First time buyer going literally insane

Croker

Leon_W wrote: »

I come back to one point Croker.

You state that if the value of the Shared equity property had risen dramatically that what you had saved in the interim wouldn't pay off the 15%. My answer to that would be so what ! You would still be in a better position than you are now having built up equity yourself ! Face it. You have nothing at the moment so something is better than nothing.

Look. There is only one option for you at this point in time, unless you win the lottery, and that is Shared Equity. Either shared with a developer or shared with your parents, it's all the same.

Yes, apologies LeonW, I mistakenly attributed your earlier post to CloudCuckooLand - so apologies to them too!

I understand that you say "so what?" about the shared equity, but had the value risen in excess of what I had saved, then I need to make up that shortfall somehow. How would that be achieved? Either remortgaging or selling. If I'm happy there, I'm unlikely to want to sell, but how are lenders going to view any request to remortgage?

The other issue I have about shared equity is something mentioned by the financial advisor I saw - in a nutshell, it was "why are developers willing to enter into a structured agreement unless they are having particular issues in selling the property?" which has stuck in my mind - and obviously has potential ramifications for me down the line.

Burridge60 wrote:

Beware.

You will be asked to provide a letter from your parents for most lenders which states that the "Gift" (loan in your case) is exactly that a gift. That they do not expect repayment either in regular payments or a lump sum. In some cases they must state if they will be securing their "gift" by way of a charge on your property. At this point many lenders will have exited stage left.

If this is to be a loan it will be built into their affordability calculations as an expense from your net income before you meet your living costs and the rest is what is left to pay your mortgage.

Bank of M and D is fast becoming the Lender of last resort for lost of young people without a deposit who want to get on the housing ladder the slippery thing that it is!

To be fair to other posters if you had got a loan and a mortgage from a lender instead of going to mum and dad they would still be telling you not to do it.

Would your stance be to recommend against the folks facilitating a loan to me through equity release, Burridge - broadly speaking, I mean?

Annisele

Croker wrote: »

So, discounting any such schemes, I'm left with trying to find £15,000 - £25,000. This is what's driving me completely insane. At a bare minimum, it's going to take me about 3 years to save that kind of money. Having never moved away at all to go to university, or suchlike, I simply cannot bear another 3 years at home.

Not what you want to hear, but I'd say the answer is renting. Studio flat, room in a shared house, whatever.

Plenty of people will tell you that renting is just money down the drain, but it does pay for a roof over your head. The most financially savvy thing to do is probably stay with your parents for another three years while you save for a deposit - but if that will drive you insane (and it would me!) renting seems by fair the best solution.

All the equity release schemes you are talking about put your parents home at risk in order for you to get your 'foot on the housing ladder'. But, to use another cliche - 'prices can go down as well as up'. The housing ladder isn't always all it's cracked up to be.

My own opinion is that prices aren't likely to go up all that much in three years - others have different views - but you need to make the right decision for yourself now. Don't discount renting out of hand!

Croker

ViolaLass wrote: »

Without going into details, have you identified /why/ you built up so much debt even with a good salary (even before the £33k) and living at home? That knowledge will be beneficial to you.

Yes, I have. This is a fair question, but it's one I've considered at lenght. When I left university in 2001, I'd amassed quite a few debts (credit cards, overdraft, student loans) and then compounded the problems by being irresponsible with my money when I first graduated (and was working on a salary of about £12,000pa). I never missed payments, or defaulted on anything, I just took on too much debt, and thus left myself no room to manouevre or save money.

In the last few years, my salary has increased dramatically, and that - coupled with the hard lessons learned previously - has allowed me to work like mad at paying off debts. I'm succeeding, and I've come a very long way, but it hasn't been easy. I'm not looking to be showered in praise for this - I've been doing what I should have been doing from the start - but I just want to get on with my life now, and I'm working hard to achieve this.

Believe me, the knowledge of how badly I've managed my finances in the past is burned indelibly into my brain! These aren't mistakes I'm going to make again, particularly not when I'm a homeowner and thus have even more to lose by screwing up.

Doshwaster

Croker wrote: »

The main problem is, of course, that I haven't built up even a slight deposit - and in fact can't do so until I've at least paid off my other loans, as I think it will be too tight month-to-month to keep paying the loans as well as a mortgage.

You are in a position that many find themselves these day (and I did too 5 years ago), early 30s, single. decent job and salary but no deposit.

Apart from marrying someone rich or getting a big unexpected inheritance there really isn't an easy way around it. That's the reason the average age of first time buyers is now closer to 40 than 30. I just bought my first place last year at the age of 38 - and that was after 6 years of very hard saving.

I would agree that shared equity schemes a waste of time - and it's unlikely that someone single and earning over £30k would be accepted anyway.

jayphe

My account might get binned for this, but you can tell he's a civil servant. :rotfl:

Croker

Annisele wrote: »

Not what you want to hear, but I'd say the answer is renting. Studio flat, room in a shared house, whatever.

Plenty of people will tell you that renting is just money down the drain, but it does pay for a roof over your head. The most financially savvy thing to do is probably stay with your parents for another three years while you save for a deposit - but if that will drive you insane (and it would me!) renting seems by fair the best solution.

All the equity release schemes you are talking about put your parents home at risk in order for you to get your 'foot on the housing ladder'. But, to use another cliche - 'prices can go down as well as up'. The housing ladder isn't always all it's cracked up to be.

My own opinion is that prices aren't likely to go up all that much in three years - others have different views - but you need to make the right decision for yourself now. Don't discount renting out of hand!

I have to say, I'm coming around to that way of thinking. I just want to make sure that I have enough left over each month after rent to still keep on saving for a deposit. I could bear saving for a deposit for 4-5 years, rather than 3, if they were years spent in a place of my own, even if it were rented. That should be achievable if I spend the next few months clearing my remaining debts (student loans aside).

You're right, though - the most financially savvy thing would be to stick it out here at home. Renting does seem a good compromise, though.

Leon_W

Croker

Yes, developers are having trouble selling properties and they are coming up with inventive ideas to sell them. I really don't have a problem with that as long as the houses themselves are priced sensibly.

I did a shared equity case last month that was perfectly reasonable. 80/20 split. The house was a new build but compared to other older houses in the area it was pretty good value, not overpriced and on a par with them. The thing is, if house prices go down they go down, it makes no odds whether you own the house outright or just a share, everyone loses but only on paper. If you own a share you lose proportionately less than owning outright.

If house prices go up then you start to build equity, not all the profit obviously but thats the rub. Is that situation better than the one you are in now or not ?

Everyone has to live somewhere and your choices are limited with no deposit. Rent, Stay with mum and dad, Shared equity.

Shared Equity gets a bit of a hammering on these boards but I see real advantages as long as you are buying sensibly and not some overpriced !!!!!y flat in a !!!!!y development that looks like a ghetto.

Croker

Doshwaster wrote: »

You are in a position that many find themselves these day (and I did too 5 years ago), early 30s, single. decent job and salary but no deposit.

Apart from marrying someone rich or getting a big unexpected inheritance there really isn't an easy way around it. That's the reason the average age of first time buyers is now closer to 40 than 30. I just bought my first place last year at the age of 38 - and that was after 6 years of very hard saving.

I would agree that shared equity schemes a waste of time - and it's unlikely that someone single and earning over £30k would be accepted anyway.

Really? That's never come up in my discussions at the various developers I've visited - and that includes speaking to the mortgage advisors, not just the salespeople.

What would you think of the route of saving whilst I was renting, then, Doshwaster? Is that something you did?

jayphe wrote:

My account might get binned for this, but you can tell he's a civil servant. :rotfl:

Hey, I can take jokes about civil servants - it beats the bile that the likes of the Daily Mail spew at us - but your joke doesn't actually make sense, does it? I mean, if I couldn't afford a house due to being lazy, that would tie in with the stereotypical view of civil servants, and would make sense as a joke. I'm not sure what the punchline here is actually meant to be!

Croker

Leon_W wrote: »

Croker

Yes, developers are having trouble selling properties and they are coming up with inventive ideas to sell them. I really don't have a problem with that as long as the houses themselves are priced sensibly.

I did a shared equity case last month that was perfectly reasonable. 80/20 split. The house was a new build but compared to other older houses in the area it was pretty good value, not overpriced and on a par with them. The thing is, if house prices go down they go down, it makes no odds whether you own the house outright or just a share, everyone loses but only on paper. If you own a share you lose proportionately less than owning outright.

If house prices go up then you start to build equity, not all the profit obviously but thats the rub. Is that situation better than the one you are in now or not ?

Everyone has to live somewhere and your choices are limited with no deposit. Rent, Stay with mum and dad, Shared equity.

Shared Equity gets a bit of a hammering on these boards but I see real advantages as long as you are buying sensibly and not some overpriced !!!!!y flat in a !!!!!y development that looks like a ghetto.

Leon, I take what you're saying but I have no indication of how lenders would deal with me if the value were to go up and I needed to remortgage to cover it. Are they likely to be receptive to a request to remortgage in those circumstances?

As for the properties on offer round my way that are part of shared equity schemes? Well, let's just say I've viewed a lot of flats recently.

Leon_W

Take this from one who knows.

99% of people say they can save when they are renting and 99% of them are wrong.