House Price Crash Discussion Thread

setmefree2

The price you buy a house for is only part of what it actually costs. Just pop over to the mortgage free wannabe board for proof of this.

If I buy a house for £250k (in any market) and over pay it so that I clear the mortgage in 10 years I save myself £140k (roughly) over someone who does not over pay and continues to pay interest for 25 years. To concentrate solely on market values is incorrect,since in the end the interest rate and length of term will have more of a bearing on what you truly pay for your house than what you actually paid for it in the open market.:money:

WTF?_2

setmefree2 wrote: »

The price you buy a house for is only part of what it actually costs. Just pop over to the mortgage free wannabe board for proof of this.

If I buy a house for £250k (in any market) and over pay it so that I clear the mortgage in 10 years I save myself £140k (roughly) over someone who does not over pay and continues to pay interest for 25 years. To concentrate solely on market values is incorrect,since in the end the interest rate and length of term will have more of a bearing on what you truly pay for your house than what you actually paid for it in the open market.:money:

Indeed - but if prices drop and you get the house that would cost you 250k today for 200k instead, that's like a 50k instant overpayment on your mortgage from day one.

Also, negative equity is not a good position to be in. It's not the end of the world but it does limit your options considerably and could be disastrous in the worst case of failing to make mortgage repayments for whatever reason.

I think people need to stop focussing on low introductory interest rates on their mortgages and think instead of total cost of mortgage and terms. ie. Can you overpay easily, what are redemption fees for closing early, can you fix over a usefully long term etc.

pickledtink

pickledpink wrote: »

Me again.

How long do you anticipate waiting before you buy? I know some of you seem to think prices will keep on falling for years to come - do you not worry that some of you will be too OLD to get a mortgage in,say, 5/10 years time? Some of you seem to be old NOW! I

Well this particular geriatric will happily buy again as soon as a house I really like at a reasonable price comes along.
Why not actually read some of the sensible factual replies to your posts instead of endlessly repeating your opinion of a situation you appear to have little experience in?
In fact just how many properties have you bought and sold in total so far in your apparently youthful existence?

setmefree2

!!!!!!? wrote: »

Indeed - but if prices drop and you get the house that would cost you 250k today for 200k instead, that's like a 50k instant overpayment on your mortgage from day one.

Some of the people on this board seem to be over focused on the front end (the cost) and have no real feel for the whole picture over the life time of a mortgage.:o So celebrating the fall in market values whilst interest rates are rising makes no sense.

For every 1% interest rise on a mortgage of just £100k over 25 years you will pay £25k extra on interest only mortgage and approx £18k on a repayment.

At the following rates of interest this is what just £100k costs over 25 years (repayment):-
7%, £212,034(£18,744 more than at 6%)
6%, £193,290 (£17,913 more than at 5%)
5%, £175,377

So if you have a £200k mortgage an increase of 1% costs £38k/£36k


and if you have sold up and rebought you aren't really gaining £50k because as someone said you have all the costs of a move involved as well:- the rent, solicitors, estate agents, stamp duty, the fees for a new mortgage and the additional costs of borrowing over the life of a mortgage because you missed out on the best rates...doesn't add up to me sorry.

pickledtink

dolcevita wrote: »

Arguing with "yourself" again tinky?

Maybe pickledpink is really my 'inner child'. :eek:

jamtart6

I'm going to wait 12 months and see what the situation is then, unless I buy one now and do it up to live in (ie. only get a mortgage for £100k rather than £150k). Thats my best advice as a buyer

pickledtink

setmefree2 wrote: »

Some of the people on this board seem to be over focused on the front end (the cost) and have no real feel for the whole picture over the life time of a mortgage.:o So celebrating the fall in market values whilst interest rates are rising makes no sense? and if you have sold up and rebought you aren't really gaining £50k because as someone said you have all the costs of a move involved as well:- the rent, solicitors, estate agents, stamp duty, the fees for a new mortgage and the additional costs of borrowing over the life of a mortgage because you missed out on the best rates...doesn't add up to me sorry.

I don't think that is what anyone is suggesting to be honest.
In my case I just happened to find my self between purchases when this hit.
As I had to leap into rented anyway I may as well stay here for a bit.

The house I wanted is now vastly overpriced as prices here have slumped quite drastically. No point in buying when I'll get similar for less later. Smaller mortgage will offset higher interest rates and I doubt if any good mortgage deals will remain shortly anyway.

beingjdc

pickledpink wrote: »

Me again.

How long do you anticipate waiting before you buy? I know some of you seem to think prices will keep on falling for years to come - do you not worry that some of you will be too OLD to get a mortgage in,say, 5/10 years time? Some of you seem to be old NOW! I

Depends on the market. I anticipate buying (again, I owned for a while a few years ago) in early 2011, when I will be 33. But it all depends what the market's doing! I'm optimistic that if I keep my saving rate up I might be able to buy for cash by then (clearly I'd have to leave London though), but we'll see.

setmefree2

pickledtink wrote: »

I don't think that is what anyone is suggesting to be honest. I

Sorry I thought a previous poster had suggested that everyone should have sold their houses last summer and indicated that he was going to better off for doing so. I was just trying to indicate that he may not have done his sums properly since he doesn't seem to have factored in anything other than market values.

pickledtink

setmefree2 wrote: »

Sorry I thought a previous poster had suggested that everyone should have sold their houses last summer and indicated that he was going to better off for doing so. I was just trying to indicate that he may not have done his sums properly since he doesn't seem to have factored in anything other than market values.

You could well be right. There are now so many cross reference discussions going on in this thread that it should outflank the TV soaps for complex plot lines.

Anyway back to the point:
I was horrified at how much I lost in wasted fees on the first sale fall through in December. About £950.00 with valuations, Solicitors etc.
Then pleasantly surprised when the resulting drop meant I could get something even nicer for £20,000 less.
Now the further vast drops mean even that is overpriced. I'll lose another set of fees. £1000.00 if we can't sort something out. However already similar houses are coming on at £10,000 less. The drop here is vastly outstripping the costs in fees.

It stinks. I don't like it and feel sick for any desperate seller caught in this nightmare but the reality is I won't pay more than the correct buy now price for anything as it will decrease in value.
I'm looking for my home not a moneymaker but I can't afford to be a prat about the finances either.
So far the lost fees have become as nothing compared to the increased buying potential of my £££ in living standard and space at reduced mortgage costs and overall price.