catch 22

flybynight

am in a bit of a catch 22 situation. am renting at the moment and am curently paying off debts, as of 1st dec i should be totally debt free with a spare £50 in savings woohoo. so the plan is to put the £200 i have been putting towards my debts into savings. all soundign good so far. the thing is, in this area the rents are pretty hihg, we are in one of the lowest rents around here and we are at £650 ( been in about 4 years and never had a rent rise so are jsut sitting itght and hoping they forget we are here so long as the rent keeps goign in and we arent any trouble) same property now would be looking at about £700 minimum.
i have been looking at a few purchase properties (just out of interest really) and a mortgage would be about £550 a month repayment. so the cathc 22 is that in order to save for a deposit to buy somewhere i would be better off with a mortgage than renting somewhere, but in order to get a mortgage i need to save.
i'm hoping house prices drop a little or at least hang around where they are, as then we stand a chance of buying. i reckion in order to save a deposit im looking at £200 a month x 12 x 4 = £9600
so i am looking at about 4 years of saving to et a deposit. do u reckon i stand any chance that the market will be similar by then? coz if it goes up again at the rapid rate everybody in work says it will, i rekcon i'll need twice that as a depoist, so will be continually chasing.

delmar39

Who knows?! The thing about the housing ladder is once you're on it you're on it. It doesn't really matter what happens to prices once your on it. If you bought when prices were high then of course you could go into negative equity, but this doesn't matter unless you have to sell. This brings me on to having a good deposit. Obviously the more you have the better it is so you maintain a good level of equity in the property (without having to rely on the ups to keep your equity up). You cannot predict what house prices will do, so implement your strategy of saving as much as you can towards your deposit. I don't know how old you are, but I didn't buy my first place until I was 29 at which point I had enough for a 10% deposit on what was then a £72k two up two down terrace. I sold it a year later for £92k. Renting is great if that's what you want, but I'd get on the housing ladder as soon as you can as in the end the costs to do either are similar, but I'd rather be investing. Good luck.

sonastin

Save as much as you possibly can as quickly as you can. In the meantime, keep checking the market and doing the sums. House prices might come down (probable in a lot of areas), mortgage lending might ease meaning you need less deposit (highly unlikely but possible) or you might come into some money (e.g. lottery win - slight more likely than an easing of the mortgage market!)

As long as you have a good grip on your finances now, and a good idea of what the market is doing, you'll find yourself with a deposit saved up and ready to get on the housing ladder sooner than you know

bigbigmamamoo

many people believe that the house market is about undergo a substantial crash. Some are predicting falls of up to 50%.
Check out the Debate House Prices board on here or the housepricecrash website for these views

flybynight

im 32, its taken a while to clear debts from moving out of home and trying loads of diferent jobs before i found one that suited me.
i reckon you are right about just saving as much as possible. thing is that £200 is the most we can save at the moment. i guess i should stop listening to the guys at work saying "oh you need to get at least 30-40% equity in the place" bearing in mind they are all 10 years older and bought their now treble figure properties for 30 adn 40k. lol

Chinkle

Just save and see, you may get lucky or you may lose out. The other way to get there quicker is to save more, look at your outgoings, could you rent somewhere cheaper (maybe a house share)? Depends on what sacrifices you want to make to get your own place.

flybynight

true, i dont reckon the missis would go for a houseshare, and we'd struggle to get somewhere to take the dog. hav changed some gas and leccy providers tho and changed mobile providers. hopefully that should help

delmar39

flybynight wrote: »

im 32, its taken a while to clear debts from moving out of home and trying loads of diferent jobs before i found one that suited me.
i reckon you are right about just saving as much as possible. thing is that £200 is the most we can save at the moment. i guess i should stop listening to the guys at work saying "oh you need to get at least 30-40% equity in the place" bearing in mind they are all 10 years older and bought their now treble figure properties for 30 adn 40k. lol

Yes I agree! Don't listen to them. If you save into a top rate ISA then at least you'll get some compound interest on top. House prices are low don't forget and whilst they could go lower past history suggests that they'll eventually climb. What value property will you be looking at in line with what you earn? You're a first time buyer and armed with some deposit money you can at least open up discussions with some lenders. I'd avoid financial advisors (sorry if there are any reading this!), but you do need to know what you're doing. You'll get loads of decent advice here...look forward to tracking your progress

flybynight

ive opened meself an e isa with nationwide ( i already have an online savings jobby wiht them) and have set up a small direct deibt to that already, and when the 2 final loan payments have gone, i will be increasing that. i thought it wasnt worth even talkign to anybody till i had at least 5k
ideally id like to be looking at about 100k for either a small 1 bed house, or a flat , i'd really like a garden for the dog, and somwehere to put meself a shed. Am not being unrealistic about what a first time buyer can get, but would like to be in this area for work, and as this is where all of our friends are. so appreciate it will probably be quite a small place / need some work if im gonna get a good price in this area, however ive worked in teh building trade for a bit and am not averse to geting me hands dirty.