The Impulsive Money Decision I’m Glad I Didn’t Make During The Pandemic
Making a life-changing financial decision like paying off debt, moving into a new home or buying a new car, always feels amazing when the purchase is final; but when the pandemic hit, a lot of these decisions had to be placed on hold.
Yet, as restrictions gradually eased here in the UK, there were a lot of new economic incentives to tempt the public into making a huge money-impacting decision, and well, my partner and I decided to go for it. In this case, ours was deciding to buy a new house.
I can hear you now — who tries to buy a new place during a pandemic? We would’ve said the same were it not for the modified Stamp Duty Land Tax that was announced back in July.
Last month, in response to the ongoing economic affects of the pandemic, and in a move designed to help stimulate the housing market, the Government announced there would be a temporary standard-rate Stamp Duty ‘holiday’ for purchases below £500,000 in England (approximately $648,000 U.S.) In both England and Scotland, all buyers benefit from the temporary zero standard rate up until March 2021.
While my partner is a first-time buyer, I’m not, as I was lucky enough to buy my apartment a few years back, so any home we bought together would be subject to the stamp duty tax – which can very quickly run into thousands in savings. We were also incredibly fortunate not to have been furloughed or laid off from our jobs, so we got approved for a mortgage. With this potentially huge saving in mind, we decided to shift our plans for moving out of our tiny apartment forward by a year in order to take advantage of the unexpected uplift.
Excited at the prospect of being able to go outside again and dizzy at the thought of a shiny new home, we immediately began searching for new places and fell in love with a gorgeous, much bigger apartment close to where we currently lived. Our offer was accepted and we were scrambling to get the paperwork sorted for our own sale. Things were looking good!
Within a week, the advert was live for our current home and then…
Viewings were sporadic because the mortgage market had shrunk; plus everyone else in a similar-sized apartment to us in the area had the same idea to sell. The listings were quickly flooded, making pricing super competitive and selling price far lower than I’d originally paid.
After a month, our offer on the lovely new place was soon rejected in favor of a buyer who’d managed to already sell their home. My partner and I were now faced with a big loss on our current place, as neighboring residents dropped their prices lower and lower in a bid to sell. With this in mind, as well as the numerous headaches with sorting complicated paperwork, trying to get the best deal on a new mortgage when rates were fluctuating all the time, and the issues we were having with both of us working from home in a tiny shares space, we decided to take our apartment off the market altogether.
We’re now seven months into some form of lockdown here in the UK, which means a lot of uncertainty and big financial moves being placed on hold, including our own. I learned a lot the last few months our apartment was on the market, and here are my main takeaways that are applicable to making any big financial decision.
Research, research, research
Though this sounds obvious yet when it comes to crunch time, sometimes this can slip our minds! My partner and I committed the cardinal sin of putting in an offer on a place before our apartment was even on the market — meaning we had to sell fast. After speaking to several estate agents and feeling overwhelmed by the sales pitches, I settled on the one with the friendliest face and rushed through signing the contract.
However, when it got to a week before our offer expired, I looked over the contract to see what we could do and I saw the true cost of my mistake. We were locked in for far longer than normal – most likely protecting their business – and couldn’t sign with another agent for months after. If I’d taken the proper time to look up estate agent contracts and what the norm was, I wouldn’t have signed it.
Researching often complicated things like lease agreements for a new home or business, or loan contracts for a new car, especially when you need to move quickly, can feel like the last thing you want to do – but it’s super important in every situation, especially when there’s no standardized contract. Google can be your best friend in this case, and if you’re feeling overwhelmed, reach out to friends and colleagues who might have their own advice or know someone who can help.
Be prepared for the fact that not every industry is geared up for the 21st century yet
This might be a pandemic-specific point for now, but as we progress further into the technological age, it’s likely some sectors are going to lag behind on this front. The law is a perfect example of a sector that moves slowly: documents often need to be signed in person and independently witnessed; a lot of old files aren’t available digitally, and office hours are still pretty traditional; so no expedited mail on Sundays, even if you really need to close on the house or sign the lease right now.
If you know you have a big financial decision coming up, my advice is to invest in a good printer (or at least have ready access to one), some stamps and envelopes. Be prepared for some longer timelines than you’ll ever expect, and to prepare for needing to travel if a document needs to be formally witnessed and the laws haven’t been relaxed to accommodate virtual witnessing in your country.
If life gives you lemons, make lemonade
After our offer on the beautiful apartment was rejected because we were struggling to sell our current place, we were upset but decided to reframe the blow as one that was working for us, and not against. We knew there was still time to find another place, and maybe that apartment hadn’t been the right fit for us in the long term anyway. This is when reality also began to set in that we may not be able to make the move we wanted this year or even the next, so a rethink of our current apartment’s layout was needed.
Reworking your home to suit this new normal, whether that’s moving around furniture, hitting up Facebook Marketplace for some cute new pieces, or having a big declutter might help you feel better about your current living space, so you won’t feel as rushed to get out. This way, you can save, build up an emergency fund or pay off debt with the spare cash that would have come from commuting and takeaway coffees – or even think long term by paying more into your pension or creating a new pot for elderly care.
There are other ways to make the best out a bad situation that aren’t necessarily home-related. For example, if you’re wanting to buy a new car right now but the decision is on hold, keep an eye out for great interest deals that may be cheaper than before the pandemic. Or you’re holding off starting up an investment portfolio, you now have more time to look into where exactly you want to invest your hard-earned money and the companies you’re investing in.
In an ideal world, we wouldn’t be in the middle of a pandemic right now and we’d all be free to make or spend money as we so please, but there are still ways to shift our perspective. If you can’t make a huge financial leap just yet, it doesn’t mean you’ll never get there; it just means you may just need to hold on for a little while longer. Working on your mindset around it will help you feel better even if you’re disappointed.
Don’t Underestimate The Mental Strain Of The Process (Self-care is key)
Making a big financial move, like buying your first home, signing the dotted line on your dream car or signing yourself up as a sole trader to kick off your new career is super exciting, but it can also be really stressful too! While I was super excited to be buying a new place with my partner, the numerous viewings and cleaning sessions that came with them only for viewers to drop out last minute, filling out endless complicated forms and monitoring the rest of the housing market with its various developments (leading to a couple of nasty surprises) took a big toll at an already stressful time.
Don’t underestimate how mentally draining the process can be, especially at the moment where companies aren’t necessarily up to full strength with their customer service, legal teams or production lines. Lean on your support networks if you have them, perhaps a friend or loved one recently went through the same process, and you can laugh about your frustrations over a (socially distanced) glass of wine. Take a break from the process if you can afford the time. In my case, I limited myself to ten minutes a day checking whether other apartments had sold and if anything new had happened in the market. Even though you’re making an exciting leap, it’s also okay to feel down about how slowly something is moving or if the plan changes.
While we’d rather be moving right now, and we’ll be keeping an eye on the situation if anything changes and we’re able to sell again, we’ve made peace with the fact it’s a difficult market and we’ll need to wait a bit longer for a new home. Making a big money move during a pandemic has certainly been a baptism by fire, but next time when we put our apartment up for sale, I’ll be a lot wiser to the process involved.
Jenny Batchelor is a freelance writer living in the UK with her partner and new puppy. She can usually be found working on her novel, trying out new recipes or baking sourdough bread. Check out her website and Instagram.
Image via Unsplash