My Journey as a First Time Buyer!

Zandoni

VKay wrote: »

Anyway houses around our budget £140-155k are selling the day they go on the market around here and have been since mid January so we will plunge back into th 'game' I suppose!

That's amazing an area of the country where houses are selling fast, can you give us a few links to example houses that have sold instantly like that.

RetroBob

vixarooni wrote: »

i'll let him buy that sodding 42 inch tv he so desperatly wants.

Why do you decide what he spends his cash on?

VKay

Zandoni will try and post a couple of links now -bear with me!!

http://www.rightmove.co.uk/property-for-sale/property-21321904.html?locationIdentifier=REGION%5E717&maxPrice=160000&radius=5.0&includeSSTC=true&_includeSSTC=on&pageNumber=4&backToListURL=%2Fproperty-for-sale%2Ffind.html%3FlocationIdentifier%3DREGION%255E717%26maxPrice%3D160000%26radius%3D5.0%26includeSSTC%3Dtrue%26_includeSSTC%3Don%26index%3D30

http://www.rightmove.co.uk/property-for-sale/property-21348838.html?locationIdentifier=REGION%5E717&maxPrice=160000&radius=5.0&includeSSTC=true&_includeSSTC=on&pageNumber=12&backToListURL=%2Fproperty-for-sale%2Ffind.html%3FlocationIdentifier%3DREGION%255E717%26maxPrice%3D160000%26radius%3D5.0%26includeSSTC%3Dtrue%26_includeSSTC%3Don%26index%3D110

Both sold day after appearing on website!

(Hope that worked)

http://www.rightmove.co.uk/property-for-sale/property-21166294.html?locationIdentifier=REGION%5E717&maxPrice=160000&radius=3.0&includeSSTC=true&_includeSSTC=on&pageNumber=4&backToListURL=%2Fproperty-for-sale%2Ffind.html%3FlocationIdentifier%3DREGION%255E717%26maxPrice%3D160000%26radius%3D3.0%26includeSSTC%3Dtrue%26_includeSSTC%3Don%26index%3D30

neas

I live in Plymouth, so Ivybridge is a good area to live.

135 for a house with a bit of work doing doesnt seem too bad for ivybridge.

Altho, other houses not realistically priced haven't really been moving in local plymouth, and have been coming down in price on property bee for a while. It used to be that 140k would get you a poor house in plymouth... whereas now 135k will get you a house needing 15-20k repairs in invybridge.

I'd say good news for me .

As for renting is dead money, I will do a little maths for you (based on figures in my local area and rent im paying at the moment)

Situation 1: Rent a 2 bed unfurnished house/flat

Cost per month: £450 (which is 'lost')


Situation 2: Buy a 130k house with a 100k mortgage at 4.99% interest

Repayment Mortgage : £584 (of which about 450 pounds is interest)


So looking at these two situations the interest you pay on borrowing such an obscene amount of money matches the money you'd pay on 'dead rent' as you say.

Now this would be a no-brainer .... if we did not throw in a few more factors.... Buildings insurance + depriacting asset. So lets expand the two scenarios...

Situation 1: Rent a 2 bed unfurnished house/flat for 2 years, then purchase a 'crashed' property for 20% less than if you bought right now

Cost for 2 years renting (24 months): £5400 (Dead money)
House price of 2009 '130k' house: £104,000 (20% fall)
Mortgage on '130k' house after deposit: £74,000

Situation 2: Buy a 130k house with a 100k mortgage at 4.99% interest in 2009

Cost of interest for 100k mortgage (24 months): £5400 (dead money or not?)
Cost of paying 2 years additional buildings insurance: £500-£1000?
Capital repaid: Approx £5,000 (lets be optimisitc!)
House price of 2009 '130k' house: £104,000 (20% fall)
Mortgage remaining on 2009 '130k' house in 2011: £94,600


So.... if a house drops 20% over 2 years... and the rent payments are similar/less or hell even 10-15% more expensive.... waiting out the 2 years with 'dead money'... would save you £20,000 off the mortgage of the house.... and £40,000 on the lifetime of the mortgage.

Please... tell me again renting is dead money.... when renting costs less than the associated costs of owning (interest payment on a large amount of money.... and buildings insurance plus others).....

Stop saying renting is dead money... because it isn't. To say such a thing shows financial naivety, if you don't back up with fact/explanation. I've just shown you my calcs, prove me wrong.

The only way renting is dead money in the short term (2 years) if if houses only crash 5% or so.... and in this economic situation that seems unlikely with 1%+ falls per month. Again it seems foolish to save such a large amount of money then squander it because you have itchy feet.

Also if you live at your parents wouldnt it be good to try renting together first? much easier to see how you'd cope with out being annoyed you lost money on it etc, and if your situation changed you could easily relocate. I'm saying... rent for 2 years... then see what happens.

Its funny i was thinking about this the other day... how much better off I will be against some peope at work who bought at the start of the crash saying 'its just a blip'.

My friend paid 110k for a 2 bed house with a 35 year mortgage!... fixed for 5 years with £650 a month rent repayments. We rent a 2 bed flat for £450 a month... a 1/3 cheaper than his mortgage. His house is now worth about 100k... so already I could buy his or a similar property and be so much better off.

If you buy a house with your 50k deposit... I will 'catch' up to you even tho I have 10-15k less... because I made the wiser choice and waited it out. Got to be smart when its biggest purhcase you make like.

VKay

Thanks, yes houses are moving quick round here.

The calculations are intersting- sorry for tagging onto your thread Rob. I'll leave it to you now!

neas

Its basically a simple math equation.

X = Cost to Rent (24 months) + Loss of mortgage repayment (i.e extra you would've paid off mortgage)
Y = Cost to Service Mortgage (Repayment+interest over 24 months) + Loss of equity cost (Equity drop over 24 months).

Using same Example X= (24*450) + (5,000) Y= (24*567) + 26,000 ..... X = 10,400 ... Y= 39608.


If X > Y renting is dead money..... if X < Y then renting is 'free money'..... if X is stupidly less than Y then your a !!!!!!!g genius. This is simlpy akin to the fact some peoples houses were earning more than they did a month during the house price inflation... now as they are falling they are also losing more than the person can earn in some instances! :O.

Stands tall as a genius .:money:

neas

Why did people think renting was dead money... because during the HPI the formula becomes.....

Say a 20% Rise in house prices in 2 years...

formula becomes:

X= (24*450) + (5,000)
Y= (24*567) - 26,000 ..... X = 10,400 ... Y= -12392.

Meaning Y is much much smaller than X... meaning buying would put you at 10k better off each year than renting.

Thats why renting WAS dead money... and WHY renting NOW is FREE money....

And yes interest rates are smaller now, but interest rates across the 25 years will make little difference to a mortgage taken out now or in 2 years time... both will share 20 years or so of the same 'mortgagable time'.

bobbadog

RetroBob wrote: »

Why do you decide what he spends his cash on?

Because a relationship is a partnership?

Saver-Rob

Lots of disagreement here. Thanks for the posts about renting not being dead money, when in fact if you had read it properly I clearly mean that renting is dead money for us, of course it is. Why dont you do some basic maths - I can pay x amount to live here or pay 3 times more somewhere else? Hmmmmmmmmmmmm!

Anyway I wont credit people with any more replies about how renting would be so fantastic when it would not in our case.

As for the people who have read it through and posted something worthwhile, thank you. Its nice to get the good posts in amongst the..... 'others'.

russ21282

To those saying rent is NOT dead money, what happens if interest rates soar when the market picks up again?

It's all well and good saying they could buy when house prices are 20% lower but what if interest rates are at 10% and their mortgage payments are £1500 instead of £500 if they bought now (for example)

Do they wait another few years for the interest rates to drop? by that time house price would be going up again, so in fact they could be paying the same price as would have if they bought now.

My point is, saying renting is not dead money is speculating on what happens in the near future, and nobody knows what will happen.

If the OP want's to buy a HOME, not an investment, can afford the payments and is happy to do it then good for him. It may lose some value in the near future, it may go back up again, nobody knows.