First Time Buyer - Assessment Needed

abbecer

Fair point well put and i respect your opinion. Personally i would still never rent if i could afford a mortgage for the kind of house that i want. I move into my new house next week and i know the price could drop but hopefully i will be there long enough that the housing market would have recovered. But i have bought it in an area that is getting a lot of regeneration and property prices are still rising slowly there. Same style houses are already selling for more than 15k than i paid for mine and i haven't moved in yet!!

Rebecca x

macaque_2

abbecer wrote: »

Fair point well put and i respect your opinion. Personally i would still never rent if i could afford a mortgage for the kind of house that i want. I move into my new house next week and i know the price could drop but hopefully i will be there long enough that the housing market would have recovered. But i have bought it in an area that is getting a lot of regeneration and property prices are still rising slowly there. Same style houses are already selling for more than 15k than i paid for mine and i haven't moved in yet!!

Rebecca x

Buying your own home is great but it is first and foremost your home, not an investment.

From an investment perspective, buying a house in today's market is very dangerous. There is every possibility that house prices will be lower in 20 years time than they are today. It happened in Japan.

PasturesNew

It happened here too ... late 80s to early 90s.

I believe it is happening here too. To simplify it, I've tried to say to people that house prices were going up about £2k per month for years. Now they will go down £1k/month for at least the next 3 years. That doesn't seem quite so unbelievable to many.

So if you can save £500/month for 3 years - and house prices come down £1k/month for 3 years ... the house you uend up buying will in fact be £54k cheaper than it is today.

Although for a lot of houses I believe the drops will be higher, my suggested figures are for a house that's currently about £150k. So in 3 years' time it might be £114k.

Anyway. Whatever. None of us can "prove" we are right. But I'm prepared to gamble on it. I've sold my house already and am not buying another for 3-4 years minimum.

cells

abbecer wrote: »

Sorry Walter J but i disagree. I think renting is dead money. In five years time they could be thinking about a family and money would probably be tighter then. I think definitely pay off debt first but then get a mortgage. Try to get a good price for your property and get a good deal on a mortgage and go from there.

Good luck

rebecca x

what is interest on the mortgage?
alive money?
it is just as "dead" as renting is. in most cases the interest portion of a mortgage is MORE than the rent for a similar property. So a mortgage in such cases is more dead money than renting.

cells

macaque wrote: »

Walter J gave sound advice but somehow don't think rebecca is going to be admitted to Mensa in the near future.

The phrase 'rent is dead money' was created by estate agents to close hose sales. Muppets but it every time.

The reality is that rent is payment for a service and is very good value at the moment. If house prices remain static at today's prices, you will make more money by renting and investing your money elsewhere.

If you really want to find dead money, then you need look no further than mortgage interest on an over priced home or a home that is falling in value.

hehe

you are 100% right, the problem is there are more people like Rebecca than there are people like you

very few people understand basic math and that is the problem!

Walter_J

The original poster and his wife are in a truly eviable position.

With youth on their side, two good incomes, and a cheap roof over their heads they can save a significant pile of cash over the next few years towards a deposit on a home of their own.

Nobody is expecting house prices to rise in the next five years. Slowly the media is coming round to the inevitable truth that a peak has been reached and they are going to start sliding backwards. In the last house price crash in the early 90's it was 4 or 5 years before they stopped sliding. It is unlikely to be any different this time. It is realistic to expect house prices to be 40% or 50% lower in 5 years time than they are today.

Rebecca's argument that 'renting is dead money' is plainly ridiculous. When house prices are rising it clearly makes sense to take on a mortgage and watch your capital appreciate. When house prices are falling however, the intellegent person will rent, save up, watch everyone else lose their shirts, and wait for the right time to buy - several years down the line.

If you want to learn more about the housing market I suggest you visit http://www.housepricecrash.co.uk and take a look at the excellent forum.

Ask a sensible question there and you will get a lot of helpful replies.

Ask a stupid one however, and they will destroy you!

Mr_Mister

Thanks guys.
Although ideally I would like to pay off the debts with the savings, we would rather keep the savings for an emergency or otherwise end up taking up more credit. Not touching the credit cards at the moment. Card tarting so either on low apr or interest free and paying off around £500 a month.
The income is NET.
Even though living with parents, paying the utility bills and council tax as both parents are pensioners.
So you saying wait another year or 2 before buying?
I seriously cant see house prices coming down especially when theres huge demand in london and south east - where i live.

Walter_J

House prices will fall.No-one can say for sure when, or by how much, but fall they most certainly will.The demand for houses in your area is high largely because of the easy availablity of cheap credit over the last few years. It has been easy to get funds to buy houses and this has driven demand mad.Read the papers.Watch the news.All over the world credit is getting tighter. Banks are just not lending money in the same quantities as they have been. This will drive up interest rates despite what the central banks do.The effects of this credit squeeze or even crunch on the housing market will be immense. Say your lender suddenly told you that you couldn't borrow £150k any more but only £100k. You can only afford a house of £150k now instead of £200k.Guess what - there aren't any!Well wait a while, because there soon will be!The housing market has been a huge speculative bubble over the last 10 years with prices going up by 300%. ALL speculative bubbles eventually burst.Be very careful!

izzybusy23

abbecer wrote: »

Sorry Walter J but i disagree. I think renting is dead money.

rebecca x

OH GOD ... MY THE DREADED 'RENTING IS DEAD MONEY' COMMENT AGAIN.

Don't people understand the current economics of mortgage payments are higher than current rentals in this present climate?????

This comment really gets my goat each time its mentioned. Sod the poor sod whose just going to take out a huge mortgage at the peak of the housing boom with rising interest rates. Yeah, don't rent cos its dead money, buy a house instead, interest rate rises will push people over the edge, repossessions will be on the rise, but so will negative equity.

SO NEGATIVE EQUITY ISN'T DEAD MONEY THEN, NO??? :mad:

izzybusy23

abbecer wrote: »

Fair point well put and i respect your opinion. Personally i would still never rent if i could afford a mortgage for the kind of house that i want. I move into my new house next week and i know the price could drop but hopefully i will be there long enough that the housing market would have recovered. But i have bought it in an area that is getting a lot of regeneration and property prices are still rising slowly there. Same style houses are already selling for more than 15k than i paid for mine and i haven't moved in yet!!

Rebecca x

Oh I get the picture now.. because you are moving to a new house next week, you want sheeple to copy you just to make you feel like you haven't made a huge big mistake???

I agree with the others, you making assumptions that renting is dead money is dangerous as you are trying to persuade somebody to take on a mortgage which could well ruin them. If thats the choice you made for yourself than good.. don't try to get people to copy your mistakes.