Updated: May 2
WTF is this blog about!?
House prices are up, by 2% in the last year, according to the Government.
It’s a strange market – a massive recession leavened with ‘for sale’ signs everywhere.
I’d essentially tell myself not to worry, it’ll be fine.
Welcome to Get Woke Not Broke's second guest blog - this time we're hearing from David Butcher, Managing Director of Communications & Content - a marketing consultancy that specialises in helping investment and finance brands engage more effectively with their audiences.
What would 50 year old me tell first-time buyer me?
When I bought my first place – an ex local authority flat in Wandsworth – I found every aspect very stressful. But it was great to unlock the door, open a bottle of champagne and then WHOOSH … the bathroom ceiling fell into the bath. I think I cried. Now I’d probably laugh.
Almost 21 years later I’m buying again. I’m getting divorced. A new home and a mortgage are way down the “things to stress about” list.
So here are three things 50 year old me would tell 30 year old me about mortgages:
1. Be more flexible
I’d assumed a mortgage was a 25 year thing. Wrong. Given the right advice and availability of products I could have borrowed for far longer. Many people move into a new place in a few years anyway - and this ends the mortgage. A longer borrowing period means lower monthly repayments. I’d have used the spare money to invest, or pay off debt or overpay mortgage repayments. And it looks like the market has far better products now than back in 2000.
2. Be more chilled
“London house price boom over,” screamed the analogue Evening Standard the day I got my first keys. I fell into to worrying about house prices too much. Instead I should have considered my mortgage borrowing (and repayment) in the context of my overall finances – which were pretty fine. In fact they were probably better then than they are now!
3. Be firmer
In a world without online mortgages I used the guy in the estate agent’s branch. Great bloke. Showed us loads of research. One less thing to worry about. And I ended up with an imperfect and costly product. I cringe at my naivety. I’d tell myself to bargain just as hard on the mortgage as on the price of my flat; take independent advice (great advice is always good value and I have a great broker now); consider repayments in the round.
It’s not a great time to buy. A global pandemic, Brexit and climate change all make for dour times.
But experience tells me there’s never a great time. I bought houses 2 and 3 around the 9/11 terror attacks and the great financial crisis. Both felt like world-ending events at the time.
Above all I’d be more methodical and balance long-term financial goals (what can I afford? When do I want to be debt free? What’s a reasonable retirement age?) with short-term ones (how long will I actually live in my first place? How should I play investment returns versus interest on debt?)
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Now for the serious part: my blogs are for educational purposes only - speak to an independent financial advisor for information on your specific circumstances. And remember, investments can go down as well as up.