A warning to first time buyers

HAMISH_MCTAVISH

shortchanged wrote: »

Crippled because it's overpriced aided by numerous props.

Crippled because of mortgage rationing thanks to a dysfunctional lending market.

shortchanged wrote: »

But how can you guarantee permanently lower interest rates?.

Take a 25 year fix.

Currently available in the UK at 5.29%.

Which means you could take out a 5.5 times salary mortgage and be paying significantly less as a percentage of your income than someone on a 3.5 times salary mortgage paid on average during the 1960's to 1990's, when the notion of 3.5 times income was widely accepted as a rule of thumb.

wotsthat

Percy1983 wrote: »

Personally I would say leave plenty of wriggle room.

It would take interest rates of 14% to cause me trouble and tighten the budget as an example.

Do you think this is in response to your parents financial mistakes or do you really think that potential buyers should be factoring in rates of 14% before buying?

Being ultra cautious can be expensive in the long run.

HAMISH_MCTAVISH

wotsthat wrote: »

Being ultra cautious can be expensive in the long run.

Yep.

Biggest mistake I ever made was not loading up on more debt in 2007/8.

Talk about missing a golden opportunity....

Percy1983

wotsthat wrote: »

Do you think this is in response to your parents financial mistakes or do you really think that potential buyers should be factoring in rates of 14% before buying?

Being ultra cautious can be expensive in the long run.

I will say its wasn't so much we factored in a 14% interest rate, I have done that calculation in hindsight.

I wouldn't say FTBs don't need to factor in massive rate rises but more so they shouldn't max themselves out.

In our case the bank gave us an AIP of £165k and we bought for £93k.

I guess not trying to keep up with the Jones's helps.

HAMISH_MCTAVISH

Percy1983 wrote: »

I wouldn't say FTBs should factor in massive rate rises but more so they shouldn't max themselves out.
.

The evidence shows they didn't, on average, even before the crash.

Remember, UK mortgage lending was on the whole responsible, prudent, and sensible.

Even the worst of the worst of it, like the relatively few NR 125% deals, have in the fullness of time shown acceptably low default rates.

wotsthat

Percy1983 wrote: »

In our case the bank gave us an AIP of £165k and we bought for £93k.

I guess not trying to keep up with the Jones's helps.

If you're happy with your choice then the Jones' don't come into it.

In 5 years time you'll wonder what all the fuss was about. Your career will be in a different place, you'll wonder if where you bought is suitable for the couple of kids will likely appear and you'll worry (rightly) whether the local school is anywhere good enough.

You'll wish you pushed the boat out a little bit more because you'll be under pressure to buy the house you could've afforded 5 years previous. Guaranteed.

Graham_Devon

HAMISH_MCTAVISH wrote: »

The evidence shows they didn't, on average, even before the crash.

Remember, UK mortgage lending was on the whole responsible, prudent, and sensible.

Even the worst of the worst of it, like the relatively few NR 125% deals, have in the fullness of time shown acceptably low default rates.

And yet again, not even the slightest bit of acknowledgement of all the support given to the mortgage market.

Round round baby, round round....

Percy1983

wotsthat wrote: »

If you're happy with your choice then the Jones' don't come into it.

In 5 years time you'll wonder what all the fuss was about. Your career will be in a different place, you'll wonder if where you bought is suitable for the couple of kids will likely appear and you'll worry (rightly) whether the local school is anywhere good enough.

You'll wish you pushed the boat out a little bit more because you'll be under pressure to buy the house you could've afforded 5 years previous. Guaranteed.

Nope in 5 years time I will have the power to overpay my mortgage nicely and be sitting happily in my 'little' bargain of a house, hopefully will have 2 mini Percy's who will fit nicely into the other 2 bedrooms, I will be happy I have a massive garden with many plants (been planting a few recently) and wildlife (hedgehogs/foxs/bees/birds) for the kids to learn about. Hopefully the local schools will stay as good as they are now and we will be sorted there.

As many of our friends and family have spotted, we have bought a house for life, I am not saying we will stay here for life, but its perfectly possible.

wotsthat

Percy1983 wrote: »

Nope in 5 years time I will have the power to overpay my mortgage nicely and be sitting happily in my 'little' bargain of a house, hopefully will have 2 mini Percy's who will fit nicely into the other 2 bedrooms, I will be happy I have a massive garden with many plants (been planting a few recently) and wildlife (hedgehogs/foxs/bees/birds) for the kids to learn about. Hopefully the local schools will stay as good as they are now and we will be sorted there.

Horses for courses I suppose. The schools don't look that great to me - just a few £k (that you could have easily afforded) would have put you in a better catchment.

'round my way £10k - £20k makes the difference between a secondary school where 5 decent GCSE's would be considered a stand-out achievement and a school where it's the norm.

Percy1983

wotsthat wrote: »

Horses for courses I suppose. The schools don't look that great to me - just a few £k (that you could have easily afforded) would have put you in a better catchment.

'round my way £10k - £20k makes the difference between a secondary school where 5 decent GCSE's would be considered a stand-out achievement and a school where it's the norm.

Interesting but how do you know exactly where I live to know which schools I would end up with, Secondary schools are hard to judge right now as there has been many mergers etc, with that we can work on a wider catchment there. Primary schools have good ofsted reports, I currently work with one of them already.