Would I lose out if I get OFF the property ladder for a while

Greenwellies_2

So, we're ready to exchange on the house we're in.
The one we want is in a short, but incomplete chain.

We have an annual income of 40k, about 50k equity in this house.
We've managed to secure a mortgage deal for 160k (4 x salary)

I'm thinking of renting for 6 months, but I worry that if I get off the property ladder a lender wont loan me anything.

Any advice?

Thanks

GW

Gwhiz

How long is a piece of string?

Although I see property prices falling for at least another 6-12 months I do think that lending should ease as the full effects of QE are felt and hopefully we'll see some real "green shoots" of recovery. In that case you should find that a) you do not need to borrow as much for the same house which is then cheaper, b) you've saved up more deposit so need to borrow less and c) morgages become a little easier to get.

BUT.... no one really has a crystal ball! Do you feel confident you'll still have a job is one uncertain thing!

Thrugelmir

How much do you like the house you intend to buy? What are the chances of finding a similar house in 12 months time?

Not everything is about money..........

As prices fall desirable houses will still sell for asking price.

Greenwellies_2

We had a long chat, we're not renting, but thanks for the replies.

If we were to rent, the threads here of LL and deposits...... they alone put us off, on top of that the rents are higher than our mortgage, so we'd not be saving

Thanks

GW

bo_drinker

Would of been a good idea to have had the "long chat" before you ask people you don't know

Gwhiz

Greenwellies wrote: »

We had a long chat, we're not renting, but thanks for the replies.

If we were to rent, the threads here of LL and deposits...... they alone put us off, on top of that the rents are higher than our mortgage, so we'd not be saving

Thanks

GW

Don't forget, all you will hear on here are the bad stories. No one posts up good stories.

I sold up a year ago and have been renting. I have a really good LA and LL and could not be happier. I am renting a lovely house (£2000/month) which could have something to do with it BUT do net let a few moaners put you off.

Gwhiz

Greenwellies wrote: »

on top of that the rents are higher than our mortgage, so we'd not be saving

Thanks

GW

But if house prices still have 10% to fall then you will be saving a bundle by renting!! Opportunity cost is what you need to look at!

freeride

Gwhiz wrote: »

Don't forget, all you will hear on here are the bad stories. No one posts up good stories.

I sold up a year ago and have been renting. I have a really good LA and LL and could not be happier. I am renting a lovely house (£2000/month) which could have something to do with it BUT do net let a few moaners put you off.

So thats why your so upbeat about house prices falling, you sold at the height and your renting.
£2000 per month over a year, thats £24000 plus. Sounds like you have spent any profit you made on the housing market.
If you rent for another 12 months, thats......£48000 plus.

I bet your praying houses fall another 10%.....LOL

GDB2222

freeride wrote: »

So thats why your so upbeat about house prices falling, you sold at the height and your renting.
£2000 per month over a year, thats £24000 plus. Sounds like you have spent any profit you made on the housing market.
If you rent for another 12 months, thats......£48000 plus.

I bet your praying houses fall another 10%.....LOL

Say someone has a £500k mortgage at 5% interest, then interest only repayments are £25k, ie enough to pay the rent, and there's a saving on insurance and maintenance. If house prices fall, that's the icing on the gingerbread.

That's quite a large mortgage, but someone who is happily renting at £2k a month may have had that size of mortgage.

freeride

GDB2222 wrote: »

Say someone has a £500k mortgage at 5% interest, then interest only repayments are £25k, ie enough to pay the rent, and there's a saving on insurance and maintenance. If house prices fall, that's the icing on the gingerbread.

That's quite a large mortgage, but someone who is happily renting at £2k a month may have had that size of mortgage.

£500,000 mortgage?. Get real.

Greenwellies_2

My main concern would be that a lender would not entertain me if I was not already on the property ladder.

Gwhiz wrote: »

But if house prices still have 10% to fall then you will be saving a bundle by renting!! Opportunity cost is what you need to look at!

At the moment my mortgage is circa £900 per month. Rents for a 3 bed home, on a council estate either here or in a new area are at least £1100 pm. So I'd be out of pocket by 200 per month, thus I wouldn't be saving. We also have a lot of 'stuff' (heavily into DIY and outdoor sports so have 2 large workshops at our current home) all of that would need to go into storage.
The mortgage on a new property is around £750 per month.

If I rented for 6 months, assuming I'd pay £ 300 pm in additional costs (over what I currently pay) I'd be £1,800 worse off. Ok the house might have dropped, but where I am the prices are going UP, and where I am looking they are not dropping their asking prices (there's only a few homes there too)