Bought at the worst time?

martyp

Hi all,

I'm feeling that my house purchase hasn't really paid off much at all and really envy the people that bought in the 5 years before me and kicking myself for wasting money renting for years before (was in temporary employment and didn't think I could get a mortgage + unsure if moving area).
Basically, looking at house prices in my street...
Here's my house (50% share):
Previous owner bought in 2000 for £27k, sold to me for £55k in 2005. House now theoretically worth £60k. So in essence they made £28k in 5 years and I'd make £5k in 11 years.
Other neighbouring houses bought:
£52k in 1999
£64k in 2001
My brother bought a house in London for £300k in 2005 and is now worth £600k so despite having an interest only mortgage could sell up and walk away with £300k and buy a house outright.

I keep thinking how if I had of bought my house just 5 years earlier I'd only have about £30k left on my mortgage now instead of almost £100k

I envy all the people that got on the property ladder as they were in the previous generation and now have big houses as they were at the right age and had secure jobs at the time to do so. It feels like those who reached the age of buying a house since around 2006 are now really suffering unless they could afford something in London.
Is there any light at the end of the tunnel for people in this situation? I did wonder if there would be something happening where the younger generations would tend to inherit property etc. from the loss of relatives with so many in the younger generation being unable to afford to leave their parents homes. It'll just be interesting to see how things work in the next 10 years, surely with incomes staying generally quite low houses can't become even more unaffordable?

dinkylink

Wow that's a cheap house, even at current values. Whereabouts do you live?

HappyMJ

You've made £5,000. It's a gain. Almost 10%. Not a big gain but it's a tax free capital gain of around 1% per year.

You've also saved by not paying rent on the share you owned which would have increased with inflation every year since you purchased.

I'm not sure why you would have £100k outstanding on your mortgage if you purchased for £55k.

Had you purchased in 2000 for £27k and made overpayments increasing as your income increased then the mortgage will be paid off by now and you would owe nothing.

If you look at your net worth I bet it's higher than it would have been had you continued to rent the property.

House prices will continue to increase especially at the lower end of the market. As minimum wages increase people have more to spend on property. If someone works full time (35 hours/week) earning the new living wage of £7.20/hour and has a partner working part time (21 hours/week) on £7.20/hour with no children (and therefore no other income or expenses) then they'd have annual income of £21,000 and could buy a property worth up to £80,000 with a £72,000 mortgage quite easily as long as they have no other debts or commitments. That can buy a 2 bedroom terraced house in my area. The mortgage would be about £400 a month and equivalent property to rent would be around £450 a month.

My advice if you want a roof over your head with little stress is to move to a location where employment at any rate of pay is available and affordable houses are plentiful. That's not London.

Don't worry about what would have been. You haven't lost any money and you've had a secure roof over your head for the last 10 years.

chucknorris

The worst time to buy is never, not 11 years ago, in 14 years time you will be glad that you bought it then.

martyp

dinkylink wrote: »

Wow that's a cheap house, even at current values. Whereabouts do you live?

West Midlands, they're currently building lots of new housing estates in the area so unsure if that might affect prices too as houses where I live used to be very sought after but now two houses in the street have been up for sale for months.
Any piece of land where there was a pub or industries that have closed down is now rapidly being built on. Unsure exactly who all these houses are for and who might be moving into them, whether it's aimed more for help to buy schemes I'm not too sure.
What does intrigue me is how they're building loads and loads of new houses in the area alongside main busy commuter routes where many industries have shut down. So the places where people used to work have disappeared and people are having to commute longer distances. I dread to think how busy the roads will become when all the houses will be occupied.

With regards also to housing prices, I grew up near London but would struggle to buy anything near my family. All the house prices there are being pushed up by people from London either moving out or buying 2nd homes etc. The local people are on much lower wages so either have to commute to London or struggle to get a house.

martyp

Thanks HappyMJ

HappyMJ wrote: »

You've made £5,000. It's a gain. Almost 10%. Not a big gain but it's a tax free capital gain of around 1% per year.

Definitely a nice thought, and with the £46k left on the mortgage it would potentially be £14k if sold. I need to pay off the half I own faster than the value of the other half increases so personally any drop in house prices might work to my benefit for buying the house outright.

HappyMJ wrote: »

You've also saved by not paying rent on the share you owned which would have increased with inflation every year since you purchased.

I still pay rent on the other half, it started at £130 in 2005 and is now £160 but that does also include Buildings insurance (I pay contents) which I believe is expensive. On that part I've paid around £19k in rent since 2005 so wonder if I had of been able to buy the house for the full price (£110k) how it may have been any different now. In total the rent and mortgage together is aroun £400 a month which is the same if not a bit less than the rental value of the property.

HappyMJ wrote: »

I'm not sure why you would have £100k outstanding on your mortgage if you purchased for £55k.

The £55k is for the half I purchased, that would be looking at if I bought the other half for the current value:
£46k left on mortgage + £60k for current value of other half

HappyMJ wrote: »

Had you purchased in 2000 for £27k and made overpayments increasing as your income increased then the mortgage will be paid off by now and you would owe nothing.

It's a nice thought, it makes me cringe that the whole house value in 2000 (£54k) was less than the same price I paid for half of it 5 years later (£55k). I did only move to the area in 2002 though so wouldn't have been able to buy it at that time.

HappyMJ wrote: »

If you look at your net worth I bet it's higher than it would have been had you continued to rent the property.

Definitely a positive thought, I know it's £14k potentially if I ever needed to sell.

HappyMJ wrote: »

House prices will continue to increase especially at the lower end of the market. As minimum wages increase people have more to spend on property. If someone works full time (35 hours/week) earning the new living wage of £7.20/hour and has a partner working part time (21 hours/week) on £7.20/hour with no children (and therefore no other income or expenses) then they'd have annual income of £21,000 and could buy a property worth up to £80,000 with a £72,000 mortgage quite easily as long as they have no other debts or commitments. That can buy a 2 bedroom terraced house in my area. The mortgage would be about £400 a month and equivalent property to rent would be around £450 a month.

I must admit there are houses in areas nearby for £80k which are actually bigger but in a less favourable area. When I bought my house it was in a very attractive area but a smaller house as an alternative to a bigger house in a less desirable area. The value isn't so much on the house itself but the surrounding area I think.

HappyMJ wrote: »

My advice if you want a roof over your head with little stress is to move to a location where employment at any rate of pay is available and affordable houses are plentiful. That's not London.

It's a bit annoying as my mortgage interest was highest when I was earning more, due to redundancy I'm now on £8k a year less than I used to be and at now my mortgage payments are the lowest they've ever been too. Frustrating as if I was in my former job I'd be easily overpaying at least £100 a month.

HappyMJ wrote: »

Don't worry about what would have been. You haven't lost any money and you've had a secure roof over your head for the last 10 years.

Good point - I do think it's good having the security as one place I rented before I was suddenly given a months notice to move out and remember rushing around to find somewhere else to live. Now it's nicer to think having my own place it's harder to be kicked out than with renting.

martyp

chucknorris wrote: »

The worst time to buy is never, not 11 years ago, in 14 years time you will be glad that you bought it then.

Good point, I feel like it's a waiting game now to see the real benefits. I know house prices and mortgages tend to seem more significant as days go by. When I think about my parents buying a semi in the 60s for £3k and that seems trivial by todays income. I can only hope that in 30 years or so £120k is something you'd earn in a month

TheeMaskedTurnip

Chin up fella, there's never a bad time to buy. You've joined the homeowner class and are now paying down your own mortgage not someone else's.

martyp

TheeMaskedTurnip wrote: »

Chin up fella, there's never a bad time to buy. You've joined the homeowner class and are now paying down your own mortgage not someone else's.

Thanks TheeMaskedTurnip, it is satisfying to have your own house rather than living in someone elses as such
Can't wait to buy it outright one day.

andybenw

chucknorris wrote: »

The worst time to buy is never, not 11 years ago, in 14 years time you will be glad that you bought it then.

Agree.

To have a mortgage free property on retirement is definitely an advantage. The earlier you buy, the earlier you get that mortgage payed off.

Property prices can obviously go down as well as up, but buying ensures you are insulated from any upsurge in property prices and therefore the risk of being 'priced out'.

If I was the OP I'd stop moaning about buying at the wrong time (as I did by upsizing late 2007), and instead concentrate on smashing that mortgage down.


Edit... Just noticed you are part of the 'shared ownership' leasehold scam. If I were you I would move if possible into your own fully owned place, even if it means somewhere much smaller. Leasehold is to be avoided unless you are fully aware of all the possible pitfalls.

Crashy_Time

andybenw wrote: »

Agree.

To have a mortgage free property on retirement is definitely an advantage. The earlier you buy, the earlier you get that mortgage payed off.

Property prices can obviously go down as well as up, but buying ensures you are insulated from any upsurge in property prices and therefore the risk of being 'priced out'.

If I was the OP I'd stop moaning about buying at the wrong time (as I did by upsizing late 2007), and instead concentrate on smashing that mortgage down.


Edit... Just noticed you are part of the 'shared ownership' leasehold scam. If I were you I would move if possible into your own fully owned place, even if it means somewhere much smaller. Leasehold is to be avoided unless you are fully aware of all the possible pitfalls.

:rotfl:Yes, the "Welcome to the club!" circle jerk was going so fast nobody noticed :rotfl: