First time buyer 10% LTV... whats the worst that could happen?

Sandwich84

I am a first time buyer with a 10% deposit who has found the right house and had an offer accepted at a slight discount from the asking price. I have had a survey done and I'm satisfied with the results. I don't want the property to be an investment or a buy to let or anything else other than a place of my own to live. My question is what's the worst that could happen...? Do I really stand to lose all of my hard earned deposit if the house markets crash 10%? (I could quote various sources but before you say it, I know its all prediction work) and if I did where would that leave me in 2 years when my mortgage product runs out and I'm left riding a standard nationwide tracker mortgage? Will all my friends who decided to sit on their cash and rent have cause to say "I told you so" as my living costs go through the roof?

josievg

Depends how long you are planning to live in your house before moving on. If you are in it for the long haul then you should be ok.

In the short term, yes, if you wanted to sell up in a year or two you could lose your deposit if house prices drop. No-one knows what will happen.

Personally, depending on your circumstances, I think it's worth the risk. I'm in a similar situation and planning to live in my (well, nearly 'my') house for five years.

Henry_P_Chester

'What's the worst that could happen?'

Well prices could easily fall more than 10% wiping out your deposit and leaving you in negative equity unable to move, some economists are predicting falls of 30% over the next two years. In fact according to the Rightmove house price index prices in London have fallen by 7.1% in the last 3 months alone!
By the sounds of it you have a 2 year fixed deal. In two years interest rates will almost certainly be higher than today. Possible back to normal levels of 5 or 6%. Can you afford this? After the last recession in the early 90s interest rates hit 15%! You could find yourself unable to pay the mortgage and getting repossessed with a sale price substantially lower than your loan amount you will be left owing the bank the shortfall.

snowlady07

On the other hand, a couple of years from now house prices may start soaring again as they were pre-credit crunch. Then in 5 years you'll sell at a profit and get a bigger, nicer house whilst your friends are firmly stuck in renting or on the first step of the ladder.....

Nobody has a crystal ball, go with your gut feeling!

dimbo61

So many things to take into account !!
Location !!!!!! is very important
Modern or old, condition and price
Can you afford to overpay big style each month ( does your lender/mortgage deals allow for overpayments)
Can you rent out a room ( do you want to rent out a room)
Are you a spender or a saver?
A mortgage is only the start of living on your own
Council tax 75%, Gas/elec, water rates , homephone/broadband, repairs/upkeep of property, new furniture and all on one income.

Henry_P_Chester

snowlady07 wrote: »

On the other hand, a couple of years from now house prices may start soaring again as they were pre-credit crunch. Then in 5 years you'll sell at a profit and get a bigger, nicer house whilst your friends are firmly stuck in renting or on the first step of the ladder.....

Nobody has a crystal ball, go with your gut feeling!

That doesnt make any sense. If prices soar then you may sell at a profit but the house you want to buy will have soared too by a larger nominal amount and it will actually cost you more for the move meaning you can only afford a smaller step up the 'ladder'

If prices drop as long as you are not in negative equity it makes upsizing cheaper and enabling you to take a larger step up 'the ladder' so THEN you can get a bigger nicer house.