Everything's changed - what would you do?

nollag2006

dopester wrote: »

Even if you could buy at 10% or 15% cheaper in 12 months on a £150K home... that is maximum of £22,500... against say £9,000 rent paid out in the same timeframe. So a possible saving of just £13,500 (+ a few other benefits of renting).... against that strong urge to buy and have "security" and all that.

And what happens if prices move in the opposite direction, as they are doing right now?

I've always believed that STR (for that is what this would amount to) is reckless in the extreme. You are gambling with a family's future.

If you can find a nice home now, and not worry about rent rises or dealing with landlords, and can afford a nice place of your own to buy - now is the time.

It might go up or down in the short term, but if you are not planning to sell up within the next year or two, then this is not a concern. Your family's welfare and stabiliy are too important for this type of gamble.

Like everyone else on here, I honestly don't know what the market will do over the next few years, but the evidence and current trends suggest it will rise. I wouldn't want to bet my life savings on a market fall, that is for sure.

dopester

nollag2006 wrote: »

Like everyone else on here, I honestly don't know what the market will do over the next few years, but the evidence and current trends suggest it will rise. I wouldn't want to bet my life savings on a market fall, that is for sure.

A reasonable comeback nollag. Fair enough.

Either way it's a bet with life savings, or significant financial resources which may have unexpectedly come someone's way (Lydia).

Buying a home using your life savings now (depending on the property) and it then later falling heavily value is betting with life savings too, imo. Not just my way as the "bet" by not buying and waiting.

So please don't prod me with the betting label "reckless in the extreme". It applies to you as much as it does to me, imo.

wageslave

I am a single parent too.

Buy. It might be a bit of a struggle at times but lets face it, what isn't?

If you dont, bit by bit your nest egg is going to disappear into someone elses bank account. There is nothing scarier than watching your capital slip away.

No matter what happens, house prices, in the long term will rise. You don't buy, you will regret it all your life.

Go for it girl:cool:

nollag2006

Lovely post wageslave, and excellent advice

nollag2006

dopester wrote: »

Buying a home using your life savings now (depending on the property) and it then later falling heavily value is betting with life savings too, imo. Not just my way as the "bet" by not buying and waiting.

I suppose it depends on whether you view your home as an investment or a place of security to raise a family.

As a property investor myself, I am happy to take a risk on prices going up. Even if they fall at some point, they will eventually rise (and fall) again. They always do.

To Lydia's specific situation, she is looking for a home and security for her family. I would strongly suggest that whatever the short term vicissitudes of the market, her safest option is not to risk watching her lump sum ebb away waiting for a fall that may or may not materialise, but rather to use her good fortune to buy a permanent home for her family, that no landlord can evict her from, or shove up the rent when she least expects it.

dopester

You make some good points nollag. I don't want to see her lump sum ebb away either, whilst continuing to pay a high rent versus buying outright, or waiting a while and not seeing a significant fall in market value of the home she would ideally like to buy.

nollag2006 wrote: »

I suppose it depends on whether you view your home as an investment or a place of security to raise a family.

I also look at money/savings as representing security for the well-being of one's family, and so was looking at a balance (cut one's cloth), although I partly accept the home as security for family too.

Wageslave.. the simple argument of house prices always rise in the long term is misleading. It is proven there are good and also very bad times to buy, given situation of the changing economy at the time. Not everyone has been able to hang on to something which looks cheap later in the future, and we could be at a significant deflationary turning point.

Not just stretching to piling it all in to a house for security, as it might prove more of a stretch to cover running and living costs with a 40% drop in income. There are many tricky variables in the decision of waiting/buying now, I'll agree that much.

carolt

I'd buy - ideally my dream place, as a 20% mortgage doesn't sound much, or outright if you're not sure about the security of your employment - or somewhere between the two? 10% mortgage etc?

Lucky you - congratulations on your good news.

HAMISH_MCTAVISH

Paid for or 20% mortgage?

Interesting. I'd probably only consider one question.

If I were to remain a renter, do I have a serious and credible fear of becoming unemployed from both jobs, not becoming re-employed in any job for years, and being unable to pay a tiny rent equivalent to the 20% mortgage, and having myself and my family become evicted and homeless.

Because it makes no difference whatsoever being a renter or a mortgagee, if you don't pay the bills, you will eventually be evicted. In fact, with regards to benefits and assistance, the mortgage holder may in fact have more security than the private renter.

If you have enough confidence in your current situation that you don't walk around worrying about such a thing, then buy the house you want for the long term.

If you view such an occurrence as a realistic possibility, then buy with no mortgage.

As for the issue of buying now or waiting that others have raised..... It seems that the goal of your saving is to buy a house. You can do that now. Waiting guarantees depleting capital, for the possible upside of buying that house cheaper. And the possible downside of having that house rise in price and cost you more, or become out of reach.

You know it is possible now, there is a real risk it may not be possible later. That to me is a risk not worth taking, for the possible upside of a few grand extra in the bank.

carolt

But if you rent, you can get housing benefit if unemployed, Hamish?

HAMISH_MCTAVISH

carolt wrote: »

But if you rent, you can get housing benefit if unemployed, Hamish?

And if you buy, you can get mortgage benefit....

I presume there is a limit to what housing benefit will pay? So if the rental place was above that they would have to move. Whereas mortgage benefit covers up to 200K.....

And you would be ineligible for benefits with savings. A long term of unemployment would deplete assets further. Whereas with the house, you keep the asset whilst benefits keep you afloat......