Looking to the future- wannabe first time buyer!

nollag2006

roseland69 wrote: »

I'm not a doommonger, but a realist. This young lady seems to have her head screwed on pretty well and I think she will be better doing what she says and saving for a few years first (she has to anyway to get any deposit whether it be for a BTL or a place of her own to live in). That time will serve a great purpose I feel. She will have a deposit so something to go to banks with AND the market will I think have sorted itself out a bit more so she will have more idea where the land lies. I honestly don't think now is the right time for someone in her position to be stretching herself.

I don't have an agenda or a reason to push one way or another. I just say what I see. Lenders are far more cautious than they once were becuase they did stupid things like give out 125% mortgages or lents massive multiples that people didn't have a hope in hell of actually paying back. So people got their place, but at what cost to them personally? The absolute best option for the OP is to save and be prudent with her cash and start thinking about investing it in BTL's (or a place for herself) when she is in a position to do so.

Quite

And risk the market pull even further away from her by the time she takes your ultraconservative advice

sonastin

If the OP is happy living with her boyfriend and doesn't need to put a roof over her head, but still wants to own property, BTL might be a better way to go.

But it all depends what the market will be doing in 2-3 years once you've got a deposit together. And no one really know what its going to be doing 2-3 months from now :rotfl:

If you are going to go down that route, I'd be aiming for something in an area you know though. Don't just plump for e.g. Nottingham because property is cheaper there, but if you are familiar with Nottingham you can live the dream sooner. There isn't just one "market" to assess - Nottingham's market will be behaving completely differently to the East Surrey market. If you are going to invest in BTL, you need to know the market you're investing in.

And while you're saving for the deposit, do plenty of research into what it takes to be a landlord...:D

roseland69

nollag2006 wrote: »

Quite

And risk the market pull even further away from her by the time she takes your ultraconservative advice

There is little risk of that in the short term. Longer term of course its an issue but given she has no saving whatsoever here and now its rather a moot point don't you think? House prices may go up tomorrow but there's nothing she can do about that now. There may also go down of course. Its all academic for now isn't it, until she get's some savings.

emilyka

Thank you very much for all your points. It is an interesting subject because as has been said the market depends on where you are located.

I must admit a reason for choosing Nottingham is because it is the only place I know well other than South East Surrey. I also know that student accomodation is expensive there compared to house prices so the ideal would be to buy a 3 bed property and let it as rooms to students. To be honest, I havent thought this through much or looked into finer details of being a landlord and the types of managed letting services etc, just putting the idea out there for more experienced posters to give views on

With regards to wanting to own a property, I have even looked into renting garages in London to let out, got my parade p*ssed on when I realised you cant get a mortgage on a garage :rotfl:

I think the moral of the story is that I should hold tight, save save save and hope for a dramatic payrise in the next 3 years. I think actually moving to another location would mean leaving my job and therefore with lower cost of living usually comes lower salary so this could well be a bit of a vicious circle?

I know it sounds like I just want a quick fix, okay, I'm being greedy and I do. But, I would rather have the quickest possible route that is not going to cause problems further down the line with extortionate interest and inaffordable monthly payments.

Typical case of wanting the best of both worlds!

Henry_P_Chester

I agree with roseland. Don't worry about 'missing the boat' because most like the boat is going to sink!

No can be sure what the market will do, but you can take a good guess and to me it's very much down, flat at best. But you have to look at the evidence and make up your own mind. To those who think it will rise that's their opinion and they are quite right to act accordingly.

Personally I see very little risk in not buying for a few more years but a huge risk buying now. I won't be buying for quite some time.

princeofpounds

- the average first-time buyer now is mid-30s. don't think you are missing the boat! In fact it's probably a sign that the current situation is not sustainable.

- house prices are at an almost historically unparalleled level relative to earnings. I can't tell you for sure whether prices will go up or down (a lot of that depends on inflation, which is not a real price increase) but it is likely that your earnings power will count for more relative to the price of the asset in the future.

- most people don't buy alone.

- critical to keep a good credit record (that doesn't mean debt-free, it means using debt carefully and always paying it back on time).

- at your stage in life the most critical thing is to increase your earnings power. Each £ in earnings means £3-4 of available mortgage finance.

- be a bit careful with regards to how you save. take note of the real interest rate (i.e. the interest rate you receive minus inflation). If this is negative your money is not actually growing, although don't get too alarmed as what matters is this number over a period of years, not just what it is at any one given moment. You might wish to consider inflation-linked bonds from NS&I or other real assets as part of your savings mix.

Bullfighter

nollag2006 wrote: »

They certainly have not. I got back into BTL in Q1 2009, and have already seen a 15% in the value of the flats.

How many have you sold and made a profit on?

Thought so.

Capital appreciation only exists once you have sold the asset.

puddy

10 months after october and you should have 8 grand, another 10 months you will have 16 grand. who knows if in that time, your wages might have gone up a bit if you get promotoed or move up the career ladder

then you have a couple of options, you can either keep saving or use that as a deposit on a BTL (wouldnt be my choice) and hope the rent pays the mortgage enabling you to carry on saving.

but you also need to be a bit more flexible. when you say east surrey, where do you mean, redhill ish? if you move a bit more towards the towns, like croydon etc you still have the ability to travel to work but property will be a bit cheaper. do you drive? if so, this gives you the option to move further away from your work but will cost of course in terms of running a car, not cheap.

youare absolutely right to consider your future independently from your partner, always ensure you can provide for yourself, you may split up from him etc (hopefully not) and you dont want to find yourself financially disadvantaged because of that.

emilyka

princeofpounds wrote: »

- the average first-time buyer now is mid-30s. don't think you are missing the boat! In fact it's probably a sign that the current situation is not sustainable.

- house prices are at an almost historically unparalleled level relative to earnings. I can't tell you for sure whether prices will go up or down (a lot of that depends on inflation, which is not a real price increase) but it is likely that your earnings power will count for more relative to the price of the asset in the future.

- most people don't buy alone.

- critical to keep a good credit record (that doesn't mean debt-free, it means using debt carefully and always paying it back on time).

- at your stage in life the most critical thing is to increase your earnings power. Each £ in earnings means £3-4 of available mortgage finance.

- be a bit careful with regards to how you save. take note of the real interest rate (i.e. the interest rate you receive minus inflation). If this is negative your money is not actually growing, although don't get too alarmed as what matters is this number over a period of years, not just what it is at any one given moment. You might wish to consider inflation-linked bonds from NS&I or other real assets as part of your savings mix.

Thank you.

I have tried to 'clue up' on savings accounts, I currently have an ISA which I was intending on putting the first £5100 (or whatever the new maximum) in and once I have acheived that amount to switch the direct debit over to another account so the inflation-linked bonds will be something I will look into- thank you for the suggestion.

I know it'll seem like I'm getting ahead of myself as I havent even saved £1k yet but I'm a little bit of a control freak and very ambitious! I like to know where I'm going, what I'm doing and what my aims are to keep me focused!

emilyka

jenner wrote: »

10 months after october and you should have 8 grand, another 10 months you will have 16 grand. who knows if in that time, your wages might have gone up a bit if you get promotoed or move up the career ladder

then you have a couple of options, you can either keep saving or use that as a deposit on a BTL (wouldnt be my choice) and hope the rent pays the mortgage enabling you to carry on saving.

but you also need to be a bit more flexible. when you say east surrey, where do you mean, redhill ish? if you move a bit more towards the towns, like croydon etc you still have the ability to travel to work but property will be a bit cheaper. do you drive? if so, this gives you the option to move further away from your work but will cost of course in terms of running a car, not cheap.

youare absolutely right to consider your future independently from your partner, always ensure you can provide for yourself, you may split up from him etc (hopefully not) and you dont want to find yourself financially disadvantaged because of that.

I thought I might have sounded quite callous about considering an independent future as a possibility but it does pay to be cautious about these things. I am glad that you agree- I do feel a little bit like a monster but myself and my partner have discussed it at length and we would both be the kind of people that if we did buy together we would draw up a contract if we couldnt pay equally (he earns a lot more than me!) Obviously this kind of thing changes through marriage and having children but that is not on the agenda!

I live in Reigate so unfortunately one of the most expensive parts of East Surrey! I must admit I would be happy to move to another area but I don't drive and I would want it to be an area I would feel safe in, which would be something to consider depending on circumstances nearer to the time.

Fingers crossed for a promotion or pay increase but currently due to public sector budget cuts under the coalition government we have pay freezes for the next year (and probably beyond). To be honest from a tax payers point of view this is quite right and it will help prevent public sector reduncancies but it is a bit of a pain for me!