Would I be crazy to consider buying now?

flutterbyuk25

Hey all

I'm looking to move out from my parents home this year. I was going to rent somewhere but happened to notice that house prices in my area have fallen quite a bit.

Turns out I can rent a 1 bed flat for £400-£450/month or buy a small 2 bed terraced house (in an area that I would consider living in, as a FTB) for mortgage of around £470/month.

I have the 10% deposit saved up and would need a 90% mortgage.

I have only really briefly looked at houses but there are a few for sale in my price range. They may need cosmetic work but would be liveable in whilst work is done.

I know that there are lots of other costs involved in buying a property, but the fact that it would cost me just £20-£70 extra/month to buy seems really good.

But would I be crazy to buy in the current economic climate??

Any suggestions?

x

Wickedkitten

It really depends. Are you planning on staying there for a long time?

hamblettamaud

a mere 10% deposit will possibly secure you a more expensive mortgage, however, you will be on the ladder & if you don't tie in too long you could remortgage at a better rate next time. i say "mere" because that was more than perfectly acceptable only a year ago. now, it seems even a 10% deposit isn't enough. that said, the other costs involved in buying a property really do add up, just as the costs in selling a property can be quite substantial. finally, if you really want to do it, now is as good a time as ever. i look at it as swings & roundabouts - prices to buy & sell are usually on a par with each other.

sharpe106

If you plan on staying and are going to rent for a bit less you might as well pay a bit more so it is your house and a bit bigger, as if you want pets for example sometimes if you rent you are not allowed them.

As for buying in the climate as long as you buy what you can afford it does not matter as if prices do go down when you want to sell the property you want to buy would have also gone down, so just do not over stretch yourself and it will not really matter

VfM4meplse

It's not mad to buy if you need a roof a over your head and can afford it. The home you live in should therefore not be seen as an investment, the perception that people made real money on their own homes and are now losing is a fallacy unless you have a rich benefactor that is prepared to board you foc. These altruistic folk are usually called parents!!

If you can find a suitable property, then well done you!

flutterbyuk25

Thanks for the replies so far.

I am desperate to move out and have my own space. I do not want to live with strangers, and none of my friends are in a position to move in a rental property with me. And it seems silly to rent for more or less the same price as buying.

I am going to invest some serious time into looking into this over next few weeks so weigh up good and bad and affordability.

x

hamblettamaud

#4 - aye, best advice there is: don't overstretch yourself :-)

sharpe106

Go and see a independant mortage advisor they should be able to give you an idea of what you can borrow and how much it will cost you, it is not really a case of how much they will lend you, it is a case of what you can afford. If you go on to some of the main bank websites and look at mortages most of them have a calculator where you can put your earnings in and what you think your bills will be and it will work out how much you can afford

Lakey

That's the best advice, go to an independant mortgage advisor one who looks at the whole of the market, and see what mortgages are out there. Then save and keep your eyes out on the bank shares, they seem to be stabilising at the moment. The banks are starting to lend,or commiting to lend a bit more easily, this might not be what it seems, but could be the beginning of some sort of stability.
Whatever you do consider the fact that prices in certain properties will always drop more than others, if you buy anything watch out for a property near pylons, main roads, flood plains, newbuilds, flats etc. If its really cheap theres usually a reason why.
Examine your job prospects, is it really safe. The knock on effect wave is only a ripple at the moment and once the wave starts, a lot of people will be washed up I'm afraid.

Consider a fixed rate for as long a period as you can get. Time it right and you will be laughing, once the interest rate starts to shoot back up most of us will be screwed.
Good luck

Take your time its a huge commitment.

Running_Horse

What would the repayments be if interest rates rose 10% points?

No more unlikely than the current low repayments, as it has happened before.

zaphod_beeblebrox_2

flutter... Im doing the same, but only if they'd except 20-30% discount on todays prices




http://www.stevemorgan.co.uk/webfiles/house_price_trend.bmp