How will the credit crisis affect my jump onto the property ladder?

flippyflaps

Hi,

Me and the wife are currently backpacking but are probably looking to buy a house next summer.

Im wondering how the economic crisis will affect my situation. Im assuming its a good thing for me as i have no debt and the house prices will drop?

Thanks
Flaps

globalds

You have control over only one of those variables .
Just stay out of debt and watch for a good opportunity .
You may be affected by currency fluctuations .The pound may take a beating over the next twelve months.

Premier_2

Yes house prices will probably drop as a result of the difficulty in obtaining credit.

However, what makes you think you will not be affected by the difficulty people are experiencing in obtaining credit?

It's not just those with debts and bad credit ratings that are affected, it's everyone! Lenders are so scared at the moment they really don't want to lend to anyone, even to other banks.

Of course, the lenders have to lend to someone as that is how they make money, but they are being particularly picky. I guess as you are currently backpacking, you don't have a secure permanent job - something lenders look at as they want to be certain of getting their money back. Experience has taught them that those who have already held down an ongoing job at a respected employer will in part lessen the risk they expose themselves to.

The other thing to remember is that credit is not cheap compared with a year or two ago - another reason for falling prices. That house of your dreams may cost less to actually purchase in the form of an asking price, but it could be more expensive in terms of monthly payments compared to what it previously was when it was valued higher.

You are only sure to win if you can buy the property without any need for any type of loan.

Incisor

flippyflaps wrote: »

How will the credit crisis affect my jump onto the property ladder?
Me and the wife are currently backpacking but are probably looking to buy a house next summer.

Im wondering how the economic crisis will affect my situation.

Jump in too early and the so-called 'property ladder' is a property snake. But pln to get yourself a deposit of at least 10% before you jump on and you'll be fine once it bottoms out.

geoffky

if you wait a few years you will be in a very good position but we are nowhere near there yet..plenty more fat to come off the pig..

Bf109

What is this "property ladder" of which you speak?

Some lifestyle TV show?

Debt_Free_Chick

Make sure you have a big, fat, juicy deposit. Something approaching 20% of the purchase price.

kunekune

They have 50%, so that isn't a problem. However, picking up on what Premier said, employment might be. One effect of the 'credit crunch' aka looming depression is that unemployment rates are going up. When you get back from your OE, what are your plans for re-entering the paid work force? If it's a matter of going back to your old job, will it still be there? If it's a matter of looking for a new one, what will the market be like? There are many of people who thought they had safe as houses jobs of the kind Premier talks about who are discovering they were wrong - my OH is one of them, probably. If banks aren't safe, what is? So, yes, the credit crunch might well affect your plans, but don't worry. If you delay a bit, it's not a major disaster, prices are going down not up.