FTB advice - House Price Crash or Stagnation???

seabiscuit_2

we bought our first house in 2002, and everyone told us at the time we were stupid, that prices were going to fall, and that the area we were moving to (south yorkshire) was a bad area to move to

we sold that house for 60k profit last year

we bought another house and although we increased our mortgage, we also now have a 60k buffer on this, so house prices will need to fall by at least tthat amount before we get into negative equity

House prices in the area we moved to are still rising, and houses in the locality are not staying on the market for longer than a month before selling - which is better than when we were looking last summer, as the same houses were still for sale 4 months after we started looking

in your position, id give your parents a rest, stick as large a deposit down as possible and get your feet wet - you are only likely to get huge problems if you intend to sell in the very short term, or if you get a very dodgy mortgage offer or you are likely to be made redundent in the short term

meanmachine_2

seabiscuit wrote:

we sold that house for 60k profit last year

we bought another house and although we increased our mortgage, we also now have a 60k buffer on this, so house prices will need to fall by at least tthat amount before we get into negative equity

Can anyone see the flaw in this argument?

Durrrr... it rose by X%....and the next house up rose by the same amount, which means that, durrrrrr.....you made no "profit".

Anyway, these homeowners always come on here telling us that "everyone" told them not to buy in whatever year they bought. That's funny, I can't find anyone who doesn't tell me to buy "as soon as possible".

What strange memories/friends these posters have.

mystic_trev

seabiscuit wrote:

we increased our mortgage, we also now have a 60k buffer

A buffers something you crash into. An increased motgage is an increase in debt - am I missing something?

Joe_Bloggs

Since I comment on financial buffers enough to make everybody sick (ad nauseum ?). Perhaps there are those who see financial buffers differently. Please feel free to quote your views on what gives you short term financial security in a fast moving world.
Once you have spent their mortgage money and nearly all your savings, you are at maximum stress and most vulnerable to unforseen financial costs. A default at this stage could trash your credit record for years into the future.
Forward planning may help a little.
J_B.
I hear there may be free accomodation on a bench outside the house of a prominent MSE contributor.

seabiscuit_2

:rotfl:

i see you have all taken offence let me answer a couple of those points:

yes the house we bought has risen in price, but not as much as 60k in the same amount of time

our mortgage increase was about 20k - obviously a huge amount

the people telling us not to buy were non-homeowners - the renting brigade (after all ive only spent approx £30k in rent over the years)

have i missed anything? feel free to carry on - after all we obviously see things from different angles

meanmachine_2

House A is bought for 100K and rises by 10%.
House B is bought for 200K and rises by 10%.

You make 10K "profit" then have to spend an extra 10K to buy the next property up. Yeah, that's real smart.

In fact, you should have been praying for 0% inflation, but then you wouldn't have had all of that phantom "profit".

Meantime, the government and estate agents continue to feed you BS about how HPI is good for you.

When are homeowners ever going to wake up?

seabiscuit_2

um not in our case

first house rose by approximately 50%
second house had risen in the same period by 30%

and i agree that i was incorrect in saying that the original figure was profit, however had we been stepping off the property ladder then it would have been profit

i object to paying 30k in rent again, at least with owning a house, ill have something to show for my money

I seem to remember having discussions with you before mr mm - i dont object to your point of view, im more thinking that there are more than one point of view and a lot of relevant to each persons life

Ian_W

meanmachine wrote:

You should check the small print of your mortgage.

I think you'll find that, if the value of the property falls below that of the loan, the bank can demand the "owner" makes up the shortfall.

If you read my post meanmachine, it makes the point that I no longer have a mortgage on which to check the fine print.

Over 25+yrs I probably had six or seven different mortgages before they were paid off and I did read the fine print and I don't remember any of them saying that. But how would that work? You get the house valued when you buy/remortgage and the lender agrees to lend you an amount against it. You make the repayments but if the value of the house falls, as in the early 90's, they can make you pay the shortfall and repossess you if you can't? But they never value it again if you stay with the same lender and if you've kept up your repayments how are you in breach of contract?

So the statutory warning that the FSA insists goes on all mortgage docs to the effect that Your home may be repossessed if you do not keep up the payments should also say or if your home goes down in value.

Well I never! Strange though in the early 90's I knew a few people who were repo'ed for not paying their mortgages [usually cos they'd lost their jobs] but never heard of anyone who was for being in negative equity.

Arch-Angel

Joe_Bloggs wrote:

Since I comment on financial buffers enough to make everybody sick (ad nauseum ?). Perhaps there are those who see financial buffers differently. Please feel free to quote your views on what gives you short term financial security in a fast moving world.

This issue of a financial buffer is something I'm wrestling with now. As a FTB I'm trying to find a balance between my deposit and a contingency fund - at present I'm considering running with 3 times our (partner and I) monthly salary.

In fact I'm half tempted to use part of my deposit (£10K) to clear a credit card, saving me £90 pm. Snowball this £90 onto my loan and in 15 months time I'll be debt free (aside from the mortgage). Would this be a wise strategy? I'll still have 5% deposit plus funds for survey, solitictor etc.

lynzpower

arch angel

some lenders minus your debt + times by three, and minus that from what they will lend you.