One of my biggest financial goals in life is to buy a house. We currently rent. In fact, we’ve always rented, and we’ve been hoping to buy.
I’m lucky that the housing market in my town is pretty good. House prices are much lower than the rest of the country and the market itself is always moving. Living in the area I do, means it’s going to be much easier for me than most to make the move from renting to buying – but that doesn’t mean it’s not hard.
After all the recent lockdowns, the house prices have suddenly shot up. My friend looked at a house last year that was up for £140,000, she didn’t go for it and it was taken off the market. Recently, she saw it had been put back on the market for £180,000. That’s such a huge jump in the space of a year – especially for an area where house prices aren’t that high!
The sudden shift in prices has got me thinking.
Is It a Good Time to Buy a House?
I think I’d better make it clear that I’m no expert in the property market. While I like to blog about saving money and building up a savings pot, this post is mostly musings about my own situation. We’re currently in a position where our savings are not quite high enough to put down a big deposit.
Ideally, we’d like to get a big chunk of money together for our deposit. That way, we’re more likely to get accepted for a mortgage, and the payments themselves should be lower. I’ve been toggling a few variables (deposit size, mortgage length) etc to calculate the mortgage payments. I’ve found that a longer term means my repayments won’t be too high if my deposit is a little lower than I’d like. This is handy to know, but my preference is a shorter mortgage and a bigger deposit.
There’s been a change in the housing market
My husband was chatting to an estate agent recently (in a social situation, we’re not at the estate agent stage yet), who said that since the lockdowns the market is booming. His anecdotal experience is that houses are selling for a higher price, but they’re also moving faster – making his office very busy.
We’ve had to weigh up whether it would be better to use the deposit we have now to try and get on the property ladder, rather than waiting longer and have the house prices increase again. We don’t want to miss the boat, but we don’t want a mortgage repayment amount that we’re not happy with.
Of course, one option is to take out the mortgage over a longer term in order to make the monthly repayments more affordable, then overpay on the mortgage where possible. Overpaying can potentially shorted a mortgage and save you interest in the long-run, but again that’s something that needs a lot of thought. Some mortgages are very strict when it comes to overpayment – meaning it might not save you all that much in the long run!
We’ve decided to stick for now
After much deliberation, we’ve decided to chance it and keep on saving. You’ve always got to put your finances first. As a money blogger I’m an advocate for constant review. Keep an eye on what you’ve got coming in, and what you spend it on. You always want to try and maximise what you’ve got to work with.
I’ll keep revisiting the mortgage calculator over the coming months as I keep an eye on the housing market. For now, the plan is to save, save, save. I’ve had plenty of practice staying home over the past couple of years, so another year or two won’t make much difference. Our social calendar is staying relatively empty, so we can fill it with social gatherings at a house we own in the future!