Would you buy now?

pingu2209

Imelda, I do understand. I rented with my husband and children for 1 year and it was horrible. You never know when the landlord will ask you to leave (2 months notice isn't really very much), and you can't decorate or buy furniture etc. It just doesn't feel like home.

However, please remember you are in a very fortunate position. You both sold your properties at the peak and there are many out there who are far worse off than you.

If you fancy a change, why don't you rent somewhere new for a while. Make the most of your flexible situation.

I think that the market will bottom out in a year or two, which will fly by. Then you can buy a house at more realistic prices.

When_is_the_reset?

garbaldisham wrote: »

IF the values fall to any significant degree. There's plenty of places where they won't all that much, and even if they do, and you decide to stay and actually live in it, the prices will recover eventually.

Say you're paying £1000 PCM rent, as opposed £1000 PCM mortgage. The mortgage is chiselling away at the debt, and after 2 years you'll have paid something (ok, not a lot but some) off what you owe the lender. However, the £24000 rent will be gone forever.

I appreciate where the nay-sayers are coming from, but IMHO it's a very short-term view. In the long run - and 20 years is a long run - buying and staying there is the best option. "Long term" and "staying" are the key words. You'll get your money's worth, and at the end of it all you'll own it outright.

You are being too simplistic in your statements: -

£1000PCM mortgage will probably not buy you as good a house as you can rent for £1000PCM so you may have a lower living standard if you buy.

You will need to tie up 10 to 20% of your capital to buy it in the first place (probably about £35k). You lose interest on this every year.

Of that £24k spent over two year most of it (around £20,000) will be lost to interest payments. Almost the same as renting.

Maintaining a house can easily cost more than the tiny saving in buying rather than renting - you could choose not to maintain it I suppose.

Add it all up over a 20-25 year period and you can be better off than owning it. Actually have a higher net worth than the owner - and have the flexibilty to move whenever you like.

Note - I have not mentioned house prices changing either way!

NEH

pingu2209 wrote: »

Imelda, I do understand. I rented with my husband and children for 1 year and it was horrible. You never know when the landlord will ask you to leave (2 months notice isn't really very much), and you can't decorate or buy furniture etc. It just doesn't feel like home.

However, please remember you are in a very fortunate position. You both sold your properties at the peak and there are many out there who are far worse off than you.

If you fancy a change, why don't you rent somewhere new for a while. Make the most of your flexible situation.

I think that the market will bottom out in a year or two, which will fly by. Then you can buy a house at more realistic prices.

If you rent unfurnished this gives you the opportunity to buy furniture, that's what we did and we were just married so there was wedding presents to get etc....

FTBFun

brit1234 wrote: »

I would prefer to rent than have my equity wiped out in house price falls. Give it a few months and you will see you get more for your money.

Weren't you saying this last year? And the year before that?

The London market is somewhat different than the rest of the country.

garbaldisham

When_is_the_reset? wrote: »

You are being too simplistic in your statements: -

£1000PCM mortgage will probably not buy you as good a house as you can rent for £1000PCM so you may have a lower living standard if you buy.

You sure about that? In my neck of the woods, like for like rental is more expensive by about £100 pcm at the moment.

When_is_the_reset? wrote: »

You will need to tie up 10 to 20% of your capital to buy it in the first place (probably about £35k). You lose interest on this every year.

Granted, but TBH the only way to get any significant interest on that capital in the present climate is if it's in an untouchable, hugely long-term account anyway. And if you use it to buy property you're not waving goodbye to it in the slightest.

When_is_the_reset? wrote: »

Of that £24k spent over two year most of it (around £20,000) will be lost to interest payments. Almost the same as renting.

As I acknowledged in my post. However, as time goes by - and I also did say this was in the long run - it swings into capital repayment.

When_is_the_reset? wrote: »

Maintaining a house can easily cost more than the tiny saving in buying rather than renting - you could choose not to maintain it I suppose.

I'd take issue with "easily". If your house is in decent enough nick when you buy it, and you insure it properly, then the stuff that really hits your pocket directly swings in once in a blue moon. In the nearly 20 years we've owned houses and flats, the only really major expense with which we've been landed was a replacement boiler: spread that cost over two decades and it's cost us about £150 a year extra. Perhaps we've just been really lucky, but I'd suspect many are in a similar situation.

When_is_the_reset? wrote: »

Add it all up over a 20-25 year period and you can be better off than owning it. Actually have a higher net worth than the owner - and have the flexibilty to move whenever you like.

Note - I have not mentioned house prices changing either way!

It depends on a lot of variables. If you want flexibility then yes, rent is obviously the best way. But security, stability and ultimately getting something back for your money?

And as for prices, as I said at the start, they're irrelevant if you plan on living in it long term. Furthermore:

brit1234 wrote: »

I would prefer to rent than have my equity wiped out in house price falls. Give it a few months and you will see you get more for your money.

Again, IF they come down. OK, let's say they do: what will happen the minute they're generally acknowledged to have bottomed out? The speculators will be in there like a shot, the domestic buyer will be caught in the rush as the demand / supply balance goes wonky, gazumping will rear it's ugly head once more...

And then, within a few short years (as you're planning on staying there, right?) all your precious equity re-appears in the value, and then some.

And that's why I think buying, and buying now, makes sense.

neas

I was saving since 2007 and have just bought.. our house was purchased for 160k in 2004, we got it for 163.5k.... so am happy with that price. All houses in this area are sold within about 2-3 weeks. We realised house prices could fall but they will fall when interest rates rise up.

We bought because we could get a nice 5year 1 month fix at 3.99% from britannia/coop. Even now this mortgage rate has rose to 4.19%...and I expect these rates to rise further. For the next 5 years the interest on my mortgage is now exactly the same as my rent, my buildings and contents cover cost me £80 for the year (via cashback website) and now have an extra room than I was when renting, a big garden, driveway and my own garage. Theres DIY to be done and the like but its mine not my landlord, and am now working toward paying off my own mortgage.

Will house prices crash further? in my opinion yes
How far? I dunno, maybe up to 30%
Over what period? I dunno, maybe it'll take 4-5 years before a 'bottom' was truly reached.
Would I wait that long? No, i am wanting to start a family.
Would i be financially better off to wait for 4-5 years,rent and then buy? Depends on the severity of the crash + interest rates when I would want to buy. I.e. if prices crashe 30% but interest rates doubled then I'd be no better off really as my mortgage rate would be same.
If house prices crashed, would i find a nice house for sale? Unlikely, as seen in the last mini crash (2009 etc) only bag of rubbish properties were on market, all good homes were retained by sellers as they didnt need to move, while they paid off more of their mortgage. Its a long wait for a crash to occur and then for people to accept these new 'prices'.

My tactic at the moment is to pay off our current 66% equity down to around 40% or so (based off current figures etc) over the 5 yearas. If IR do rise i'll have less owed and wont be as impacted as much.

Imelda

DocProc wrote: »

I'm not so sure about the '15yrs' bit, when you say



Wouldn't it be better to just bear this fact in mind, but in actual fact try and get a mortgage for as long a period as you possible can? eg, 30 years, if possible.

Why?

Well, your monthly commitments are minimised. The amount of capital you have to find each month is less than it would be for a 30 year repayment mortgage than it would be if you had to pay that capital back over half of that period of time.

Of course, you can always settle your mortgage back at any time - within 15 years if you like -BUT YOU DON'T HAVE TO. In fact, you can always over pay the minimum requirement for the capital side of the repayment if you want too - but you don't have to.

So you would be minimising your commitments. Do you follow?

I do follow- minimise what we have to find each month and then overpay what we can afford. All makes good sense to me.

OH chose 15yrs (like I say he is the brains and has done all the maths) because the monthly payments (fixed for 5yrs) are less than our monthly rent now. Plus, it is an offset and OH gets a bonus each year which we would be able to offset but still be able to get our hands on it if necessary. The hope is we would be able to pay the mortgage off at the end of the fix and have it completely offset before that.

Imelda

neas wrote: »

I was saving since 2007 and have just bought.. our house was purchased for 160k in 2004, we got it for 163.5k.... so am happy with that price. All houses in this area are sold within about 2-3 weeks. We realised house prices could fall but they will fall when interest rates rise up.

We bought because we could get a nice 5year 1 month fix at 3.99% from britannia/coop. Even now this mortgage rate has rose to 4.19%...and I expect these rates to rise further. For the next 5 years the interest on my mortgage is now exactly the same as my rent, my buildings and contents cover cost me £80 for the year (via cashback website) and now have an extra room than I was when renting, a big garden, driveway and my own garage. Theres DIY to be done and the like but its mine not my landlord, and am now working toward paying off my own mortgage.

Will house prices crash further? in my opinion yes
How far? I dunno, maybe up to 30%
Over what period? I dunno, maybe it'll take 4-5 years before a 'bottom' was truly reached.
Would I wait that long? No, i am wanting to start a family.
Would i be financially better off to wait for 4-5 years,rent and then buy? Depends on the severity of the crash + interest rates when I would want to buy. I.e. if prices crashe 30% but interest rates doubled then I'd be no better off really as my mortgage rate would be same.
If house prices crashed, would i find a nice house for sale? Unlikely, as seen in the last mini crash (2009 etc) only bag of rubbish properties were on market, all good homes were retained by sellers as they didnt need to move, while they paid off more of their mortgage. Its a long wait for a crash to occur and then for people to accept these new 'prices'.

My tactic at the moment is to pay off our current 66% equity down to around 40% or so (based off current figures etc) over the 5 yearas. If IR do rise i'll have less owed and wont be as impacted as much.

I have similar thoughts, the house we would buy would be somewhere we could stay longterm. When the crash first started I remember us feeling very vulnerable having money sat in the bank, panicking and spreading it allaround so we had £35k (as it was then) with each bank (and then they merged anyway ).
I would rather have a house, owned outright that we could live in without worries of being evicted and being able to afford a nice life should my OH/ me be made redundant.

tawse57

I live in a area where 2 in 3 people work in the public sector yet house asking prices rival those of parts of London.

I hear stories everyday of huge debt, I look at the land reg figures of houses sold just 3 years ago but whose sellers now want double what they paid - 250K houses on the market for 400K even though bought in 2007. Nuts.

I am very wary of buying now as I think the job cuts to come will result in forced sellers. Asking prices have made it so that there is no point in viewing.

sarah_elton

I'm in the "Do it!" camp since your finances look so sound. We have just moved (on Tuesday ) from our rented two bed flat to a four-bed detached house that we've bought. Very similar to you - large deposit and we borrowed over 15 years which is comfortably affordable on either of our salaries alone.

I was actually really sad leaving the flat. It was the first place I bought after moving out of home. I subsequently met my hubby and he moved in. I sold it in Feb 2009 so we could rent while looking to buy (and therefore buy chain free), but since it sold to a BTLer we rented it back and didn't have to move. Despite my feelings on the day of moving out, I love our house already after just 48 hours! We were completely overflowing our flat with stuff (we've done quite a good job of filling a four bed house lol). Same as you, we got married in June and our wedding presents didn't really fit in the flat. Now everything has a home. No more neighbour noise since the house is detached. We've already met some neighbours - our street is a mixture of elderly people and young families - seen some young kids already which will hopefully be us in a few years.

We looked for at houses for just over a year. We felt that most asking prices were OTT (and most of those we thought that about are still on the market!). This one finally came on the market in March with an asking price £40k less than other similar properties - finally a realistic seller. I was getting Rightmove alerts so we viewed it the day it came on, went back the next day, and offered straight after the second viewing.

It may well dip in price in the next few years. I just don't care. We're not remotely over-stretched so wouldn't be forced into selling (even if we both lost our jobs we've got enough in savings to pay the bills for several years). There's no guarantee a house I love as much as this would have been put on the market during such a dip, even if we could have paid less for it. I feel so settled already and after six years living in flats having a garden is just the best feeling! It's a proper grown up family home and I couldn't be happier. If your budget will get you a house you'd be happy in for a good long while if need be, and the right house is available for you, go for it.