Posted on Feb 25th, 2022

There is one thing I can say with total certainty: you shouldn’t buy in an area where you don’t want to live long term and where you think properties don’t look easy to sell on. If you did, you would regret it.

I can also be certain that in purely financial terms you are better off upfront buying something within your original budget. If you stay within budget and buy a property costing £190,000 (your deposit of £50,000 plus a mortgage of £140,000) you will pay £350 in land transaction tax (LTT) – the equivalent of stamp duty land tax in Wales. If you buy a £210,000 property, your LTT bill will be £1,050. Note that Wales doesn’t have first-time buyer relief from LTT whereas first-time buyers in England do get SDLT relief on the first £300,000 of the price of a property costing up to £500,000.

However, if stretching your budget would mean that you could buy somewhere where you would be happy to live for several years – especially if it meant that you could have a lodger, for example, who could help with the extra cost – it could make more financial sense in the long term.

While I don’t think it’s wise to compromise on buying in an area you would be happy to live, you may need to make compromises in other aspects. Would you be prepared to buy a flat rather than a house, for example? If you would be happy in a new-build property, would you consider stretching your budget by making use of the Help to Buy Wales scheme which runs until March 2023 (but doesn’t let you sublet any part of the property)?

Finally, it might cheer you up to know that the mortgage lender Halifax’s crystal ball suggests that house prices may rise by only 2% in 2022 or even not rise at all. So waiting before you buy shouldn’t be too detrimental if an afternoon with your calculator shows that stretching your budget isn’t an option.

Original article: https://www.theguardian.com/money/2022/jan/24/should-i-buy-a-house-within-budget-or-stretch-myself-for-a-long-term-place

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