Anyone saving to buy a house for cash?

marathonic

By the way, in the interest of full disclosure, I'm also keeping an eye on properties in the Culmore Rd area.

My thoughts are that, whilst it's cheaper to own than to rent my current house, overpaying the mortgage will build up equity quicker than I could build up savings by renting. If property prices continue to fall, the price difference between my house and those in the Culmore Rd area should reduce, meaning that I'll have less of a shortfall to make up. If prices start rising, the difference will start to increase but the cost of this to me would be less than the cost had I not owned my current property.

My current property was valued by the bank at £10,000 more than what I paid last December which is an added bonus.

saverbuyer

marathonic wrote: »

I agree with this. Houses in Culmore Road and Limavady road tend to rent for about 50% more than what my house would rent for whilst the houses sell for almost double.

Likewise, houses costing about 50-60% the cost of mine rent for about two thirds the money. The cheaper the house, the more cost-effective it becomes to own as opposed to rent.

If these areas are your only options, renting does indeed work out cheaper for the moment. It then becomes a lifestyle choice. Except for the top 5-10% of earners, saving to buy a house in these areas is likely to take the best part of a decade. If someone is happy to do this, then so be it.

In the long term, I suspect that ownership becomes the cheaper option in all cases but, given the current market conditions, one couldn't be blamed for sitting on the sidelines waiting for a confirmation on a turn in prices.

You could give me some pension advice. 2 times annual salary already is very well done. Have you been working since your early 20s?

saverbuyer

marathonic wrote: »

By the way, in the interest of full disclosure, I'm also keeping an eye on properties in the Culmore Rd area.

My thoughts are that, whilst it's cheaper to own than to rent my current house, overpaying the mortgage will build up equity quicker than I could build up savings by renting. If property prices continue to fall, the price difference between my house and those in the Culmore Rd area should reduce, meaning that I'll have less of a shortfall to make up. If prices start rising, the difference will start to increase but the cost of this to me would be less than the cost had I not owned my current property.

My current property was valued by the bank at £10,000 more than what I paid last December which is an added bonus.

I prefer the Limavady Road myself.

I've been told that good houses here have been just about meeting their asking prices.

marathonic

saverbuyer wrote: »

I have a friend who rented a 5 bedder off the the Culmore road for £650 a month (did need a bit of work). House would have cost £300,000.

In fact I don't think I've ever seen a house, in the city with a rent higher than £750.

Rents are unlikely to rise in the current environment. I think close to 40% of Derry households claim housing benefit.

Belfast isn't the same market. I think in the majority of cases you save several hundred a month (at least) renting.

An area I've been watching that highlights your point more would be Templegrove. I've seen two houses come on the market for sale this past 11 months that were asking £250,000.

The house below came on the market for rent last month at £800 per month and was let last week:

http://www.propertypal.com/31-templegrove-londonderry/160979

You'll see two similar houses for sale here (one sold early this year but was also asking £250,000)

http://www.propertypal.com/search?sta=forSale&sta=saleAgreed&sta=sold&q=templegrove&pt=residential&sty=detached

marathonic

saverbuyer wrote: »

You could give me some pension advice. 2 times annual salary already is very well done. Have you been working since your early 20s?

I've been in my current role 8 years. I started out the first 2 by contributing the minimum required for receiving my employer contributions (6% total).

In 2008, as markets started to fall, I increased my contributions to 30% total (4% employer, 26% personal). I remained at this level until 2011 when I started focusing more on the house deposit by reducing them back to 6% total..

A lot of those high contributions were when the market was half it's current levels.

My thoughts were to make the contributions high when there were no kids, mortgage, etc. to worry about. I could have bought my house sooner if I'd not gone this route but would have paid more so I was lucky with my timing.

The main thing that got me where I am today is increasing my contributions when things were looking their worst - at a point when MSE was full of threads asking whether they should decrease or stop their contributions - and one particular thread that I remember well where the poster was considering moving their entire fund to cash near the market bottom.

From here on out, I can keep contributions lower because the growth on the current fund should outstrip future contributions on average.

saverbuyer

marathonic wrote: »

An area I've been watching that highlights your point more would be Templegrove. I've seen two houses come on the market for sale this past 11 months that were asking £250,000.

The house below came on the market for rent last month at £800 per month and was let last week:

http://www.propertypal.com/31-templegrove-londonderry/160979

You'll see two similar houses for sale here (one sold early this year but was also asking £250,000)

http://www.propertypal.com/search?sta=forSale&sta=saleAgreed&sta=sold&q=templegrove&pt=residential&sty=detached

Nice houses. Don't really like the area but still nice.

Cheaper renting there.

tara747

marathonic wrote: »

Which, as a cold hard fact as opposed to opinion, is better than never seeing £600 a month again.

That's true. But I don't pay anywhere near £600 a month in rent. I rent directly from a lovely LL who is very handy when it comes to repairs. As he pays no letting agent fees and doesn't have to get tradesmen every time something needs done, he charges me less rent than equivaent houses in the ads you see on PropertyNews. And my rent hasn't risen in 5 years.

The best rental properties in Belfast always change hands via word of mouth, btw.


Yes. I'm in a 4-bedroom detached house that was built in 2007. No such houses in the estate with 4-bedrooms have come up for rent recently making it hard to compare but 3-bed semi's in the estate rent frequently for £550 monthly. The £50 extra is probably a realistic estimate for the extra bedroom and fact that it's detached.

So my £58 figure should really be £62.50.

But you're not saving anything compared with my rent.

I'm on variable at the moment. I could have opted for fixed but I know that my LTV will allow me access to even better rates by next year. There is a risk that rates will rise. In my opinion, the risk of this happening is lower than the risk of the rent paid by most tenants rising over the next few years.

Well, lucky me that my rent hasn't risen - and my LL has said that he is unwilling to raise it because such reliable tenants as me are hard to find.

Yes. For example, Nationwide allow 10% overpayments annually. First Direct actually allow unlimited overpayments.

Fair enough.

My replies in pink.

marathonic

saverbuyer wrote: »

Nice houses. Don't really like the area but still nice.

Cheaper renting there.

Yeah, for now, it’s cheaper to rent that particular house than to buy. Assuming a 4% interest rate, that house would cost £10,000 in interest alone. Add £1600 rates and £400 insurance and you’re already talking £1000 per month, before maintenance.

I imagine that, to the purchasers of these houses, the additional cost inherent in owning a high-end home is acceptable given the removal of the risk of prices rising bringing such a home out of reach again (as it likely was 5+ years ago).

Another factor is that, although you don't see rents rising, the chance of renting that home for £800 per month in 5+ years time is minimal. However, the mortgage rate shouldn't increase much, if any, above 4% over the next 10-15 years. This is a matter of opinion of course.

saverbuyer

marathonic wrote: »

Yeah, for now, it’s cheaper to rent that particular house than to buy. Assuming a 4% interest rate, that house would cost £10,000 in interest alone. Add £1600 rates and £400 insurance and you’re already talking £1000 per month, before maintenance.

I imagine that, to the purchasers of these houses, the additional cost inherent in owning a high-end home is acceptable given the removal of the risk of prices rising bringing such a home out of reach again (as it likely was 5+ years ago).

Another factor is that, although you don't see rents rising, the chance of renting that home for £800 per month in 5+ years time is minimal. However, the mortgage rate shouldn't increase much, if any, above 4% over the next 10-15 years. This is a matter of opinion of course.

I would bet a lot of money that house will rent for exactly the same amount in 5 years’ time.

I doubt Derry rents have risen much in the last 10 years if at all.
Realistically the most they could hope to rise is by wage inflation rather than cpi/rpi. You would be betting on the city growing and perhaps it will, but mostly from a social housing point of view. The opportunities aren't there for real growth.

tara747

marathonic wrote: »

Yeah, for now, it’s cheaper to rent that particular house than to buy. Assuming a 4% interest rate, that house would cost £10,000 in interest alone. Add £1600 rates and £400 insurance and you’re already talking £1000 per month, before maintenance.

I imagine that, to the purchasers of these houses, the additional cost inherent in owning a high-end home is acceptable given the removal of the risk of prices rising bringing such a home out of reach again (as it likely was 5+ years ago).

Another factor is that, although you don't see rents rising, the chance of renting that home for £800 per month in 5+ years time is minimal. However, the mortgage rate shouldn't increase much, if any, above 4% over the next 10-15 years. This is a matter of opinion of course.

Anyone who can accurately predict interest rate movements over even the next 5 years (never mind 10-15 years) should immediately give up the day job, vast riches await.