FTB - are we being paranoid or being messed around by the agents?

Cannon_Fodder

jozbo wrote: »

renting is genuinely throwing money away

Renting a property is much the same as renting the money from the bank (by paying interest), in order to buy using an Interest Only mortgage. You pay for a service, both ways get you a roof over your head.

The difference is the repayment of the capital sum.

If you delayed buying, and managed to pay a sufficiently smaller asking price (= capital sum), it can offset continuing to pay rent. Both directly, if a big enough drop, but also indirectly by avoiding 25 years of interest on the difference between 'current and future' selling prices.

Average house prices are £6k down since January, according to today's Halifax figures. If that trend continues, it *could* save £24k over two years, on average.

Who knows whether they will be up or down in two years ? Plenty of opinion that they will be at best flat through 2011. Public Sector job losses, tax rises, other austerity measures to come, plus eventual BoE base rate rises and yet they are already dropping..?

So, mathematically, renting does not have to be throwing money away.

Of course, it is possible that prices will rise and the opposite then applies.

The difficulty is that its not until after the event that you know whether you gain, or not.

jozbo

sure, but we would be paying back as part of the mortgage, however slowly. plus as i've said before we are putting in a large deposit so the mortgage element still works out cheaper than renting (fine, in the short term).

however at the end of the day if renting and buying worked out financially about the same, who wouldn't prefer their own place where they were free to decorate as they wished and actually cared about looking after? we currently rent a small place with awful decor where we cant live as we wish (no washing machine, tiny kitchen, no office though i work from home). we are looking at places with an extra bedroom and non matchbox kitchens and that would improve the quality of our lives so i reckon it's worth the small differences.

Cannon_Fodder

jozbo wrote: »

sure, but we would be paying back as part of the mortgage, however slowly. plus as i've said before we are putting in a large deposit so the mortgage element still works out cheaper than renting (fine, in the short term).

however at the end of the day if renting and buying worked out financially about the same, who wouldn't prefer their own place where they were free to decorate as they wished and actually cared about looking after? we currently rent a small place with awful decor where we cant live as we wish (no washing machine, tiny kitchen, no office though i work from home). we are looking at places with an extra bedroom and non matchbox kitchens and that would improve the quality of our lives so i reckon it's worth the small differences.

Agreed. Don't get me wrong. Not saying renting is for life, or perfect, or anything like that.

Just that it has its place, it serves a purpose - not just money down the drain;

- Better then being stuck at home with the parents until you are 30+.
- Nearer to work while you save a deposit.
- Close to nightlife/entertainment.

and so on....

Until you are ready to buy. When picking the right place, at a price you are happy with, helps secure peace of mind.

botchjob

jozbo wrote: »

the quote they have for extending the lease is 7k. i like the place a lot but think it's worth 195 with the lease and no more. sure we may lose this one but next time will look at cheaper places i reckon!

If you do pursue your purchase you should look into this v. carefully. Have you seen this 'quote' in writing? The way leasehold extensions work is that the leaseholder pays for a surveyor's valuation and that valuation is then negotiated with the Freeholder (with the leaseholder picking up the tab for both solicitor bills). In your position I'd want to be very very clear that the figure of £7k is what the freeholder has said they'd accept. You should also be aware that extending the lease would undoubtedly slow down the whole process as it would add a whole new element (and another solicitor) to the equation. Approach with caution....

botchjob

it's also worth bearing in mind that with a short lease like that, if the vendor is unwilling to sort out an extension themselves, they are sitting on an asset which will be depreciating annually. Maybe the asking price already takes that into consideration (does is seem cheap in comparison to similar things on the market?) but, if not, they should have bitten your hand off.

jozbo

it's about the same price as other things on the market, if not a little more expensive.

since they haven't found a place to move themselves it looks like the lease extension would make what looks like a slow sale even slower. we are not rushing to find a place but once a deal is done we would want to move within a couple of months.
we could offer 187-190 without the lease as a final offer, ask to see the 7k quote in writing and get powers to extend it transferred to us (thats possible, right?) then do that ourselves once moved in and past the headaches of the deal.

poppysarah

And leases get more expensive as time goes on - and you have to own it for two years I think before you can alter it (Could be wrong on that ...) but I'd walk away if they won't sort it.

jockosjungle

So do you want the flat or not? No offence but you're confusing me so not sure what the seller thinks. One minute you've bid £200k, they accept and now you don't want it, but you do but feel like you've offered too much.

I currently rent but am in the process of buying. The whole renting is dead money is a ridiculous thought to be honest. It is only dead money being thrown away if you are happy to sleep on a park bench, otherwise for your money you are getting shelter. I know you could be paying a mortgage on your own place (and I agree) but to overpay on a flat you clearly are having doubts about just to shove it to a landlord isn't the best strategy. You have somewhere to live so are in no rush, take your time and buy a decent place at the right price

jozbo

i hear you jockos. i am confused and undecided. i'm trying to weigh it up. i like the place but for less than i buckled and offered. i think we will see it again and talk to the vendor before reconsidering an offer, if at all.

agreed, renting is better than being homeless. we are lucky to be able to rent. what we want next is our own place. agreed, rushing isn't the way to do it. perhaps we just need longer to look at the options!!

bumpydog

macadamia wrote: »

IMO this is one of the worst times to be a first time buyer; you are almost buying at the top (but that's another subject). Have a look at the House Price Crash website - here's an interesting thread - third month of falls from Hallifax. If you are determined to go ahead with this purchase <shudder> then you should be reducing your offer.

I really would avoid the House Price Crash website if I were you. Its a collection of very bitter people hoping and praying for the collapse of the financial world, so they can feel better about not having taken responsibility for their own lives...