General FTB question - houses seem too cheap!

calnen

Hi all. As everyone says, I've been reading these forms for a while but never got around to registering.

My OH and I are 22, married and currently renting, and both have a considerable commute to our jobs. (We got work where we could, which was around 2 hours apart, and are living in the middle.)

We're thinking of changing the situation next year, so one or other of us quits and finds a new job in the same town as the other. So I've been tentatively looking around for houses to rent or buy in the area I work, around Stafford, just to get an idea.

Rightmove gave me this: http://www.rightmove.co.uk/property-for-sale/property-10943472.html?pageNumber=1&backToListURL=%2Fproperty-for-sale%2Ffind.html%3FsearchType%3DSALE%26locationIdentifier%3DREGION%255E1255%26radius%3D0.0%26displayPropertyType%3Dhouses%26minBedrooms%3D3%26maxBedrooms%3D3%26minPrice%3D70000%26maxPrice%3D80000%26maxDaysSinceAdded%3D%26_includeSSTC%3Don%26x%3D42%26y%3D8%26sortByPriceDescending%3Dfalse%26primaryDisplayPropertyType%3D%26secondaryDisplayPropertyType%3D%26oldDisplayPropertyType%3D%26oldPrimaryDisplayPropertyType%3D%26oldSecondaryDisplayPropertyType%3D%26newHome%3D%26retirement%3D%26auction%3Dfalse%26partBuyPartRent%3Dfalse&propertyType=houses&locationIdentifier=REGION^1255&maxBeds=3&radius=0.0&maxPrice=80000&minPrice=70000&minBeds=3

We currently pay 530 a month to rent a nice 3 bed semi, and have some money in the bank from student loans which we never spent. (So it's a deposit, but isnt really our money).
Still, I put the figures into a mortgage calculator online and it said that with a 20,000 pound deposit (which we should just about be able to scrape together this summer), owing 50,000 on that house, if we paid 530 a month (ie our current rent) as a mortgage instead, we could own it about 12 years - even assuming we didn't overpay. Granted that was a cheap house - most similar ones in the area were 80 or 90k.

I guess I just wanted someone to check my figures really. That certainly doesnt seem as expensive as I thought houses were. Granted we're in a good position, both in graduate jobs (but not especially well paid ones), but is that really an overpriced housing market? I always thought mortgages were meant to take most of your life, but just paying our rent we would own that house by 35. Unless I'm missing something, that is?
Final thought - will it get any cheaper, do people think? If prices dropped another 10% this year that would be 7000 more off, which would go (I'd hope) most of the way towards doing it up.

RomansProperties

I have just quickly checked and it would take about 11 years to pay off at just over 5%.
Looking at the house its none standard construction so you would have to check out the mortgage situation first.
Hope this helps

calnen

RomansProperties wrote: »

I have just quickly checked and it would take about 11 years to pay off at just over 5%.
Looking at the house its none standard construction so you would have to check out the mortgage situation first.
Hope this helps

Thanks for the reply. Not sure what you mean by non-standard construction, but interesting that the basic figures seem right. It justed seemed strange - a wonder if this means we're paying too much rent?

currynchips

You will find that mortgage repayments are often less than your rents, when equal the rental place will probably be better.
The house in question.....looks rough. The garden is a poor start and the front is manageable but brings into question the rest of the street.
The major thing I've noticed about EA's and rightmove, is that if they can't make a photo look good then they won't put it on the site. Hence one photo means the inside is pretty dire. 'In need of some modernisation' from my recent experience basically means the carpets, the wallpaper, the smell, the bathroom and quite often the kitchen need doing.

Please also add £2/3k in fees and then consider what stuff you need to buy before putting deposit down.

Poppy9

Buying a house is not just mortgage payments.

While you are both working now you can easily manage £530 rent but if one of you gives up work or loses your job can you still do so?

You will be buying at the lower end of the market so you will have additional costs over the next few years of updating i.e. new kitchen, bathroom, decoration, carpets and funishing (assume you are renting fully furnished). Do not underestimate the cost of these or the cost of unexpected repairs. It all adds up.

As also mentioned you will have fees to pay when buying for searches etc.

Also you might want to start a family. You may or may not decide that one of you stays at home but if you return to work which will then mean nursery fees.

You will probably not want to stay in this house forever so dreams of being mortgage free by your mid 30s maybe premature. Moving means extra borrowing and it's often at a time you have a family or want to enjoy more luxuries in life.

confused31_2

If you know the area and you like the house make a cheeky offer, i think at that price its a bargain, you could even get a bit more off.

The thing is even if a house is nicely decorated, you will always want to change it to how you like it, so with it being in need of modernisation at least you can change it to how you like it.

If you can afford it go for it, by me the only time houses go really cheap is if the area is not that nice, if you dont know the area check it out first,.

confused

Poppy9

Not knowing the area but this house seems a much better buy for just £2k more

confused31_2

Poppy9 wrote: »

Not knowing the area but this house seems a much better buy for just £2k more

it does look better, i still think with any house the area is the main thing.

confused

calnen

Poppy9 wrote: »

Not knowing the area but this house seems a much better buy for just £2k more

I spotted that one too - unfortunately its a 50% share.

To the other comments - we do have furniture already, and yes I'm aware there would be other costs for refurbishment. We don't have extravagent tastes for fancy bathrooms or kitchens though, so would another 10k seem like a fair estimate? I know carpets and curtains are expensive, but have never actually bought any so I'm not sure how much it would all come to.

Do people think prices on properties like that will fall further, or is the area I'm looking at one where prices already seem low? (Could they even rise?)

currynchips

Yeah at least 10k. What is the average price on the street?
If that place, as suspected, is an absolute dump inside then it's nigh on bottom price. A developer would be the most likely to take some more off it.

Running_Horse

Can I ask why you are renting a 3 bed semi?

Surely a nice cheap one bed flat would do while you save up?