Trading up easier as property prices plummet

confused31_2

If your moving up the ladder in a falling market of course you are going to be better off, you might not be better of financially but the gap between the lowest priced property gets closer to the one people are moving upto, which means thay have to borrow less.

i had my house for sale last year for 160,000 and i was thinking of moving up to about a property priced at 200,000. So i would have had to borrow 40,000 pound for the new house.

Now say the 2 properties dropped 50%, i would sell mine for 80,000, but if the one i was moving upto also drops 50%, it would 100,000, so i would only have to borrow 20,000 pound


Now it might cost you more but what do you expect, you dont get something better for nothing.

But if you are moving up and all houses are falling at the same level, its a good time for you.

Dan:_4

confused31 wrote: »

If your moving up the ladder in a falling market of course you are going to be better off, you might not be better of financially but the gap between the lowest priced property gets closer to the one people are moving upto, which means thay have to borrow less.

i had my house for sale last year for 160,000 and i was thinking of moving up to about a property priced at 200,000. So i would have had to borrow 40,000 pound for the new house.

Now say the 2 properties dropped 50%, i would sell mine for 80,000, but if the one i was moving upto also drops 50%, it would 100,000, so i would only have to borrow 20,000 pound


Now it might cost you more but what do you expect, you dont get something better for nothing.

But if you are moving up and all houses are falling at the same level, its a good time for you.

This is true.

However, some people may not be in a position to sell at a price to settle their current mortgage, and are in effect trapped in NE. This would be particularly unpleasant for those who are ready to start a family and require more space.

The Government, if anything, should be helping these people to move house by transferring their NE to a new mortgage.

Cannon_Fodder

creamy wrote: »

http://uk.youtube.com/watch?v=o5MTClLvgnk&feature=channel_page

go away, Bruno.

whathavewedone

I would surprised if at some point banks wouldn't lend to people with negative equity.

There are going to be a lot of people in negative equity who haven't defaulted on their mortgage, have immaculate credit ratings and who have kept their jobs through the recession.

Some people who bought at the top will go under but those who survive shouldn't be penalised.

If you think about it, someone who has weathered a recession in those circumstances would actually be very low risk once prices have bottomed out.

I doubt it will happen this year though.

Gorgeous_George

With rising prices, people could pay the moving costs by using the equity in their property. Effectively MEWing to move house (maybe 'mewving could be a new word).

With falling or stagnant prices, people need to save in order to pay the moving costs. People generally are not good at saving.

So, moving may be cheaper as prices fall but, even without negative equity, it may be more difficult for many people.

GG

Pobby

Throughout the 70`s trading up was a different affair. We were a very young couple starting out on a career path. Wage inflation, promotions far outstripped hpi. In our caes 1974 semi @ £9,999. Our income jointly around £3k a year. 1978 we stepped up the market and bought @ £14,950 however our income was around £10k jointly. That`s how it worked then.

We sold in 1988 for £65,000. Interestingly enough our joint incomes were then around £27k a year so we had seen 10 years of rampant inflation.

treliac

Gorgeous_George wrote: »

With rising prices, people could pay the moving costs by using the equity in their property. Effectively MEWing to move house (maybe 'mewving could be a new word).

With falling or stagnant prices, people need to save in order to pay the moving costs. People generally are not good at saving.

So, moving may be cheaper as prices fall but, even without negative equity, it may be more difficult for many people.

GG

Assuming affordability, it's always been possible to allow for moving costs in a mortgage loan.

Gorgeous_George

treliac wrote: »

Assuming affordability, it's always been possible to allow for moving costs in a mortgage loan.

It was still Mortgage Equity Withdrawal.

I did it.



GG

scousethife

greenwheels007 wrote: »

Mmmm now, having read the thread which is about two bed houses dropping faster than the rest of the market lets have another look shall we?

Say house prices went up 10% in 2007
100K to 110K
200K to 220K
The defecit (mortgage) has gone from 100K to 110K
You are right the defecit has increased well done.

Now lets say house prices reduced in 2008 by 15%
100K - 85K
200K - 170K
Defecit is now 85K

If you had traded up in 2007 your defecit would have been 110K, by 2008 figures the defecit would be 85K.

It is also possible to trade up without increasing your mortgage. I am sure that I could get a nice 4 bed house in some places for the price of a 1 bed flat in Chelsea.

So the myth 'cultivated' by EAs is not entirely untrue in any market, particularly a declining one. And I think it is a little offensive to suggest that anyone who agrees is thick!

Maybe you should give the rocket science a miss for a bit!

So you bought a house for 100k
sold it for 85k
then bought another for 170k

You still have to add another 85k to your mortgage!

as I said in the first line - no one trades up without adding to their mortgage!

So if they dropped 15k and 30k respectively your only 10k better off (whose nicked the 5 grand?.......probably a scouser

The myth I was refering to was when people say oh we made 100 grand on our house and it let us buy a bigger one!

No it didnt what "let you buy a bigger one" was the more money you borrowed

Oh and do you mind if I throw in the cost of moving house? £9000 is apparently the average.


Ok yeah the chealsea flat people can but thats hardly a typical scenario is it? in fact it aspires to being negligable.

treliac

Gorgeous_George wrote: »

It was still Mortgage Equity Withdrawal.

I did it.



GG

I should think nearly everyone did it. As normal practice (and not quite the same as having a holiday on the mortgage), I should think it will carry on the same way.

The only time I was expected to have savings was as an FTB.