Advice Wanted

quyejoyce

Hi

I am new here.

I am looking for advice. I have just got a price for my house on the Right to Buy scheme. It is a good price. However, I am kinda worried what with all the news stories about Northen Rock and interest rates and the situ in the US speading over here. As well as reports the the housing market is likely to drop 20% in the next 18 months.

So my question is, do I go a head now or do I wait and re apply?

Houses in my area are currently on the market for £189,000 however they are not selling at all. The market has come to a complete standstill. Although the price I have got for my property is £124,000 I am nervous that should the above happen I will be stuck in negative equity.

Heelllpp what do I do. I have 12 weeks to make my mind up and then I lose this price and will have to re-apply.

busy_b

Personally, I think it depends on the area that you are buying in. If you are happy there and intend to stay there for a reasonable amount of time, I would opt to buy. BUT if you intend to buy at the reduced price to sell for a profit as soon as you can, then I would seriously re-consider.

I think that the Right to Buy is an excellent idea and worked for my parents, as they stayed in the property for many years before selling for a healthy profit, but its all about timing. If you have 12 weeks to make a decision, I would look at every property in your area for £124,000, decide if any of them appear to be as good value as your's, watch the market (although it's a difficult time of year, as nothing seems to be selling at the moment and probably won't until the New Year) but most of all I would way up the monthly cost and whether you will be able to afford the repayments if the interest rates do rocket. (I know this is obvious but I don't think negative equity is too much of a concern if you know you're always going to stay in the same property - that's just a personal opinion )
I'm new to this and have never replied to any posts before but I'm property mad and a great believer in the Right to Buy BUT ONLY in the right area!
Good luck with your decision.

dunstonh

However, I am kinda worried what with all the news stories about Northen Rock and interest rates and the situ in the US speading over here.

Doesnt matter if it does.

As well as reports the the housing market is likely to drop 20% in the next 18 months.

These are the same reports that have been appearing for the last 7 years when property has doubled in that same period.

Houses in my area are currently on the market for £189,000 however they are not selling at all. The market has come to a complete standstill. Although the price I have got for my property is £124,000 I am nervous that should the above happen I will be stuck in negative equity.

Negative equity is only an issue if you want to sell and your mortgage is higher than the property value. You would need a 34% drop to lose money which is possible but unlikely. However, property price isnt your issue. It is your monthly cost vs rent and the fact that you will be paying rent for life unless you buy. They are your primary costs to be concerned with. Not an asset value that you have no control over and in the scheme of things doesnt have much impact unless you are buying or selling or have investment properties.

quyejoyce

Hi Guys

Thanks for your responses.

I am still weighting it up at the moment.

You can't even get a one bedroom flat here at the moment for the price I am being offered for my two bedroom house. As I said before houses the same as mine are on at £189K but not selling so I really do think they are being over valued. I am in Dagenham, Essex (or East London) which they have been saying will boom in the 2012 Olympics. However, I have been reading reports yet again today about prices dropping. And as it is my intention to sell as soon as the five years are up or maybe sooner(the period which you have to wait in order not to pay any discount back) thats why I am concerned about negative equity. At end end of the day if I am gonna buy then I want to make some money to move up the ladder.

We can afford the repayments on one offer, but I think I will shop around a bit more as the rates seem quite high, 5 years fixed at 6.75 and then 7.37. I am new to this....so is that high for current mortgage deals? Rent v Mortgage on that deal it'll be another £600 on top. Without insurance and the extras.

Anyway I am rambling.

Thanks again

quyejoyce

I forgot to add, I think we will wait the twelve weeks and that gives us time to weigh the situation out and see if there any significant changes to the markets.

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