. Sure, they got in touch, to tell us they'd all sold out, great! Might be a blessing in disguise with the way mortgage rates are heading, we are on 1.54% until 2026 so we're going to to use some cash we have to overpay the mortgage and make use of the interest we are on. LTV is currently 59% so we are in a good place at the moment.
 
Joined
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Waiting for the final person in the chain to approve next Friday as a completion date. Fingers crossed for an exchange tomorrow!

Edit: EA thinks we’re ready to go and that our solicitor can release contracts in the morning. We’ll find out I guess.
Good luck mate! fingers crossed for ya

Frustratingly we didn’t exchange today, nor did we have an update from anyone. The wife is starting to question whether we should pay off the mortgage instead. Can’t blame her, it’s a really uncertain time to be taking on an additional financial burden. I’ll leave it to her to decide otherwise I’ll never hear the end of it.

Edit: looks like any percentage increase doesn’t make much difference to our monthly payment, so we’re all good.
Arghs :( sorry man

We had our eye on a new house, it's a new build by Bellway and due for release next summer. We viewed the show home, had a good look around the plot/area. It's got the best school in the area within it's catchment area, double garage, loads of floor space, bi-fold doors, high ceilings etc. They said they'd be in touch in August when they are released for sale. Sure, they got in touch, to tell us they'd all sold out, great! Might be a blessing in disguise with the way mortgage rates are heading, we are on 1.54% until 2026 so we're going to to use some cash we have to overpay the mortgage and make use of the interest we are on. LTV is currently 59% so we are in a good place at the moment.

Aye with newbuilds in decent school catchment you need to be ready as they open on release day unless yer happy with a wonky plot with tiny garden :(
Whey aye chop some overpayments in man :) see how many thousands it saves you over the mortgage length!!

We've just lost out on newbuild #2 :(
 
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Soldato
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Not Aberdeen
We had our eye on a new house, it's a new build by Bellway and due for release next summer. We viewed the show home, had a good look around the plot/area. It's got the best school in the area within it's catchment area, double garage, loads of floor space, bi-fold doors, high ceilings etc. They said they'd be in touch in August when they are released for sale. Sure, they got in touch, to tell us they'd all sold out, great! Might be a blessing in disguise with the way mortgage rates are heading, we are on 1.54% until 2026 so we're going to to use some cash we have to overpay the mortgage and make use of the interest we are on. LTV is currently 59% so we are in a good place at the moment.

That's a great mortgage rate, I know I'd be sticking if in your position. Plus I hate new builds wish a passion :p
 
Caporegime
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That's a great mortgage rate, I know I'd be sticking if in your position. Plus I hate new builds wish a passion :p
Everything where we are looking at which has character, is about £200k over the price of a new build and probably wants another £100k spending in it.

I mean £700k U WOT M8.
 
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Soldato
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That's a great mortgage rate, I know I'd be sticking if in your position. Plus I hate new builds wish a passion :p
I think some of the builders are meant to be ok. I was tempted by some of the new builds here but after seeing the delays, the price changes and the fact that many in my area were build quite close to busy A roads I decided against it. They were often cheaper/set price so it was tempting.
 
Joined
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That's a great mortgage rate, I know I'd be sticking if in your position. Plus I hate new builds wish a passion :p

Mental rate aye

That was my perception of new builds too until I moved away from the cheaper end.
Tiny houses
Pointless garages that wont fit a car
Driveway long enough for nowt other than a micra
More than one car? need another house :p
Room layout and flow of house making no sense
Minimal space between plots
Dinky Gardens
Daft locations


We initially started looking at Avante Homes then move to Storey and then Cussins.
Must say Storey (whilst priced a bit higher) do seem to be miles ahead of the competition in my eyes

As I mentioned above tho, you need to get in fast to these as the good plots go quick.
Prices between developments can differ hugely too, 2 local developments to us nigh on 70k difference in price for same house
 
Caporegime
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Plots with double garages tend to be much better than those at the cheaper end, in terms of layout, parking, front & rear gardens etc. Current house was built in 2017 and we moved in last summer. We love it bar a few things, the addition of a child has meant our priorities have changed somewhat. Ours is worth £450k or so, and we really struggle to find something substantially better unless we spend well over £650k, which means we'd have to make a load of sacrifices with our spending and lifestyle which we're not really prepared to do.
 
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