Is buying residential property now unwise?

[northernladuk]

Are there any other downsides?

Nothing else that has the possibility of your family falling out and you losing your home no.

[oliverson]

If you have the money right now, I'd say I probably agree with this. Though I'd be wary that potentially my income could be cut significantly, so I'd want to be extra sure I could pay for it.

I wonder if, post the AS it will affect the way mortgage lenders deal with contractors taking out mortgages?

Crazy advice. There's a reason for the 4 x salary. It's called AFFORDABILITY. Committing to a mortgage dependant upon contracting income right now would be akin to suicide IMO.

[northernladuk]

Crazy advice. There's a reason for the 4 x salary. It's called AFFORDABILITY. Committing to a mortgage dependant upon contracting income right now would be akin to suicide IMO.

Doing it 6 years ago isn't looking right clever now either to be fair lol

[MrWebDev]

Crazy advice. There's a reason for the 4 x salary. It's called AFFORDABILITY. Committing to a mortgage dependant upon contracting income right now would be akin to suicide IMO.

I realise that lenders apply 4-5x lending cap for the reason of affordability. I believe I'm correct in saying that if you go through a contractor specialist mortgage broker, most lenders will work out the affordability based on your current day rate.

Genuinely, in your opinion Oliverson, what rate of income would you commit to a mortgage?

[uk contractor]

I would worry more about interest rates rising sooner or later that will happen UK Gov cannot keep them artificially low forever. If like me you have been around a while & remember the mortgage interest rates in the 80s-90s which even @ 7% would financially cripple most home owners nowadays!

Being a contractor or not is not the issue as job security is not a common concept anymore anywhere. Only borrow within your means & plan for interest rate rises as they will inevitably come & cause a lot of hardship for homehowners who over commit their finances!

3-4% would cause a lot of distress but most could live with it somehow someway. Anything more would be highly damaging as the sums involved are staggering when you add 5-6% interest its almost double & the associated costs with that skyrocket !!

[jonneymendoza]

If you're talking about BTL then you're going to pay more but ultimately you'll be throwing money at a long-term appreciating asset. If you don't need to get the money back out any time soon, it's worth doing. I would imagine there will be a fair few contractors looking for Sunday/Monday to Friday lodgings after T&S goes bye-bye though, so getting on the property ladder would get you out of that market.

What do you mean by T&S?

[northernladuk]

What do you mean by T&S?

Travel and subsistence. The stuff you spend getting to clients, staying overnight and food etc that you can claim.... For now.

[jonneymendoza]

Travel and subsistence. The stuff you spend getting to clients, staying overnight and food etc that you can claim.... For now.

Ahh so from April next year we cannot claim for travel and subsistense expenses?!?!?!

[northernladuk]

Ahh so from April next year we cannot claim for travel and subsistense expenses?!?!?!

Don't you just love contactors that haven't a clue what's going on around them... The above is just the tip of the iceberg. I suggest you go digest everything in this part of the forum....

The Future of Contracting

[MrWebDev]

Being a contractor or not is not the issue as job security is not a common concept anymore anywhere. Only borrow within your means & plan for interest rate rises as they will inevitably come & cause a lot of hardship for homehowners who over commit their finances

Thanks for your reply UKC!

I totally understand the point you make re. interest rate rises, and the associated rise in mortgage cost etc. You mention living within your means, this is a concept I also understand, spending what you've got, making sure you have substantial savings etc. However the scenario you outline, that there's not much difference in being a contractor or a permie since job security in this day and age is no longer common, what would you say 'your means' are? As a contractor would you peg means against your equivalent permie income (plus any other income you may have), lowest ever achieved day rate, some other figure? Obviously dependant on your financial situation there would be other figures to take into account, for example if you had kids, maybe a debt to pay etc etc