Rent now, wait for the crash and then buy?

p00hsticks

Out,_Vile_Jelly wrote: »

But the next house you want to buy after the crashocalypse will also be £50-£100k cheaper so what difference will it make?

It makes a difference if you've got a relatively large mortgage as negative equity may make it difficult / impossible for you to move

To illustrate -
- buy a house for £250k, with 10% deposit, leaving a mortgage of £225k

House prices fall 20% so house value drops to £200k

If you then need to sell / move you have to find £25k on to pof what you are getting for the house in order to clear the mortgage at completion, and have no funds freed from the sale to use as a deposit for any subsequent purchase.

adonis10

p00hsticks wrote: »

It makes a difference if you've got a relatively large mortgage as negative equity may make it difficult / impossible for you to move

To illustrate -
- buy a house for £250k, with 10% deposit, leaving a mortgage of £225k

House prices fall 20% so house value drops to £200k

If you then need to sell / move you have to find £25k on to pof what you are getting for the house in order to clear the mortgage at completion, and have no funds freed from the sale to use as a deposit for any subsequent purchase.

Agree with this, dangerous game if small deposit. Fortunately, ours will be about 55% of the purchase price so only an incredibly serious crash would put us in negative equity.

Arthritic_Toe

UKmitch wrote: »

Buy something, anything you can afford - why? Because renting you're 100% throwing your money away - it won't change in the future - but buying, even if it does crash, you'll still have something to show for it, however little.

Well if you buy just before a crash, you may be throwing 150% of your money away!

cashbackproblems

I have been looking down south and this year despite the lack of supply I haven't seen prices increase much, im looking for a 2 bed flat in a commuter town

The stamp duty, tax change and EU uncertainty is helping the market cool off.

If you predict a crash soon then why buy? Just hold on and keep monitoring the homes.

adonis10

cashbackproblems wrote: »

I have been looking down south and this year despite the lack of supply I haven't seen prices increase much, im looking for a 2 bed flat in a commuter town

The stamp duty, tax change and EU uncertainty is helping the market cool off.

If you predict a crash soon then why buy? Just hold on and keep monitoring the homes.

I'm not predicting a crash as such, rather assuming that one will be along in the not too distant future. However, I'm almost 33 and once my flat sale goes through I'm either renting or living with parents. Nothing wrong with the latter but it's not something I want to do long term. At some stage I think it's a case of "get the best for what you have and hope that you've not timed it completely wrong". Swings and roundabouts, I guess, as I bought my flat for 50k less than I'm selling it for so, unless I just wait and wait and wait, I'll be at the other end of the scale and buying at a high time.

economic

adonis10 wrote: »

I'm not predicting a crash as such, rather assuming that one will be along in the not too distant future. However, I'm almost 33 and once my flat sale goes through I'm either renting or living with parents. Nothing wrong with the latter but it's not something I want to do long term. At some stage I think it's a case of "get the best for what you have and hope that you've not timed it completely wrong". Swings and roundabouts, I guess, as I bought my flat for 50k less than I'm selling it for so, unless I just wait and wait and wait, I'll be at the other end of the scale and buying at a high time.

its really strange but you seem to be in he exact same position as i was. i got an offer few months bacj for my place and was debating whether to buy as well. im also 33 and can live with parents too. i decided to buy as the more i thought about it the more i realised you have no idea if there will be a correction/crash and i dont think current market is a bubble as such that is screaming crash. i would buy but not rush and wait for a good property. check any current mortgage early redemption charges however.

economic

hyperjon84 wrote: »

Am I missing something here? I'm really not good with maths but can't get my head around this statement so please don't slate me if I'm missing the point.


So if this guy has £300k in the bank for example, and buys a £200k property just BEFORE a crash which knocks £50k off of the value, he now owns a property worth £150k and has £100k left in the bank. His total worth is £250k and a house that he was considering upsizing too has now dropped from £550k to £500k.


If he brought just AFTER a property crash, he would now own a property worth £150k and have £150k in his bank account. His net worth is now £300k and his next planned house is still on the market at £500k.


He's down £50k. £50,000. Fifty-Thousand pounds. I'm not sure what sort of jobs people have on here but I'm on less than £30k p.a like most of the working class, I've worked far too hard to gamble £50,000 of my savings!


As I said I'm sure I'm missing something, so please correct me?

but on £30k pa you would not buy a £500k house....

getmore4less

Unless you are paying cash you are not buying equity but debt.

If servicing the debt is cheaper than renting it make little difference if the price moves as long as you can ride out the slump.

HappyMJ

UKmitch wrote: »

Buy something, anything you can afford - why? Because renting you're 100% throwing your money away - it won't change in the future - but buying, even if it does crash, you'll still have something to show for it, however little.

What if it is cheaper to rent than buy?

My flat costs £475 to rent. I'm happy renting it for that. I could also buy it. It would cost £110,000 to buy today. Or I could put the £110,000 in the bank and earn interest and that interest can pay the rent. I get an average of 5% interest on my money which covers the rent.

If house prices crash as has been forecast on here then I would still have £110,000 in the bank. If I purchase the flat I've lost money.

note: I do not have £110,000.

iantojones40

I'm not so worried about any potential future crash, it's the current chronic lack of supply that is far more of a concern to me, the stock levels on the market have crashed by more than half in just the last 18 months in my area, buying right now means choosing from nothing but overpriced dregs, all that's on the market is rubbish houses in undesirable areas.
I'd be seriously miffed if I bought a rubbish house right now as it's all that's available, then in a year or two a much better selection comes on to the market (which is a distinct possibility the way btl is being justifiably targeted)