New Build Disaster - help needed!

albacore1854

I have a feeling there will be a lot more of this type of post over the coming months.

Fear of missing out, or greed is no reason to buy a home.

But it does illustrate that house price is only important when you buy, and when you have to sell.

How many more people are in the same boat that if forced to sell, there's a whopping great defecit.

Importantly though if someone gets repo'd in the block, and the bank chooses to sell at 210K to recoup the debt quickly, alas, that is what yours is worth.

At least if you got 224K its a known.

movieman

Frankly, I suspect it will be worth a lot less in two years; there's no sign of the BoE easing up on interest rate rises and when prices start to drop new builds will be decimated. Aside from being overpriced in the first place, builders will happily under-cut the prices asked by current owners in order to shift the new flats they're building... they don't want to be stuck waiting a decade for prices to recover and they'll still be making a profit selling at 2/3 of current prices.

silvercar

Will Halifax let you change to an interest only mortgage?

To apply for a residential mortgage with the intention of letting the property is fraud, obtaining money by deception, penalties include jail, criminal record.......

To breach one of the terms and conditions of your mortgage by letting out a property that was your home on a residential mortgage is "merely" a breach of the terms. Not criminal, Halifax if they were minded, could take you to a civil court. Provided the mortgage payments are met that is unlikely to happen (and I've not heard of it happening to anyone else). As your is a flat and presumably the building in insured through the block, that won't be a problem to you either.

So what I am saying is that you could just let it without permission. If Halifax found out and started sending you snotty letters, by the time they became difficult and insistent you would be outside your fixed rate period and could move your mortgage.

The implication would be that you would have to declare the mortgage when applying for another mortgage (obviously not with the Halifax), this could limit how much a lender is prepared to give you. If you are not taking a vary large amount in relation to your salaries it should not be a problem.

haymans74

I am quite insulted by the "greed is not a good reason to buy a home" comment.

We bought a home because we were sick of lining the pockets of landlords, sick of having to move on every year and wanted to get married and have a family and some stability. We never intended to sell and make a quick buck (although quite what is so wrong with that is beyond me as there are many people on this board buying for investment purposes and doing just that!)

When we bought the property we intended to live here for 5 - 7 years. However, due to family illness and me having to commute to Essex regularly to see my father in hospital we would PREFER to move before then.


But thank you for the helpful advice :rolleyes:

albacore1854

Hayman, my comment was not aimed at you.

I was trying to illustrate that there are a raft of people my age being goaded into paying vastly inflated prices by whatever means, by friends, family etc.

DavidN83

My advice would be sell now; I think the price of most newbuilds will only go down in the forseeable future.

As someone who cannot get on the housing ladder because of the silly prices, I really feel for people like you who have stretched yourselves this much. It's something I'm not prepared to do because of the risk involved, especially with new builds.

I really hope everything works out for you.

haymans74

Ah sorry.... Obviously I bite too easily!

mystic_trev

I would also advise against renting the apartment out. Apart from 'negative rental' you'll also have the annual maintenance charges. Pretty soon (already in many places) they'll be a glut of newbuilds apartments and the prices will drop.I bought a couple of BTL's over ten years ago, although they've gone up in value over three times, the yields have therefore gone down. I filled in my Tax Return a few weeks ago, nett yields just over 2% !!!!!

silvercar

Some assumtions: You switch to interest only, pay 4.69% now and 6% after Feb '08.

Lets allow 10 months of the rental income to go towards paying the mortgage and the other 2 months will cover voids and any other costs (eg agents fees, insurances, maintenance, service charge on the block etc).

So in the first year:

Half the time the interest rate is 4.69, the other half 6%:
Total interest (only) on 223k mortgage =11,919
10 months rental income @ 1,000 pcm =10,000
cost to you = 1,919

In the second year
interest at 6%=13,380
10 months rental income=10,000
cost to you = 3,380

In the third year (say rent increase of 3%)
interest at 6%=13,380
10 months rental income=10300
cost to you =3,080

So basically, for as long as you keep the flat you need to be able to subside its running. Whether a few thousand a year makes life difficult for you or not is your decision. But if you keep the flat for 5 years in the hope it reaches your 245k purchase price it will have cost you about £14,000 to do so.

Of course what will happen to your flat's price is anyones guess but it is costing you to wait and find out.

If you do want to sell, it is easier when you are occupying it than a tenant being difficult about viewings or an empty flat with no rental coming in while you wait for the sale.

Ivrytwr3

i pay £484 per month mortgage + letting agent fees + insurance + gas/elec safety certificate + any maintainance and my rent is only £440 per month!!!

My only driving factor is that we are now on the property ladder as i genuinally believe things are going to get worse before they better.