another big price drop?

tux900

With a repayment mortgage you have no choice but to the pay the loan+interest each month. For some people's circumstances that may be unaffordable. An interest only mortgage is, obviously, interest only however they often still allow overpayments - but it's your choice whether to and how much[1].

Mathew

[1] Sometimes there are limits.

franklee

sonastin wrote: »

A nose-dive would require enough sellers to a) be in a position where they can lower the price on their property significantly (i.e. no negative equity) and b) be in a position where they had to move no matter what and accept prices way below what they hope for instead of waiting it out. If there was a large enough pool of sellers in that position, it would probably drive the market down sharply.

There are loads (if not most) OOs who purchased five, ten or more years ago who are a million miles away from negative equity even with substantial price drops. For these OOs what matters is the cost of getting from property A to property B and so if they are trading up they benefit by house price falls. All that happens is that those FTBs who paid over the odds get stuck and people just move around them. Of course anyone downsizing considerably loses but then they're probably retirees who've benefited from many years of house prices rises and want to get on with life so a theoretical drop from peaky prices in a big bubble probably doesn't bother them that much. Once the message that house price rises won't be back anytime soon permeates and interest rates start to rise I think we will see house price drops. I don't think it would ever be a nose dive, more that the volumes of sales remains low until the stalemate shifts towards selling. Meanwhile expect a run on bunk beds

silvercar

poppysarah wrote: »

Erm
What's the point of the IO mortgage?

How are you repaying it?

If rent would be £800 pm and IO mortgage is £250 pm, that is a very good point to start with.

Add the potential to overpay and the deal is even more attractive.

For the well disciplined, the advantage of an IO mortgage with the option to make capital repayments as and when beats a repayment mortgage because of the flexibility it offers.

brit1234

twirlypinky wrote: »

I'm getting a little worried that house prices are going to take another nose-dive and we'll lose that equity we've saved.

Yes we are expecting the second part of the crash now. For the last few months hiuse prices have stagnated and started falling. Some indicies have fallen 3 months in a row.

Those price rises at the beginning of the year were mainly due to foriegn buyers in south east and government socalled affordable housing which allows peoplebut overpriced properties. Transaction levels are extremely low and those above distorted the figures.

We all know house prices only rose massively due to cheap credit, low interest rates, irresponsible lending and fraud. t some point they would always correct them selves downward and that time is now. Especially as houses have now flooded the market.

Keep over paying and don't worry. Price falls are good as it allows smaller gaps in prices for you to upgrade.

tyllwyd

Now that you have already bought, my personal opinion is that you are probably best sticking where you are, and when the time is right for you, sell & move to your better place - if the price of your house drops, then the price of more expensive ones will too, and the same if they go up.

I do think that saying that you are 'overpaying' an interest only mortgage is kidding yourself a bit - if it was me, I'd work out what a repayment mortgage over a sensible term would cost per month, pay that much as a minimum, and only think of any thing above that amount as an overpayment.

doire_2

lincroft1710 wrote: »

The market here is still buoyant, houses selling quickly and prices appear to be still on the increase.

.

Says who? The Daily Mail

poppysarah

Ooo Boyant! Love that word.
Reminds me of a boyancy aid ... something that is there to stop you drowning.

sonastin

Can we all please remember that there is really no such thing as "a housing market" - instead there are hundreds and hundreds of little markets all moving in different ways. When things stagnate in one place, doesn't mean somewhere else can't be flourishing!

We didn't see an increase in prices earlier in the year, but there are some teeny tiny signs that perhaps things might possibly be starting to move now maybe. Only I didn't say that out loud. Don't want to jinx it!

lincroft1710

doire wrote: »

Says who? The Daily Mail

No!!!!! From looking at sold boards in my area which often go up after property has been on sale for less than a month, and asking prices are up on last year. Market here is healthy, new agents are setting up, and sales adverts in property papers well outnumber lettings adverts again.

tux900

lincroft1710 wrote: »

[...] asking prices are up [...]

That says nothing of sale prices though. Remember, a lot of people put their house on at a price commensurate with what else is on the market at the time, however by definition a lot of what is on the market is (still) there because it is overpriced! It all-too-often becomes a self-fulfilling collection of overpriced properties.

I'm not saying prices in your area, or any other, are up or down but merely pointing out that you have to be careful what figures you use to support your premise.

Mathew