First time buyer advice needed

meanmachine_2

Steb4life your posts should carry a health warning rather than an ADVERT, which is counter to the forum rules, please remove.

Oh, and if I see one more "renting is dead money why not take out a 125% mortgage instead" I think I'll go American Psycho.

Where DO people get these stupid notions from?

What on earth do you think that 25% is then?

EDIT: Also I see you're from the North West. Man, if you want dead, try the property market in your area. Dead, deceased, decomposing.

ixwood

If you've go no money, let alone in debt, you can't afford a house IMO.

Save and pay off your debts 1st.

steb4life

meanmachine wrote: »

Steb4life your posts should carry a health warning rather than an ADVERT, which is counter to the forum rules, please remove.

Oh, and if I see one more "renting is dead money why not take out a 125% mortgage instead" I think I'll go American Psycho.

Where DO people get these stupid notions from?

What on earth do you think that 25% is then?

EDIT: Also I see you're from the North West. Man, if you want dead, try the property market in your area. Dead, deceased, decomposing.

The 25% is a consolidation of the debt they already have. You then pay either:

a. Larger monthly payment
b. Overpay as and when they can afford to.

Strictly speaking it's 20% or 17% if you don't consolidate the car loan.

I don't even know why i'm defending this, it was the LAST course of action I proposed and that was just so they knew the different courses.

We live in a time when people come out of Uni with massive debts - Are they all going to have to live at Mum and Dads till they are 40?? Do all the Mums & Dads here want their kids in their house til they're 40??? At least having a house means they have something to show for all that debt rather than NOTHING.

And Rent is DEAD money, can someone explain to me why it isn't?!?!?!

Thanks for the complimentary remark about the NW too, It is grim up north as they say;), but I have a house and I like the people!!:A

Turnbull2000

steb4life wrote: »

And Rent is DEAD money, can someone explain to me why it isn't?!?!?!

If rent is "dead money" in seemingly absolute terms in your view, do you also consider buying food dead money? After all, the food won't grow in value. It will only be consumed and you'll have nothing to show for it.

Why don't you explain to us why renting is dead money in today's market. You seem so sure of yourself. It should be easy.

(edit: Are you an estate agent? Your sig seems to indicate so. You should stop cowering behind your company Mini cooper, don your Matalan pinstripe suite and put a disclaimer in your sig for all to see)

Doozergirl

If immediately putting yourself into negative equity is a last-case scenario, then surely you shouldn't start off by buying your house that way?

Take out a 125% mortgage and you are stuck in that house until you have worked yourself out of that negative equity. What happens if you have children, if you need to move for work, if you split up!? I would far rather rent and have freedom than be tied to a debt and a house. "At least you have a house to show for it" is a pretty ridiculous comment. You've hardly 'made it' when you are suffering with a weight around your neck is hardly happiness. Secured personal debt is bad debt to have.

No-one needs to live with Mum and Dad forever, you have the option to rent until you can take proper charge of your finances. I suspect the OP is not 40 considering that his girlfriend has not long qualified as a nurse and that he is on a relatively low wage.

I would think that not that many people who take out 125% mortgages are the saving type, for the fact they have that size of mortgage! And therefore perhaps not the type to immediately start overpaying on that mortgage?

£20,000 worth of debt, when it is the same as you earn pre-tax in a year is a HUGE debt to have. How long will that take to pay off?

Renting is not dead money in the short term when the rent is less than the equivalent mortgage repayments. The OPs girlfriend will be able to pay off more of her debt if her outgoings are as low as possible. After 2005 being a pretty tough year in the market I strongly suspect that the next year will be the same considering that rates are higher than they were then. Prices won't be stretching too far away any time soon.

I'd have advised anyone with prospects to take out a 100%+ mortgage five years ago, like I'd have advised myself to have bought a much bigger place when I bought my first flat. I have the benefit of perfect hindsight. Past performance is no indication of future value...

olly300

steb4life wrote: »

The

We live in a time when people come out of Uni with massive debts - Are they all going to have to live at Mum and Dads till they are 40?? Do all the Mums & Dads here want their kids in their house til they're 40??? At least having a house means they have something to show for all that debt rather than NOTHING.

Firstly if you went to uni and come out with debts you have come out with something apart from those debts = an education.

People who buy straight out of uni are likely to only be able to afford one bedroom flats. In the last recession people who brought studio or one bedroom flats found it the hardest to move as no-one wanted to buy such a small place when they could get somewhere bigger.

If you live at home and your parents get fed up with you they are likely to help you to move out in more than one way. Plus living with your parents for a few years can help you get rid of lots of debts quickly as it's very unlikely the amount they charge you for board will equal the true costs of living in a place you have brought or rent. Also because you don't like living with your parents you are likely to work out ways of getting rid of the debt by taking on extra work.

steb4life wrote: »

And Rent is DEAD money, can someone explain to me why it isn't?!?!?!

Having shelter is a fundamental human right. Renting a property gives you the means to have shelter. I have met both private and council tenants who have happily rented on low rents for many years.

Renting:
1. Gives you the opportunity to live in different places and different countries with ease. You want to move you just give notice, wait until your contract expires or illegally disappear. Then off you go.
2. You don't have to pay maintenance charges or sort out the maintenance for the external structure of the property , the heating and the electrics plus some landlords provide you with white goods which they fix for you when they break. In fact some landlords provide you with a lot of nice stuff for you to use.
3. The goverment will pay your rent if you are made redundant. If you have brought a property after 1995, are under 60 and lose your job, for 39 weeks the government pays nothing then they pay the interest up to 1.25% over the Bank of England base rate.
4. At the moment in lots of places renting a nice property is much cheaper than monthly mortage repayments on a repayment mortgage. Lots of people are buying on "interest only mortgages" forgetting they are not paying back the capital or saying that they will start paying it back in 2-5 years. Lots of things happen in that time.

poppy10_2

Turnbull2000 wrote: »

(edit: Are you an estate agent? Your sig seems to indicate so. You should stop cowering behind your company Mini cooper, don your Matalan pinstripe suite and put a disclaimer in your sig for all to see)

Oh god, he is, and have you seen his website? (Check his profile for the link) - it's possibly the most garish business site I've ever seen, if even people like this can make money from property at the moment then the market is truly crazy.

steb4life

olly300 said [in blue]
Firstly if you went to uni and come out with debts you have come out with something apart from those debts = an education.

Interesting that you say that - have a look at graduate employment figures, initial earnings and level of debt at start of career. That said you still have the debt even if you don't pass the course!! What does having an education matter if there isn't the jobs paying the salary you need to buy a house??

People who buy straight out of uni are likely to only be able to afford one bedroom flats. In the last recession people who brought studio or one bedroom flats found it the hardest to move as no-one wanted to buy such a small place when they could get somewhere bigger.

It depends where you are in the country, there are still lots of terraced houses in my area marketed for less than £100K. And whatever house they buy, they bought because it fits their needs and pocket, surely it then goes to say that the next generation of FTBs will be wanting similar properties?

If you live at home and your parents get fed up with you they are likely to help you to move out in more than one way. Plus living with your parents for a few years can help you get rid of lots of debts quickly as it's very unlikely the amount they charge you for board will equal the true costs of living in a place you have brought or rent. Also because you don't like living with your parents you are likely to work out ways of getting rid of the debt by taking on extra work.

It might not be possible to live with your parents indefinitely. I am from a family of three and we all moved out of home before 21. All for different reasons but we wanted to fly the coup! It also may not be possible for them to help out, if they don't have the spare cash floating about. If you have a property of your own, it doesn't stop you taking on extra work! If you are motivated to take on extra work then you'd be motivated to do it if you knew that it would bring you one step further to that final mortgage payment because you already have that debt. If you live at home and you don't like it there most people would just go to the pub or not spend much time at home - as it's so easy!! You seem to live in this world where people don't get into debt before owning a home and that you can't think about getting a home until you're debt free - ironically to get into debt again!!!

Having shelter is a fundamental human right. Renting a property gives you the means to have shelter. I have met both private and council tenants who have happily rented on low rents for many years.

I would love to live in your world of human rights, you need to travel and not abroad - in the UK - look around at the homeless and the destitute and tell me where their 'Human' rights are for shelter. HAVE YOU RENTED??? If not, why not and if so why are you not including yourself in this happy lot!!??!!

Renting:
1. Gives you the opportunity to live in different places and different countries with ease. You want to move you just give notice, wait until your contract expires or illegally disappear. Then off you go.
Your Landlord also has the right to give you notice and should they do so you will have to leave and find somewhere else to live. Not everybody wants to move around and some people stay in the same house for years. It's their little castle.

2. You don't have to pay maintenance charges or sort out the maintenance for the external structure of the property , the heating and the electrics plus some landlords provide you with white goods which they fix for you when they break. In fact some landlords provide you with a lot of nice stuff for you to use.
Some landlords also are very slow to even do basic repairs and some will deduct the repair charges from your deposit if they 'believe' you were to blame, there are many an unscrupulous landlord out there. Plus what if you want to have a new kitchen/bathroom/install fitted wardrobes. The landlord won't pay for these if the current suites are 'serviceable' and if you pay for them then you're increasing his property value and not yours.

3. The goverment will pay your rent if you are made redundant. If you have brought a property after 1995, are under 60 and lose your job, for 39 weeks the government pays nothing then they pay the interest up to 1.25% over the Bank of England base rate.
What you fail to explain is that yes they will pay for your rent - to a point - or they will move you into a, how can I put this 'less luxurious abode' in an 'up-and-coming area'. You also fail to explain that they will offset your savings against the rent to - the ones that you were possible using to save for a deposit.

4. At the moment in lots of places renting a nice property is much cheaper than monthly mortage repayments on a repayment mortgage. Lots of people are buying on "interest only mortgages" forgetting they are not paying back the capital or saying that they will start paying it back in 2-5 years. Lots of things happen in that time.
I agree and this one is down to the financial responsibilty of the person getting the mortgage and yes renting a nice property can be cheaper in some areas though you will still have nothing to show for it!!!

You won't be able to make any major improvements to the property. Should you not like the decor, you will have to pay to decorate someone elses house at your expense and you can't take it with you if they ask you to leave and you won't profit from the improvement it could make to the property.

If you have your own house. You can change what you want, make improvements and profit from them(or not depending on your idea of improvements), as long as you keep up the payments you will never be asked to leave (not true in a letting) and IT'S YOURS!!!!

See this link as a prime example of why letting even when you're a good tenant can still be a nightmare:

http://forums.moneysavingexpert.com/showthread.html?t=507575

Rent IS dead money, you don't actually get anything from it!! I think your points are valid in certain circumstances but you will NEVER gain from renting in the long term.

Using the bubble burst model (buying just before a crash as in 1989 to simulate what 'could' happen) you would be back in equity in less than 10 years following a similar recovery (I know it's only a theoretical prediction) on average anywhere in the the UK. Incidentally for those mocking the North West and its market, we recovered the quickest and on average remained in equity - so it's not that grim up north!!

Incidentally I have a Mazda 323F which I bought for CASH - which I saved up for! WHY because the minute you buy a car it depreciates so there is no point paying interest on that. Houses, generally will go up in value in the long term!

A mortgage is a debt, if you can afford to repay it then it's up to you how much you choose to take out. If you want a house now then you roll with the punches, if you can afford to wait then you make that choice. The best decision is an informed decision - of ALL the options!!!

Ste

Doozergirl

Oh for goodness sake. Getting back to the OP and not going wildly OT for the sake of an argument; if you cannot afford to buy a house at the present moment and/or if you cannot manage your finances properly you should not buy one until you have paid off some debt and saved up!

You should save up for a car because it depreciates but it's okay to borrow more than the value of your house to pay off your personal debt? Riiiiiight.

ixwood

steb4life wrote: »

olly300 said [in blue]
You seem to live in this world where people don't get into debt before owning a home and that you can't think about getting a home until you're debt free - ironically to get into debt again!!!

Only from an estate agent!! :rolleyes: Can you save your aggressive borrowing encourgment to the poor punters in your place of work please?

You're supposed to have a deposit for buying a house. It's much cheaper. And less risky. And if you can't even break even before you buy a house, what chance have you afterwards? Let alone when the "surprise" (cos wnkr EA didn't think to mention it's a good possibility) of an IR rise or 2 comes along.