Making the leap from renting to buying

Pooky

Really would value some input on this.....

My husband and I have been renting for the past 3 years and would desperatly love to buy a house. We've got some debt that we're managing quite well and only have his income at present. I'm going to be working part time, self employed, and we'd really like to know what to do for the best. We've been paying a high rent (is there any other sort) for the past 3 years but most of the mortgage deals we've looked at wont lend us nearly enough to buy anywhere....surely the fact that we've managed all our rent and debts for the past 3 years had got to be a positive thing???

If the mortgage amount was based on the amount of rent we're paying then we'd be able to afford a decent 3 bed house...as it is - the wage we have coming in doesn't even get us a 1 bed flat....wheres the sense!

We've got family that would happily sign a gaurantee to help us out. We've looked into council housing but don't score enough points for anything, housing associations again dont have anything to offer apart from shared owenership which is few and far between. How can we make the leap into buying something reasonable.

Any suggestions would be wonderful.......... Thanks

rchddap1

Don't discount shared ownership. We put our names on the council housing list, even though we knew that we wouldn't get a property. A few years later we were accepted for a local shared ownership 2 bed mid terraced house. There is also another scheme where the housing association lend you 25% of the purchase price of the house. You have to fund the other 75% and find the house. But when / if you decide to sell the house the remaining 25% of the sale price goes to the association. GIve a local association a call, you never know what they might say.

lisyloo

There are a number of warnings about a house price crash around as house prices have become out of line with earnings.
I don't know what is going to happen but I do think there are a lot of risks to buying at the moment.

I would stay put for the time being and put away any spare cash for a deposit and the various expenses involved in buying.

Be aware also that when you buy you need to insure the building plus pay for any repairs and upkeep. The amount you pay for maintenance depends on the age of the property but don't forget to factor this in.

bluesnice

pooky, we are in a similar position.

We've been renting for 3 years too at £995 per month! My husband earns £38,000 with a decent bonus and I earn £15k. We get to save a fair bit every month and our accounts are in order and our credit sore good. We have a 15 to 20 grand deposit ready. But when I use the mortgage calculators found on line it says we can borrow just enough for a ***** flat above a kebab shop! No thanks!!

Anyway we are going to downsize to a smaller cheaper rental property and keep building up our deposit. We'll reassess the buying situation in a year or so. Like lisyloo said, i think its a bit risky to be buying at the mo.

dragonfly02

@bluesnice it seems to me that you have a huge advantage over many other buyers, you have a hefty deposit in place and your earnings are pretty high, as you said though the mortgage calculators and house prices are petty at the moment.

Have you considered a self cert mortgage? ok you will have to pay a larger deposit than on a normal house but it appears to me that if you have 15-20 grant deposit in place you are in a good position

It might be worth looking into

dougk_2

bluesnice,
I don't know where you want to live, how much houses are where you are looking and what calculators you are using, but just on what you have said with a normal lender you should be able to borrow about £140k on your husbands salary alone.
There are other lenders (IF, Abbey, Accord and Standard life for example) that would lend you more especially taking into account your income as well. With your £20k deposit you are therefore looking at properties around £160k+.... is there nothing in the area for that?
I live in reading area and you can get 3 bedroom terrace houses for that sort of price (ok probably not the sort of thing i would want, but better than a flat above a shop!).
A mortgage for £150k over 25 years can be arranaged for less than the £995 a month rent.... so personally I don't think its that risky buying a house as the £995 you are just giving to someoneelse for no gain at all.

jma_4

I'd like to be able to make the jump too but don't have a lot of money floating around. There is only my income too as the wife doesn't work, having three kids (where'd they come from?! ). We currently rent at £650 but looking around at the kind of house we want (three bedroom), the monthly expenditure would increase and there isn't a lot spare as it is. I'm still paying off a graduate loan too which, with the money I have saved (about £5k), I was going to pay that off rather than use the money as a deposit and then begin saving again (with the extra I would be paying going into my savings now, rather than loan repayments...)

I get tons of pressure from the other half though 'cos I feel stuck and don't feel as though I can do a lot about it. She wants space, to be out of the house we're living in now and I don't know where to start. Damn! Sorry, that became a bit of a rant rather than asking anything specific. My bad!

The reason I posted was that I was wondering if property auctions were worth considering? I don't know how they work, does one have to fork out money up front before arranging a mortgage? There is potential for a bargain, if maybe not liveable straight away?

bluesnice

thanks dragonfly and dougk,

I didn't realise we could get such a high mortgage. Non of the calculator I use come up with this figure. Surely if we did we'd be stretching ourselves a bit? If the interest rate went up we could be in trouble.

We live near SW london and the prices are high. I've had a look and for 160K we'll not get much!

No, we are going to wait and maybe buy further westward. Do you think we are mad?

FJSRiDER

bluesnice wrote:

Surely if we did we'd be stretching ourselves a bit? If the interest rate went up we could be in trouble.

So go for a fixed rate term? Where the repayments are fixed - no matter what happens to the interest rate.

pickle

I'm in the same situation. I did own a house but then moved when the prices were escalating (had to move due to circumstances). I'm now renting and i'm going to wait until prices go down. It's just too risky to buy into this market. Whatever you do don't buy a house for a long while. Prices will crash and you'll be very very sorry you ever purchased. Check the land registry site for details on prices for your area and see (when the June/july stats come out) how the Jan - Mar 2005 quarter did. You will probably see that the prices fell and they are expected to do so in the future. Read the economist or other independent economic journals, don't listen to newspaper articles which are written by the banks, estate agents etc. Of course they want you to buy - they want your money. You may be able to get something much better for your money a bit down the track after the market has fallen and stabilized.

pickle

Watch BBC2 tonight 7pm - might be worth watching. On the potential for a house price crash.