FTB, making an offer on new build tomorrow - advice needed please!

pete96

Thanks for your thoughts Chris. 2-3 years was just an initial idea, but having read what people have said, if the market at that time didn't permit us financially then we simply wouldn't move. 2-3 year could just as easilly be 5-10.... it wasn't ever set in stone - maybe i should have made this clear as it may have influenced some of the opinion in this thread RE re-selling, equity gain etc etc?

pete96

Max_Headroom wrote: »

you need to seriously re-evaluate your financial situation and commitments.

yes thanks for your advice, this it why i posted here in the first place

Natty082

pete96 wrote: »

i believe i did... see post #44

Sorry - i'm at work on a 'minimised' screen - must have scrolled past it.

Reason I asked about your job is because there are a number or large Architectural practices in my area making staff redundant at the moment. All the contract staff are going first. You need to think about this and how secure your job is.

We offered about 28% off originally and worked up from there.

We just said we want the house for X amount - and we want an incentives package.

pete96

Well luckilly for us, our firm's work is predominantly public sector work - sports centres, uni halls, community building etc etc, so fortunately we've not been as heavilly affected by the 'credit crunch' as alot of companies in the industry. We had a meeting regarding the issue just recently, and all seemed well, but thanks for the concern!

Incisor

pete96 wrote: »

Right ok so the general opinion is that it's a bad idea due to the my current and personal situation. If i was to change to a resale home, 2 bed in the region of £160K, would the opinion still be negative? Even taking into account of the £62K interest free govenment loan - at £160K sale value i'd only be borrowing say £100K...

Still a bad idea. Again due to your s=current and personal situation. Nobody gets on the property ladder at the moment, everyone lands on the property snake. If you are near the top of the board, you can survive landing on a snake if you are happy to go back a few places. In your case, with only £1000, you will be of the bottom of the board when you land on the property snake - into virtually instant negative equity the moment you move in, even with a resale house. Come back to it when you have a 10% deposit.

Max_Headroom_3

pete96 wrote: »

Right ok so the general opinion is that it's a bad idea due to the my current and personal situation. If i was to change to a resale home, 2 bed in the region of £160K, would the opinion still be negative? Even taking into account of the £62K interest free govenment loan - at £160K sale value i'd only be borrowing say £100K...

Two things:

The government loan is still a loan, so you wouldn't be "only borrowing £100K".

My understanding is that the governments grand scheme to shackle first time buyers with massive debt in order to save the house builders only applies to new build property, so if a resale home you're not eligable.

My advice (assuming you're for real) is, you're young, you've got no money (in the house buying grand scheme of things £1,000 is nothing, especially if that's two peoples input). Go and save up a decent deposit, it will put you in a better place to actually get a mortgage (there are no 100% mortgages at present so you're out before you've started) but more importantly trying to save up ten thousand pounds (say) will give you a much greater understanding of what these figures like "£100K" and "£160K" that you glibly throw around truely mean.

I'm not being patronising, I was young once and the odd five hundred or thousand pounds felt like nothing, right up until the point that you try to save it or pay it back if you've borrowed it.

You need to get a really good understanding of money, otherwise you're just headed for a whole world of financial pain.

Natty082

pete96 wrote: »

Well luckilly for us, our firm's work is predominantly public sector work - sports centres, uni halls, community building etc etc, so fortunately we've not been as heavilly affected by the 'credit crunch' as alot of companies in the industry. We had a meeting regarding the issue just recently, and all seemed well, but thanks for the concern!

We had that meeting too on Monday .... do you work in our office??

pete96

Incisor wrote: »

Still a bad idea. Again due to your s=current and personal situation. Nobody gets on the property ladder at the moment, everyone lands on the property snake. If you are near the top of the board, you can survive landing on a snake if you are happy to go back a few places. In your case, with only £1000, you will be of the bottom of the board when you land on the property snake - into virtually instant negative equity the moment you move in, even with a resale house. Come back to it when you have a 10% deposit.

Thanks that kind of makes sense. But can i ask, can you to explain a little more about the negative equity situation which has been the main topic of conversation here. I know what it means - when the house is worth less then you owe, but what does it actually mean in context? So i buy i house now, loose say 15% in a year and a half, but then 3 years after that it goes to 5% then what i paid for it, so im in positive equity. As long as i stay with the house through the period of negative equity, and remain on a fixed rate mortgage, how exactly will i suffer through the period of negative equity??

sorry, the nievity really coming out now

pete96

Max_Headroom wrote: »

Two things:

The government loan is still a loan, so you wouldn't be "only borrowing £100K".

My understanding is that the governments grand scheme to shackle first time buyers with massive debt in order to save the house builders only applies to new build property, so if a resale home you're not eligable.

My advice (assuming you're for real) is, you're young, you've got no money (in the house buying grand scheme of things £1,000 is nothing, especially if that's two peoples input). Go and save up a decent deposit, it will put you in a better place to actually get a mortgage (there are no 100% mortgages at present so you're out before you've started) but more importantly trying to save up ten thousand pounds (say) will give you a much greater understanding of what these figures like "£100K" and "£160K" that you glibly throw around truely mean.

I'm not being patronising, I was young once and the odd five hundred or thousand pounds felt like nothing, right up until the point that you try to save it or pay it back if you've borrowed it.

You need to get a really good understanding of money, otherwise you're just headed for a whole world of financial pain.

The government scheme i'm on did only used to be new build, but they have changed it now so resale homes are an option. I see your point about it still being a loan, but it's a very cheap loan as loans/mortgage go, is it not?

Your advice has been acknowledged... thanks!

Max_Headroom_3

Thanks that kind of makes sense. But can i ask, can you to explain a little more about the negative equity situation which has been the main topic of conversation here. I know what it means - when the house is worth less then you owe, but what does it actually mean in context? So i buy i house now, loose say 15% in a year and a half, but then 3 years after that it goes to 5% then what i paid for it, so im in positive equity. As long as i stay with the house through the period of negative equity, and remain on a fixed rate mortgage, how exactly will i suffer through the period of negative equity??

Hard (impossible even) to re-mortgage to take advantage of any better mortgage deals.

Impossible to sell should you need to relocate, or you lose your job or your relationship break up, or you hate the neighbours, or any other reason, unless you can fund the gap (plus other selling expenses like estate agency fees).

No escape route, you're completely locked in.

And simply the fact that you paid more than your "asset" is worth, you owe more than you own. You're poorer than the tramp on the street corner who has nothing, because you have less than nothing!

Lets put the boot on the other foot, what do you gain by buying a house and putting yourself into negative equity?