Is this the right time to get on the property ladder?

GDB2222

Dougy, a 1% rise this year is almost bound to happen. It's what happens after that that is worrying. If you are going to fix then 2 years is neither here nor there. If rates go up that's likely to be for a while.

Burridge60

This is a home you are buying and there will be a value you will place on it rather than just compare the economics of buying or renting.

But you can make a rented property a home but only have tenure of that home for the period of your tenancy agreement.

If it is bare economics then you can do the calcs with assumptions (your own best of all) about interest rates, rental costs, buying and selling costs, capital required to achieve either method, what if values drop, what if they rise, how often you might need to move the list could be endless.

Security of your income will be of paramount importance as a repossession has a potentially lot more social stigma and financial impact than being evicted for non payment of rent.

dizziblonde

We took the jump last year - house prices in our street have dropped about £20k in the last couple of years meaning one fell nice and neatly into the amount we could borrow. Yes, they could drop further - but the value of your house is fantasy money until you come to sell, if we end up in negative equity we've bought somewhere we're not realistically going to expand out of in the next decade since the kids thing isn't happening for us so we bought somewhere we wanted to live in, fixed the rate for 5 years (we'd rather pay out a little bit more over that time for the longer fixed rate just so we know exactly where we stand each month) and worked some room in if rates went up to their high levels again after that and it got our foot in the door so to speak. Still waiting to see what the other house sold at a similar time to ours sold for as a matter of interest to see where things are headed on this street - but that's idle curiosity more than anything else. Also in our case I'm pretty confident prices will rise in a couple of years as we'll be right near a new tram extension which will drastically improve transport links and that, plus being in a heck of a good secondary school catchment are about as decent a bet as I think you can get without a crystal ball. But basically we bought the house to live in - not to print money from.

They'll analyze this for hours over in the next door forum -come to no conclusion whatsoever and no one has a crystal ball.

I'm incredibly glad to be out of renting though - no fighting to get repairs done, no letting agencies to deal with and NO MORE MAGNOLIA WALLS!!!!

Burridge60

If you NEED a fixed rate then a 2 year one puts you back into the variable rate market in two years time.

Pay £1000 for that two year fixed rate and you slip back against the repayments of the capital you have made in that two year period.

If you need a Fixed Rate now you are likely to need one again in two years time, then four years and then six years etc. All with a £1000 fee?

Kerching! I hear Bank tills all over the land.

If you know however that your income will increase in that time due to qualifying after pupillage then thats different but you are then likely to want a property that befits your new income.

Please also note the threads from MSE site posters that took a long fixed rate with their bank and they cant now borrow what they already owe to move house. The deal might be portable but the affordability of your original mortgage cant be.

dougy432

It would be nice to get out of renting and all the uncertainty that goes with it, and have somewhere we can call our own.

We are both in reasonably good jobs with 2 different fairly large utility companies, that have been through restructure, so we are as confidant as we can be with job security.

Unfortunately, because of our situation, we only seem to have a couple of mortgage options at the moment. It would be nice to fix the rate at a "reasonable" level for a 5yr period, but as we are only putting 10% down, we don't fall into that bracket and the best we can get is the 2yr, which will end at probably be the worst time of the upheaval. If we chance the tracker, even if the int rate goes up 1% we will still be on less than the fixed. It just that will the interest rate stop increasing there, or go spiralling like the late 80s 90s, when it was 13-15%!

Thanks for everyones advice so far

Dougy

LandyAndy

dougy432 wrote: »

We seem to be leaning towards still buying. We are after a home not a money making commodity. We plan to stay put for at least 5 to 6 hrs as this when my son will no longer be a dependent as such.
As we are a fair way into the purchase, the rented house we are in is no longer available, so we will still have to move no matter what, and incure more costs.

:rotfl:Yrs, perhaps?:)

We bought a house in October 1989 and it was at least 6 years before it got back to that purchase value. By the time we sold in 2006 it was worth substantially more. Property is a very long game.

neas

Wife and I bought 7-8 months ago... at that time things werent looking rosy.

IN fact things arent going to 'look rosy' for at least 4-5 years. I wasn't prepared to wait 5 years to buy my house.

We had a nice largish deposit (33% start off equity), interest rates were stupdidly low (4% fixed for 5 years) and the rent we were paying was £450 compared to £330 interest we pay on that same loan for a bigger house.

Basically its what your gut tells you... wife and I had waited 3 years to save up from 10% deposit to 33% deposit... but those years saving had been long enough.. and i wasnt willing to wait forever.

Simply when you get your proper overpay by as much as you can during the fixed term.. if you do encounter dropping prices your overpayment should mean you wont be caught with negative equity... do this and you will have your own home, worst case you'd 'lose' some money on paper but if you stay 10 years there say prices will be roughly similar.



Basically nobody has a crystal ball i wouldnt bet on house prices rising... i'd bet that house prices fall when inflation is taken into account BUT i believe interest rates will be higher so you cant 'fix' at a lower amount meaning you still pay the same interest rates and waited longer for not much benefit... while paying someone elses mortgage off. But that was my feelings.

Now a property owner my aim is to overpay the mortgage as much as possible... per my plan above

GDB2222

dizziblonde wrote: »

I'm incredibly glad to be out of renting though - no fighting to get repairs done, no letting agencies to deal with and NO MORE MAGNOLIA WALLS!!!!

If it's any help to you, as a landlord I'm sick of magnolia too.

mystic_trev

dougy432 wrote: »

We plan to stay put for at least 5 to 6 hrs

If that's the case I think it's a Hotel you want, not a house! :rotfl:

timmyt

dougy432 wrote: »

Hello All,

My wife and I are in the process of buying our first house together. We are in our early 40's and have both for various reasons, had the rough end of the property experience.

Looking at reports, aswell as a rise in the interest rates, the forecast for house prices suggests a fall of 20%!

On paper it now looks like we should pull out of the purchase and continue to rent for a couple of years.

Can we borrow a crystal ball please?

Regards

Dougy

it most certainly is, tens of thousands are in the know even now.

the media have really hurt the market but properties are most certianly selling, and at great prices.