Bought a new build and may be price drops in neighbouring properties

ManAtHome

Also, you might want to fund ISAs rather than overpaying - once your annual allowances have gone.... they've gone.

Gorgeous_George

You can put all your spare cash towards paying your mortgage off like a MSE sheep. Or you can find a balance that suits your own needs. It's good to party a little.



GG

Phatmouse

lazygoose wrote: »

Wow this thread has touched a nerve !

It's also brought out a lot of HPCrasher's

You say significant price drops in the area ?

would you give us a postcode. thanks.

No price crash, more of a price correction of about 20% over the next few years.

When key workers are priced out and people cannot afford to get on the property ladder something has to give.

Houses are out of proportion price wise to other living costs.

Why do people get so upset about the inevitable, all eggs in one basket?

It was time for house prices to rise but greed and fear pushed them to an unsustainable level.

barnaby-bear

franklee wrote: »

Talking of new builds I'm puzzled by this:

http://www.rightmove.co.uk/viewdetails-5714004.rsp?pa_n=3&tr_t=buy

3. Who would want to buy 98 ugly new build flats in Luton for £17,000,000

Often a housing association. The capital comes from charging more for all privately available new houses and putting the money (Section 106 money) in a pot that the hosuing association can spend/waste. The rents only have to cover the maintainence/upkeep/running the housing association etc so yield irrelevent and if they don't spend the pot of money they lose it so quite often desperate to buy anything and they won't care what it looks like.

frugalista_2

Kez100 wrote: »

5 years safe? Were you around in the late 80's? We bought in 1991 thinking it was the bottom of the market (prices had been falling for a couple of years) We sold in 1994 at lower again! So, from the top of the market, five years was smack bang at the bottom of the market.

Negative equity this time is going to be like no other because of the degree. We lost 5k. Our mates who bought at the top in the late 80's lost 25k. We thought that was terrible and for them it seemed like there was no future for a while - that'll be nothing on todays prices.

I do think the refinancing will catch many out. It's an assumption you just refinance when a fixed or discount term ends. I don't think many realise you can only do it if the property value stacks up to the total borrowed, and it isn't something people will be warned about when buying as it isn't part of any professionals remit.

25 year fixes wouldn't suit very many. I would have considered it when we bought (so long as it was portable) but now - 16 years into a 25 year term -we are in a very different position to anything we could have ever imagined and we are happy on a low tracker freestyle offset.

Blimey kez you are even more bearish than me!

Remember after 5 years you should have paid of a bit of the capital (admittedly not that much). If you are still in negative equity even after this repaid capital and your initial deposit of say 5%, we are talking about nothing less than a house price crash, especially in real terms.

It can happen, for sure. 10 year fix is the way to go, for me anyway. Especially with refinancing fees at £1000 a pop, what's the point of going for 2-year fixes? You will have to refinance 4 times so you're already £4000 down, even if interest rates are benign. I haven't even mentioned solicitor's fees and redemption fees.

Also, I've noticed that it is quite difficult to get the new lender lined up to take the loan over from the old one at exactly the point when the mortgage beneficial initial period ends. So you end up on the SVR for a couple of months anyway.

frug.

frugalista_2

BrandNewDay wrote: »

I'm confused... are you saying that you can't make overpayments on a fixed mortgage? Or remortgage in a few years, anyway?

If we don't pay down our mortgage in 5 to 7 years, it's not because we're mindless sheep, but because we don't have the money for that. We can afford to overpay some, but not that much.

There's something to be said for peace of mind, too. I read an article about this and a woman said she got a 25-year mortgage fixed at 4.99% a couple of years ago. I think that's brilliant. I wish we could do that.

You can overpay on almost all mortgages, including most of the 25 year fixes currently around. However the overpayments are normally limited to say £500 per month or 5% of the outstanding balance per year. Check the small print if you think you might want to overpay.

frug

frugalista_2

ManAtHome wrote: »

Also, you might want to fund ISAs rather than overpaying - once your annual allowances have gone.... they've gone.

I would strongly concur with this. Overpaying and (Cash) ISAs are functionally equivalent, they are both tax free, risk free savings. But ISA money you can get at much more easily, so you should fill up ISAs first.

The only caveat is if you are locked into a mortgage interest rate which is higher than the best ISA pays. But this is highly unlikely at the moment, I would guess.

frug.

denimmaterial

barnaby-bear wrote: »

Often a housing association. The capital comes from charging more for all privately available new houses and putting the money (Section 106 money) in a pot that the hosuing association can spend/waste. The rents only have to cover the maintainence/upkeep/running the housing association etc so yield irrelevent and if they don't spend the pot of money they lose it so quite often desperate to buy anything and they won't care what it looks like.

This is something I didn't know until this morning when my daughter told me. I feel very sorry for people who buy a house in what seems like a nice new small 'exclusive' estate only to find that some of their neighbours may not be what they expected. Instead of paying money for social housing, the builder can actually give a percentage of their houses on an estate for social housing. And not only that, but buyers will be paying around £25,000 more for their house on average. See quote below for the explanation.

"Affordable housing
The ever broadening scope of the section 106 agreements, commonly now also provide provisions for social and affordable housing on new developments. The builder provides these homes for free alongside the homes for sale in order to obtain local authority approval for his proposals. The price of your new home includes the cost of the 106 agreement. It is estimated that 40%* of large residential developments have paid section 106 contributions. The total figure agreed between councils and developers is a staggering £1.2 billion* - the estimated value of affordable housing provided as a result of planning gain, accounting for half* of this. This can put an average of £25,000 on the cost of providing your new home."

Buy old houses!!