First Time Buyer Help Please :)

valleygirl1984

Hi

My partner and I are a year out of university and are both on good salaries and have saved up £12000 to put down as a deposit on a house.

We have saw a house we like and put in a verbal offer for 120k (it was offers over £112500, we offered £115 which got knocked back and also £117 qhich got knocked back) which has been accepted. We are planning on living in the house for a min of 5 years with no plans to move on anytime soon. I accept that in 1 years time we could prob get the house for 110 or lower but it is an ideal first home for us (3 bed, great area, transport links etc etc) and we are keen to buy.

However as we are inexperienced we would like some advice. We have been told by bank/financial adviser that a mortgage should be fine, high rates but again to be expected, but our financial position is strong and we are low risk.

Should we buy now and go for it despite falling prices and rising interest rates?
Or sit tight for another few months?

We dont want to rent anymore and we dont want to live with our parents for anything over 6 months.

All advice appreciated!! We live in Scotland if that makes any diff.

Thanks everyone

Claire

beecher

If I were you, I'd have a look on nethouseprices and see what houses in the street have gone for in the last 5 years or so, just to get a good idea of how much the prices have gone up/down in that time. Have you had a survey done yet?

If it is what you want and the mortgage is affordable then I'd be tempted to say go for it. You could rent for 6 months but with a 10% deposit, and good salaries you're in a stronger position than most.

herbiesjp

If you want to buy, then waiting a few months is not really going to make a lot of differene to the whole scenario - in fact rates could go up and make the mortgage more expensive.

There was a report out the other day that said house prices were still going down - however the only region were they were up slightly was Scotland, as they have not had teh same kind of growth the rest of the UK has had (more steady).

So you may want to take that into account.

Just be aware that you bank may not be offering you the best option (then again they might) - but make sure you compare what they offer against what else is on the market

elementelement

Scotland is a bit different from down south.

in the last quarter they went down approx 7% but overall they are still 2% higher than last year (land registry index). however in the last month they went up 0.2% (according to bbc website)

depends on what area you are buying?

edinburgh -- etremely over inflated
however a 3 bed for 120k sounds closer to the west.

I have recently done a first time purchase in glasgow a few weeks ago.
i managed to get the house for the price it was worth in 2004 17k less than in 2006.

less movement on the bottom scale of the house buying (first time buyers) is meaning offer over prices are no longer as high. you are in a strong position because alot of people hear about all the reported house crash prices that happened down south and assume it gonna happen in the north as well.... therefore they are being reserved.

what type of house you get and what area? housepricenet will give you a good indication.

poppy10_2

elementelement wrote: »

Scotland is a bit different from down south.

It's not different, there's just a lag. The house price boom started later here, and the bust is only starting to begin.

valleygirl1984

Thanks to everyone for their replies.

I had a look on house price net and the property was bought in March 2005 for £100k and our offer of £120k has been accepted which to me seems like a modest rise. The area in general has had very little houses up for sale in the last 5 years.

Guess what really wanting to know is could we end in negative equity?

Thanks again, all advice is much appreciated.

valleygirl1984

Oh and the property is a large 3 bed semi in good area, driveway, good sized garden, floored loft, conservatory extension and 2 year old fitted kitchen with range cooker included and oak flooring and carpets (v good condition) included also.

dimbo61

as you are planning on staying 5 years min then look for the best 5year deal you can find as this gives you time to build up the equity you will have in the property. offset mortgage are a good way to save money for emergencies
and reduce the amount of interest and hence the length of your mortgage.
GOOD LUCK in your new home together

valleygirl1984

The best 5 yr deal we can get has rates set at 7%.

Would we not be best going for a 3 yr fixed rate and hope the market had stabilised by time 3 years is up?

How would we build up equity in 5 years on a fixed rate? (sorry if this is obvious but im a newbie trying to learn as much as i can)

Been offered variable mort - but this seems madness as rates look set to rise.

Thanks

ziknik

valleygirl1984 wrote: »

Thanks to everyone for their replies.
SNIP

Guess what really wanting to know is could we end in negative equity?

SNIP

It is very likely that you would go in to negative equity.

You might not be in negative equity when you come to re-mortgage in 5 years time. House prices will fall in real terms (relative to the cost of other goods), almost 100% guaranteed. Wage inflation, if we get it, may save you from negative equity. There are no strong signs of wage inflation at the moment.

valleygirl1984 wrote: »

The best 5 yr deal we can get has rates set at 7%.
SNIP

How would we build up equity in 5 years on a fixed rate? (sorry if this is obvious but im a newbie trying to learn as much as i can)

SNIP

You build up equity by repaying more money than you loose through interest and declining house prices.

beecher

20% higher than 2005 prices sounds quite a lot to me - where I live in Glasgow we're back down to just less than 10% of 2005 prices. But of course it depends on where you live and how the market has gone up and down since then, as well as the work which has been done to it/whether the last owner got it cheap. Don't suppose you'd be happy to tell us where it is/give a rightmove link?