I’ve been asked over and over again lately – is it still worth buying a house right now, or should I wait for the mortgage interest rates to come down?
It could be said that when it comes to buying a house, the sale is over. Because those low interest rates that we’ve enjoyed for nearly 12 years are well and truly gone and they’re back up to the level where interest rates usually are.
I know that might sound a bit harsh and for some people it’s going to sound a little bit strange, because all they’ve ever known are low interest rates.
I completely understand this, and the frustration that some people are feeling. But if you look at house buying across the world – in the USA, Canada, Europe and so on – it’s quite usual that people pay between 4% and 6% per year on the borrowing for their home (whether they call it a mortgage or home loan or however else they term it).
I think we do really need to get used to the fact that this is what mortgage rates are meant to look like. And for some people, that is going to mean changing how they do things.
So IS it worth buying a house now, or should you wait for the interest rates to fall?
In answer, all I’d say is if you want to buy a house now, then buy a house now. If you want to wait, then wait. There’s no right answer and sadly none of us has a crystal ball!
I can’t tell you if or when mortgage rates will come down. But what I can share with you today are some things to consider in terms of buying a house, so you can make the right choice for you and your family.
The first big question is whether you have sufficient deposit to buy a house? Of course, it’s perfectly possible with zero deposit, or a low 5% or 10% deposit. BUT the more deposit you’ve got, the better mortgage rate you will get, because you represent a lower risk to the lender (more on this in another blog here!).
The other thing to bear in mind is that the bigger deposit that you have, the smaller mortgage you will need to buy the same house. The smaller mortgage you have, the lower your monthly payment will be. And this is something to REALLY look closely at, especially when interest rates are high.
It might be that on paper, you can afford a £200,000 mortgage, but it’s out of your budget when you look at what the monthly payment for that would be. Strictly speaking, it’s not out of your budget, otherwise the lender wouldn’t lend you that amount of money – but we’ve all got a figure that we’re comfortable paying for our mortgage each month and if your projected payment is much over that figure, you’re never going to feel comfortable in your new home.
So if you’ve decided that you aren’t comfortable spending £1000 a month on a mortgage payment, what you can get for that now is going to be significantly less than what you could get for it two years ago, which means you might then need to adjust your expectations.
It might mean buying a smaller property or looking at less expensive areas. It might mean buying with a partner or friend. It might even mean rethinking whether now is the right time to buy at all – because while they say an Englishman’s home is his castle and we’ve got this big thing in the UK about owning our own home, it’s not the right decision for everybody.
For some people, having the flexibility of renting a property instead and knowing they can move from place to place is liberating. This is especially true in these days of working from home, which opens up more possibility to work remotely from anywhere in the UK and therefore having more freedom to travel around.
We’ve seen this loads ourselves, with house sitters that come and stay at our home when we go on holiday. We’ve got alpacas – you can’t just put them in kennels like you would with a dog and we’re not exactly going to take them away with us – which means we need someone to come and stay at the house to look after them, while we’re abroad. We use trustedhousesitters.com and it’s great. We’ve met some amazing people, and they’ve all looked after our animals and our home really well.
So how does it work?
We list our property and our animals on the website, with the dates that we’re going away. People who are members then get the opportunity to come and stay at our house. We receive various messages from people who are free and would like to be considered, and after looking at their profile and reviews, we usually then jump on a Zoom call or WhatsApp chat to see if we like each other. Then we choose who we want to come and stay.
From our point of view, for an annual fee which is actually really reasonable, we get lovely people who come to live in our home and take care of our animals. They effectively get a free holiday – a bit like Airbnb, but without having to pay for the place you stay!
We tend to invite people to come the day before because we want to be able to explain exactly what to do, to look after the alpacas. But if you’ve got a cat or a dog, they could literally just turn up on the day you leave.
The great thing for the people that come to stay, is that they get to see different parts of the country, without having to pay for accommodation. We’ve had people come from various places including Ireland, Germany and London. We’ve had people who are doing this just occasionally, but we’ve also had people who do this full time.
Going back to buying a house, this is my point here – that some people have given up their home, either sold it or rented it out, and then do housesitting for a week or two at time. They get to experience looking after all kinds of animals and staying in all kinds of different places, while saving the money that they would otherwise have had to pay out on rent or housing costs.
It can be a brilliant option for youngsters who want to get on the housing ladder, who are either not sure which area they want to live in and want to try a few places out – or who don’t want to live at home with parents, but also don’t want to pay out for rent. Others are looking for a change or a different way of life, or simply a cheaper way to see different parts of the world. Housesitting can be a really cost effective solution providing you’re clean and tidy and prepared to look after animals (many people still work remotely too, around the animal care).
If you want to know more about Trusted Housesitters and see if being or getting a house sitter could work for you, you can find it here on the ‘Things I Love’ page, where I share affiliate links to some of the companies I really rate.
Because when it comes to property – now that interest rates have doubled – buying a house right now might still be 100% the right option for you. But equally, more and more people are considering all the various, less traditional options and changing how they do things, in a way that works for them!
Until next time,
Claire
