First time buyer advice needed

ixwood

FYI;

ixwood wrote: »

http://www.moneyweek.com/file/99/property-article-listing.html

The fact that every property article on there suggests things aren't looking good for house prices, is quite telling IMO.

Things are on the slide and the smart money is getting out IMO.

I feel sorry for all the ill informed "must not miss out (any more)" recent buyers.

What do you think?

Ace01

But we have to jump on at some time or another, especially as this is a good property in the south east where prices are astronomical!!

Its one of the worst area's to consider buying in. All our debts would be paid off over time on an apr of 6.5 compared to 17.5%.

Surely this makes sense?

Lavendyr

Ace01, my partner and I are in the south-east. We are renting. Aside from a student loan, we are not in debt. We are jointly earning more than you and your partner. We save money each month and have a goodly amount already saved up between us.

We do not think we can afford to buy a house right now and nor do we think it is a sensible time to first-time buy.

1) The housing market is very uncertain at this time - unlike the last few years there is not a clear upward trend, especially with active changes being put in place to combat price rises.
2) Interest rates are high, meaning that interest on any borrowings will be high.
3) We are renting a house and managing to save, on average, the monthly rent again between us each month, towards a deposit.
4) We want to put together a reasonable deposit so that we can borrow as little as possible.

In essence, yes, of course house prices may continue to rise, but I think it far more likely that the market will stabilise, because it cannot continue as it is. Therefore we think it's very dangerous to be a first-time buyer at this particular moment in time, because we could end up ploughing our savings into a house and taking out a whacking great mortgage, then finding that the value of the house drops and we've lost out.

Not knowing your full situation, I still think your IFA has given you very poor and potentially dangerous advice. You might well be able to pay everything off at a lower APR, but you will be paying it off for years to come. You seem to be relying on the fact that house prices will increase, and at this time you simply cannot rely on this to bail you out. At this time, a house is not a good investment (unless you already own one, obviously), not a good place to put "all your eggs", and that is exactly what you would be doing.

meanmachine_2

Ace01 wrote: »

But we have to jump on at some time or another, especially as this is a good property in the south east where prices are astronomical!!

Its one of the worst area's to consider buying in. All our debts would be paid off over time on an apr of 6.5 compared to 17.5%.

Surely this makes sense?

If your "friend of a friend" IFA didn't explain to you why borrowing over a 25+ year period is worse than borrowing over a shorter term, they're clearly useless.

Doozergirl

Ace01 wrote: »

Its one of the worst area's to consider buying in. All our debts would be paid off over time on an apr of 6.5 compared to 17.5%.

Surely this makes sense?

No it doesn't! Have you read any of Martin's articles on this website?
If your girlfriend owes £20,000 then over the life of the mortgage, you will pay back in the region of £60,000!

First of all, the debt at 17.5 percent need to be moved to a lower one but over a short period of time. She can learn to tart with 0% credit cards that would enable her to pay back the capital without much interest (there are fee for transferring the balance)

Please, go over the the debt free wannabe board and ask over there how she can reduce down the interest payments and get the debt paid off asap, not in 2032 :wall:

House prices will not rise forever. In fact, after the recent rate increases, you can almost guarantee that house prices will be doing pretty much nothing for a while.

Before you stick yourself directly into negative equity (something that the majority of us are petrified of) please read a bit more of Martin's main website and a bit more of this board where you will begin to learn over time. You really need to understand what it is you will be doing - at least by then you can make an educated decision rather than just obsessing that house prices will run away from you. They simply cannot do that infinitely - if FTBs cannot get on the ladder, no one else can move up it.

Pobby

Totally unbelievable.The sooner they teach money management at school the better.But there ya are,media studies and the humanities are the way to go!

The_Dragon

DH and I are in the unfortunate position of being first time buyers as the landlady of the flat we rent has decided to sell. Over the past few years though we have salted away about £14k an we figure we can afford to go up to about £150k for a property.

We do NOT want to be in the position of being snowed under by debt for the rest of our naturals! :eek: The only other debt we have is a car loan as everything else has been paid off! We were hoping to wait a couple of years before going down this route but no such luck! :mad: I have been a house owner myself just before the last crash and I lost 50% of the purchase price due to negative equity - read everything very carefully Ace as you could end up losing the property and everything else if you do not have the money!

The Dragon - wishing she wasn't back in this situation!