FTB such high rates?!

jamief

Yakubu22 wrote: »

but surely by the fact that there is no return on the money spent. Renting is 'dead' money? I rent and have done for three years. I appreciate it proivdes the freedom to walk away at the end of a contract. But if any potential buyer can get a great discount on a property to buy for themselves. Then that isnt a bad deal IMO.

There is no return on mortgage payments, especially at the moment.

In a depreciating market, you could end up paying mortgage payments for the next 2 years, selling up and still owing the bank money.

before_hollywood

i've been looking at somewhere, and ltv majorly affects the repayments.

for example with 10% deposit it works out same as renting almost identical house on main road, whereas a lower ltv makes a huge huge difference and is a shorter term loan

dunstonh

New Build and appartment. Two things a lender doesnt want to hear and put them together and you have a recipe for potential disaster. Then add a very small deposit (10-15% is small) and stick a builders deposit on top (which is really a builder giving back 5% to what they added to the build in the first place) and its a wonder anyone is lending to you let alone at uncompetitive rates.

New builds tend to lose 10-15% the minute you buy it so you are likely to wipe out any equity you had the day you move in.

I cant see house prices being lower than they are now in 2 years time that's all.....

Last house price crash in the 90s was over 4 years. We are only at 20 months with this one. The US has been falling for a number of years with no sign of that stopping and we tend to follow them, albeit a year or two behind.

It could stop soon or it could just slow down but keep dropping. Remember that repossessions havent really hit the house prices yet as its still early days.

Yakubu22

jamief wrote: »

There is no return on mortgage payments, especially at the moment.

In a depreciating market, you could end up paying mortgage payments for the next 2 years, selling up and still owing the bank money.

I can only speak from my experience. I am looking at making a purchase at 15% LTv. Which is the absolute minimum LTV i would consider buying with. The difference between renting a brand new 2 bed aprtment (which i do now) and buying a 3 bed semi (is £150 per month). Now given the property I'm looking to buy is more expensive anyway comapred to what im renting now. I dont think the extra £150 per month is at all bad.
Again i understand the argument about interest and the fall in property prices still to come. But if i get a 20% discount on the list price of the property (assuming the list price wasnt over priced initially) then I think there's very limited risk involved.

NickDurham

Yakubu22 wrote: »

I can only speak from my experience. I am looking at making a purchase at 15% LTv. Which is the absolute minimum LTV i would consider buying with. The difference between renting a brand new 2 bed aprtment (which i do now) and buying a 3 bed semi (is £150 per month). Now given the property I'm looking to buy is more expensive anyway comapred to what im renting now. I dont think the extra £150 per month is at all bad.
Again i understand the argument about interest and the fall in property prices still to come. But if i get a 20% discount on the list price of the property (assuming the list price wasnt over priced initially) then I think there's very limited risk involved.

Do you mean 85% LTV (ie a 15% deposit)?
The problem is the value of the house is what is paid for it, not its asking price. When you come to sell people will be all too aware of what you bought it for and - hence - what it was worth at that moment in time.

whiteflag_3

lukekelly wrote: »

Your planned course of action sounds extremely risky. There's a reason banks are demanding large deposits at the moment: house prices are falling. With a 10% deposit for a new build there's a substantial risk that you're going to be in negative equity. Actually I'd be absolutely amazed if you weren't in negative equity almost immediately. My personal recommendation would be for you and your partner to save for a couple of years before considering buying a house.

Why is falling into negative equity in the short to medium term risky if you are

a- buying somewhere to live in ( i known thats a novel concept) and
b-you are not planning to move in the short to medium term?

How do you save for a bigger deposit when you are going to be paying more in rent than you would be for the mortgage in the meantime?

whiteflag_3

NickDurham wrote: »

Do you mean 85% LTV (ie a 15% deposit)?
The problem is the value of the house is what is paid for it, not its asking price. When you come to sell people will be all too aware of what you bought it for and - hence - what it was worth at that moment in time.

Why is when your selling the biggest consideration for when your buying? The worlds changed, perhaps you need to consider some people might be looking to buy somewhere to live in long term , not make a quick buck.

If theres any good that will come out of this mess is that not any tom !!!!!! or harry can become a property developer.

NickDurham

whiteflag wrote: »

Why is when your selling the biggest consideration for when your buying? The worlds changed, perhaps you need to consider some people might be looking to buy somewhere to live in long term , not make a quick buck.

If theres any good that will come out of this mess is that not any tom !!!!!! or harry can become a property developer.

It's not your biggest consideration. It's just one worth mentioning. I was only responding to the points being made and the idea that rent ws dead money originally. In fact, I'm a FTB thinking of buying myself. I'm currently renting, but my life situation means FOR ME it makes sense to buy now. Why do some people think that because you make one argument on a particular point that that is the entirety of your views on a subject??

whiteflag_3

NickDurham wrote: »

It's not your biggest consideration. It's just one worth mentioning. I was only responding to the points being made and the idea that rent ws dead money originally. In fact, I'm a FTB thinking of buying myself. I'm currently renting, but my life situation means FOR ME it makes sense to buy now. Why do some people think that because you make one argument on a particular point that that is the entirety of your views on a subject??

cause you didnt post a counter argument.