lenders warn low-deposit mortgages are over

Jimmy_31

Cleaver wrote: »

Location..

I get a location with the cheaper houses.

Cleaver

Jimmy_31 wrote: »

I get a location with the cheaper houses.

Well any location is a location. What I'm saying is that house prices, by and large, are derived purely from location. If it costs £50,000 for the materials then the rest of the cost is made up of buying the land, which is purely location. I.e. the materials to build a 3-bed house in London will be the same as one in Newcastle, but one might sell for £1.5m whereas the other goes for £150,000. Same house but location will determine the value - more people want to live in London than Newcastle.

If your happy with the other location then that's great. If the same house is double the price in another location nearby then it suggests that that is a nicer area, as many more people want to live there which means the price is higher. But if you're happy with that area then that's all that matters.

I'm not having a go by the way, as unless you're a millionaire you have to make decisions about location. We had a decision to make about whether to buy a small 2-bed terrace or flat in one of the areas of Manchester we really, really liked or buy a 3-bed semi in an area we weren't as keen on buy still liked. After considering and looking at both we went for the latter, so we have a house we love in an area we like, rather than a house we like in an area we love.

You can buy a house very similar to our house in an area just two or so miles from here for about 40% less than we paid for ours, but we weren't willing to do that as we wouldn't want to live in that area. Other people do though - it's all down to personal taste. I'm sure there are some people living in our first choice areas in Manchester in small terraces as they weren't willing to compromise on location, whereas we were. You're willing to compromise on location too, like we were when we bought our house.

Jimmy_31

Cleaver wrote: »

Well any location is a location. What I'm saying is that house prices, by and large, are derived purely from location. If it costs £50,000 for the materials then the rest of the cost is made up of buying the land, which is purely location. I.e. the materials to build a 3-bed house in London will be the same as one in Newcastle, but one might sell for £1.5m whereas the other goes for £150,000. Same house but location will determine the value - more people want to live in London than Newcastle.

If your happy with the other location then that's great. If the same house is double the price in another location nearby then it suggests that that is a nicer area, as many more people want to live there which means the price is higher. But if you're happy with that area then that's all that matters.

I'm not having a go by the way, as unless you're a millionaire you have to make decisions about location. We had a decision to make about whether to buy a small 2-bed terrace or flat in one of the areas of Manchester we really, really liked or buy a 3-bed semi in an area we weren't as keen on buy still liked. After considering and looking at both we went for the latter, so we have a house we love in an area we like, rather than a house we like in an area we love.

You can buy a house very similar to our house in an area just two or so miles from here for about 40% less than we paid for ours, but we weren't willing to do that as we wouldn't want to live in that area. Other people do though - it's all down to personal taste. I'm sure there are some people living in our first choice areas in Manchester in small terraces as they weren't willing to compromise on location, whereas we were. You're willing to compromise on location too, like we were when we bought our house.

Im perfectly happy with the location i want to move to.

Spending another 50k could get me (a better location) in some peoples eyes but i wouldnt be willing to pay another 50k as i wouldnt get anything extra for that 50k as i can see.

crash123

Cleaver wrote: »

Well any location is a location. What I'm saying is that house prices, by and large, are derived purely from location. If it costs £50,000 for the materials then the rest of the cost is made up of buying the land, which is purely location. I.e. the materials to build a 3-bed house in London will be the same as one in Newcastle, but one might sell for £1.5m whereas the other goes for £150,000. Same house but location will determine the value - more people want to live in London than Newcastle.

If your happy with the other location then that's great. If the same house is double the price in another location nearby then it suggests that that is a nicer area, as many more people want to live there which means the price is higher. But if you're happy with that area then that's all that matters.

I'm not having a go by the way, as unless you're a millionaire you have to make decisions about location. We had a decision to make about whether to buy a small 2-bed terrace or flat in one of the areas of Manchester we really, really liked or buy a 3-bed semi in an area we weren't as keen on buy still liked. After considering and looking at both we went for the latter, so we have a house we love in an area we like, rather than a house we like in an area we love.

You can buy a house very similar to our house in an area just two or so miles from here for about 40% less than we paid for ours, but we weren't willing to do that as we wouldn't want to live in that area. Other people do though - it's all down to personal taste. I'm sure there are some people living in our first choice areas in Manchester in small terraces as they weren't willing to compromise on location, whereas we were. You're willing to compromise on location too, like we were when we bought our house.

He is not buying a new build but I would think workmen in the south would be on more than in the north.

Cleaver

Jimmy_31 wrote: »

Spending another 50k could get me (a better location) in some peoples eyes but i wouldnt be willing to pay another 50k as i wouldnt get anything extra for that 50k as i can see.

Exactly, which is the point I'm trying to make. Other people are willing to pay an extra £50k for that area, hence why houses cost an extra £50k in that area.

Cleaver

crash123 wrote: »

He is not buying a new build but I would think workmen in the south would be on more than in the north.

That's a very pedantic point and I think you know what I mean. The materials to build a house are pretty much the same in London as anywhere else, although I agree that maybe southern workers charge more. But we're talking marginals aren't we? The point remains that a 3-bed house in Richmond will be £800k plus whereas exactly the same house in Burnley will be £150k. There's no difference in the house, it's purely location and supply and demand. Doesn't matter if it's new build or old.

Batchy

illgetthere wrote: »

It would be interesting to find a statistic that showed how many people who bought a high ltv product (95%-100&+) have actually defaulted.

My first mortgage was a NR together product at 103% LTV. I haven't defaulted and don't think that i even considered the LTV. All i made sure of was the ability for me to pay, and the fact that i didn't want to rent and throw money to someone else.

It was a great product and a great opportunity to 'start to' own my home. I was 18 at the time and it seemed to be the sensible option when i wanted to move out.

Would it really be an issue if 100% mortgages were reintroduced? Were these products the main catalyst for problems in the housing market?

The problems were not High LTV it was liar loans... instead of banks introducing new criteria, to sharpen things up, they just said if you want to own us a house, show us how much you mean it, and how much your willing to lose!

Saves on the paperwork.

It was fraud accross the board that caused the problems not inheritently high LTV's

Batchy

If you buy a house in a better area, your buying into a lifestyle.

A kids lifestyle of not hanging around on street corners waiting for the next car chase.

Schools should be better.
Local amenities better.
Neighbours could be better.
Parks safer
Less Trouble, lower crime rates

When your done, so long as the area keeps up its standards, it should still be worth a premium over other area's.

CKhalvashi

Batchy wrote: »

If you buy a house in a better area, your buying into a lifestyle.

A kids lifestyle of not hanging around on street corners waiting for the next car chase.

Schools should be better.
Local amenities better.
Neighbours could be better.
Parks safer
Less Trouble, lower crime rates

When your done, so long as the area keeps up its standards, it should still be worth a premium over other area's.

Whilst I make no secret of the fact I grew up on an ex-council estate in North London, I happen to live in what’s commonly known as the most prestigious road in the town I am in, and couldn’t agree more.

We’re right behind a school, yet there are little problems due to the nature of the location and the side of the town we’re on. I’m downsizing at the moment, and have just bought a house opposite where we are now. My lifestyle choice dictates that whilst I cannot afford the house I am in at this precise moment, it’s a case of being able to look into the future of what the property will be worth. 5 years ago, this area was no better than the ex-council on the other side of the school, now there are huge premiums, in part due to the fact that one of the most prestigious girls schools in the country is there.

We’ll see how it goes, but at the moment, it couldn’t be better!

IveSeenTheLight

ILW wrote: »

What wil happen when a point comes when renting is cheaper than buying, I seem to remember that that was generally the norm in the past.

Why should renting be cheaper than buying?

Certainly rent should always be more expensive than mortgage interest.

To rent, your paying a premium for securing on a short term deal.