Why are people having a go at folk wanting to sell and buy

olly300

longforthesun wrote: »

So could the posters who tell everyone not to be so stupid and buy now please tell me what do you think will happen to this country if everyone listened to you?

First and foremost this is a money saving forum.

Therefore advising a FTB without a large deposit to spend money on an asset which will depreciate in value is not money saving, particularly if they are not buying a property in a place where they will stay for a very long time to bring their future family up in.

Secondly, whatever the state of housing market there will always be people who will be forced to buy and sell.

Thirdly the housing market in the past few years has been relying on BTL investors not FTBs at the bottom of the market. Many potential FTB can actually save money by living in this accommodation as they don't have to deal with the hassle and the cost of owning a property.

pickledpink

Chris2685 wrote: »

Well it depends on your situation really..
For me, I was going to buy, but decided not to...

I put things into perspective for myself.

we were going to buy a property for £210k, which over 25 years would have cost us around £500k once all the interest was included.

If I could be abolsutely 100% certain that I could make repayments for the next 5 years, I would have probably gone through with it.

The fact is though that I couldn't guarantee that, and me and my fianc!e have been saving our asses off for the last few years in order to get onto this so called housing ladder. I didn't fancy blowing all of our hard earned savings, and then 2 years down the line the house be worth less than we paid for it, blowing away all those savings and then some.

To rent is going to be throwing money away in one sense, and it is quite a hard bullet to bite, but when you think about it logically, it is not throwing money away.

Renting at, say, £800 pcm is going to cost around £10k. We will still have all those savings in the bank, plus more hopefully. We will be able to reassess the housing market, and it is very likely that house prices will have dropped more than £10k in our area.

So renting for 1 year will cost £10k. I think that is worthwhile, especially why the market is as volatile as it is at the moment. The savings we have for our deposit + stamp duty + other costs should earn us around £1000 in interest too, so offsetting that against the rental loss it is £9k. Plus the fact that the house were going to buy needed new windows (£5k), would have needed maintenance no doubt which costs money, etc...

That is basically me putting it in perspective for myself. It took a lot for me to work out which way will benefit us more.

If I could buy for cash, I would certainly buy (no chance of the bank repossessing your house! It is almost certain to recover what you paid in cash over the course of time you live there. But stretching myself and taking out a mortgage for 25 years, effectively costing me TWICE what I actually offer for the property over the course of the mortgage term...

Hopefully that disjointed collection of words above will help put some of this into perspective for people buying or considering buying at the moment...

For me it was all about risk, and I couldn't bring myself to take the risk of losing all my savings and possibly losing my job and having the house repossessed...

Your quote:

"But stretching myself and taking out a mortgage for 25 years, effectively costing me TWICE what I actually offer for the property over the course of the mortgage term..."


I don't know how au fait you are with motrgages, but the repayments on a 25-year mortgage loan will ALWAYS be about double the original amount you borrowed: how do think banks make their money??:rolleyes:

However, with inflation the repayments after 10 years will be significantly reduced. Your repayments after 10 years will seem like small fry.

I knew someone who took out a huge mortgage on a beautiful house (and in the beginning it was a struggle) but towards the end of their mortgage their repayments were peanuts in comparison to what other people were paying on their new mortgages or rents.

dopester

Chris. I'm in full admiration of your wisdom. Except for the assumption cycles with be like the last 3 experienced, your post is bang on.

I also agree fully with Incisor.

dopester

pickledpink wrote: »

However, with inflation the repayments after 10 years will be significantly reduced. Your repayments after 10 years will seem like small fry.

Not if we are entering a long period of economic depression, debt liquidation, and deflation, with asset values already collapsing at a staggering rate from peak this past year.

Look at RBS. £76 billion they paid for the crud that was ABN AMRO at peak.

Lloyds pick up HBOS last week for something like £22 billion just 14 months later.

Sir Fred Goodwin will have been forced to re-evaluate his whole reality perception about value after that. Just like a lot of people will have to when house prices crash in full.

Chris2685

Thanks dopester. If the cycle doesn't appear to be like it has been in the past by the end of our first year of renting, then at least we will be in a position to re-assess the situation each year and decide whether it would be a good idea to buy or carry on renting.

PickledPink: I don't quite understand what you're saying? I know mortgages over 25 years are about double over 25 years. It also costs a fair bit to arrange a mortgage and to renew it, so I was also factoring in those costs as a kind of round figure. Your comment about the repayments after 10 years being small fry is also a fair one, but I don't really want to be paying over the odds for 10 years, when I could wait 1 year and pay less? If I get it wrong, I get it wrong. I won't be much out of pocket compared to if I get it wrong the other way around and buy instead. Hope that makes sense

PasturesNew

Most people I see that are here asking about buying a house and being told not to are in the following groups:

- FTBs overstretching themselves and expecting a 100% mortgage
- Wanting to buy something now for a couple of years only
- Probably not even working yet (a lot of students wanting a BTL)
- people buying overpriced new builds
- people buying overpriced equity shares.

People who are moving house aren't told they're being daft.

GDB2222

longforthesun wrote: »

I have read posts with people saying they have their deposit and mortgage offer and have no intention of moving for 10 years and are being told they should still not be buying, surley these are the people we need to be kick starting the houseing market again.

Why should these people kick-start the housing market by buying whilst prices are still far too high? Why shouldn't vendors be encouraged to kick-start the market by dropping their prices some more, until they become reasonably affordable? Why is it the buyers who should stretch themselves, and not the sellers?

pickledpink

Chris2685 wrote: »

Thanks dopester. If the cycle doesn't appear to be like it has been in the past by the end of our first year of renting, then at least we will be in a position to re-assess the situation each year and decide whether it would be a good idea to buy or carry on renting.

It depends on how many years you want to reassess the situation......by the time Doubting Tom makes a decision the opportinity has usually passed him by! And time goes VERY quickly.............you may not be able to get a mortgage a few years dwon the line.......who knows what fate has in store for us?

PickledPink: I don't quite understand what you're saying? I know mortgages over 25 years are about double over 25 years. It also costs a fair bit to arrange a mortgage and to renew it, so I was also factoring in those costs as a kind of round figure. Your comment about the repayments after 10 years being small fry is also a fair one, but I don't really want to be paying over the odds for 10 years, when I could wait 1 year and pay less? If I get it wrong, I get it wrong. I won't be much out of pocket compared to if I get it wrong the other way around and buy instead. Hope that makes sense

You don't have to keep renewing a mortgage!!!:rotfl: Silly bean, you!!

Anyway, you've obviously pinned your hopes on getting a mortgage in one year from now (hope they don't tighten up even further and you find no-one will give you a mortgage - which is looking increasingly feasible now the banks are only going to lend to those who are already very solvent and have heaps of dosh for a deposit).............so what are you moaning about????

Just wait another year!:p :rolleyes:

dander

I think there are a fair number of posters on here (these forums, not this thread!) who are intentionally trying to talk down the market. There are also people who are giving very sensible advice to people - some of whom come up with some pretty hare-brained schemes!

But as for advising people not to buy and sell at the moment, I have to say I certainly wouldn't unless I was forced to - partly because of the financial risks and partly simply because of the stress of trying to get a sale through I found the whole process stressful enough when times were better!

And I do think a first time buyer would be taking a huge risk to buy right now. The state of the market is just so volatile.

Chris2685

pickledpink wrote: »

You don't have to keep renewing a mortgage!!!:rotfl: Silly bean, you!!

So you're saying it is more sensible to go onto the variable rate? Right then...