Save 16k in a year by doing nothing*

chucky

most people do buy a house with a mortgage. average LTV is around 75%.

it's safe to assume that would be the norm, unless you're Graham Devon of course...

people that sell a house pay commission to an estate agent - you'll probably say that they'll be able to get a reduction in commission rate now because your aunt's cousins nephews butchers uncle owns the estate agency.

mortgages/taking out a mortgage when house prices are lower is more expensive and even harder when house prices are lower.

i'm not even sure why i'm bothering because it will all go straight over your head

sabretoothtigger

This idea of saving reminds me of a game of 'frogger'
Watch you dont go squish hopping around

lisyloo

I see what you are saying.

However, I never mentioned selling and STR'ing.

There are loads out there waiting to buy, or wanting to buy, or looking to buy without having to sell a house first

Oh I see.
So you are saying save £16K (or whatever) by waiting.
In which case I wholeheartedly agree.
I see many negative indicators for the housing market and few positive ones. Unless I had really pressing reasons to buy then I think it's a good plan to wait.

However that would ignore any other pressing needs like wanting to be settled before you start a family (and for women that means ideally before 35) or finding your dream home.
I bought at a time that wasn't ideal, but my dream home came along and I was debt free. The houses in question don't become available very often, so we took the plunge.

On the whole I think it's a good plan to wait, but I can see that for some people at the right time in their career, financial planning or family planning, then it can be difficult to wait many years on end especially if you are female in your 30s (or 40s) and the clock is ticking.

But on the whole I think the downside for house prices outweighs the upside considerably right now, so if waiting is a possibility then I'd wait.

Batchy

Lets look at some figures:-

Average 160k house (100% mortgage) on a base +1% say currently £500 per month mortgage
0 mortgage application fees
0 mortgage valuation fees
1000 legal fees
30 telegraphic transfer fees
2800 estate agents fees
250 mortgage exit fees (deeds release & sealing charge)
750 removals
150 house insurance admin fees (for cancellation or moving)

To sell it would cost... £4980

Then add the deposit for the house your renting £1000
Lease application fee per person £150

To rent for two years a 160k house would be (roughly) £15000

To buy again it would be:-

Average 144k house (100% mortgage - not possible need at least 10-15% deposit) now on base plus 4% would be around £800 per month mortgage
995 mortgage application fees
270 mortgage valuation fees
1000 legal fees
90 telegraphic transfer fees
1440 Stamp Duty (applicable as you have brought and sold previously)
250 mortgage solicitor fees (deeds release & sealing charge)
750 removals
150 house insurance admin fees (for cancellation or moving again)

Total buying cost £4945

So basically ive knocked 16k capital off my mortgage which only cost £11k, BUT... ive added two years to my mortgage so effectively wasted 15k renting, Ive also had to find at least £15k deposit for the new house if not £21k, and my mortgage payments are significantly more now, for the next 25 years (potentially) due to the fact I lost the excellent tracker rate I was on.

Just how many people do you think will be selling to rent and profit from 10% falls?

Zilch mate... just cant see people making 10% falls worth doing anything about!

Cash Flow wise - you could potentially be 30k out of pocket, with significant increase in mortgage repayments when you get back on board. These are the decisions people are faced with!

To summarise:-

Dont do it!!!

If your Waiting fair enough... but still... waiting for prices to start going up and it will get cut throat. you wont end up with the house you really wanted.

Graham_Devon

Batchy wrote: »

Just how many people do you think will be selling to rent and profit from 10% falls?

Zilch mate... just cant see people making 10% falls worth doing anything about!

We've already covered this. Not everyone has to sell a property. I was talking about those waiting, hence the use of "do nothing".

Wookster

IveSeenTheLight wrote: »

Your right no one can say anything for certain, including your 2-4 years quote

Where do I say prices will go down?

Think you're missing my point here - prices are already high, and there isn't much upwards pressure, and indeed a fair bit of downward pressure.

But that doesn't mean prices will drop. Neither does it mean prices will rise

Now if interest rates were to reset to 5.5%... that'd be a serious matter.

Really2

Wookster wrote: »

Now if interest rates were to reset to 5.5%... that'd be a serious matter.

They are, but the base rate isn't.;)

Wookster

Really2 wrote: »

They are, but the base rate isn't.;)

I did mean the base rate.

That'd translate into significantly higher interest rates than now.

IveSeenTheLight

Wookster wrote: »

Where do I say prices will go down?

Think you're missing my point here - prices are already high, and there isn't much upwards pressure, and indeed a fair bit of downward pressure.

But that doesn't mean prices will drop. Neither does it mean prices will rise

Now if interest rates were to reset to 5.5%... that'd be a serious matter.

Where did I say you said prices would go down?

Think you were missing my point wookster.
You said that anyone who can say with certainty what house prices will do is talking out of their proverbial end and then go on to say from your perspective what you think house prices will do

Wookster wrote: »

anyone who can say with certainty what they will do is talking out of their proverbial rear end.

I do, on the other hand care about what happens over the next 2-4 years and not much upward pressure on prices from where I stand.

IveSeenTheLight

bullau wrote: »

The buying and selling fees have to happen regardless so cant be counted any differently whether they happen simultaneously in the future or are postponed by str.

!00% mortgages are as rare now as they are likely to be. A deposit would have to be found regardless of when you purchase. A 10% deposit of £144k later is cheaper than 10% of £160k now.

STR allows a gap where more saving can be built up and the financial shock of the buying and selling fees can be spread.

If rates rise to 4% in the future then that tracker mortgage will be rising anyway so no difference or saving there either.

If someone is looking to STR now then selling now will save them a £16k haircut. If that £16k equity is used to pay rent then they are still ahead of the game buying another home at £16k less in the future. STR saves £32k, assuming that there is also a house to sell.

Let me first say, STR is gambelling on future price drops.
They stopped this sort of practice in the shares market for a reason.
But what if they don't drop, what if they rise?

Incidently who are you proposing will buy the STR's if the recommendation from some is not to buy as the market is going to drop?

Finally, higher LTV products were removed from the market as prices fell previously.
What makes ou think the 10% dposit mortgages will be still available if property drops to £144k from £160k
10% of £160k (£16k) is less than 20% of £144k (£28.8k)