My first property - but left confused

Ady87

How many times do we have to have the chat about interest rates and relativity?

House prices got where they are because of low interest rates/cost of borrowing. This is the worst time ever to buy when you consider national average income, average house prices and interest rates at those higher prices.

Can we stop rambling on about high interest rates of the past when house prices were much lower as a % of average incomes and so less of an issue. If you’re a first time buyer now buying at near all time high prices as a % of income compounded by highest cost of borrowing it’s the hardest it’s been in generations to buy a home.

FreeBear

glmrz said: it appears it hasn't been maintained for a long time, and the current tenant doesn't seem to be bothered about keeping it tidy.

If this property is currently rented, do nothing until the tenant has vacated.

The last thing you want to be doing is buying a property and then having to evict a tenant (not that a solicitor would allow you to proceed).

EssexHebridean

Ady87 said:

How many times do we have to have the chat about interest rates and relativity?

House prices got where they are because of low interest rates/cost of borrowing. This is the worst time ever to buy when you consider national average income, average house prices and interest rates at those higher prices.

Can we stop rambling on about high interest rates of the past when house prices were much lower as a % of average incomes and so less of an issue. If you’re a first time buyer now buying at near all time high prices as a % of income compounded by highest cost of borrowing it’s the hardest it’s been in generations to buy a home.

The point here isn't the high interest rates of the past, it's that there is currently a whole clutch of young FTBs who genuinely believe that interest rates right now are "high" and that this in turn means that if they sit back and wait for a while, those rates will drop back to "normal" - with their "normal" being sub 2%. As Martin has routinely said, not only can we not expect that to happen, but if it DID happen it would indicate more significant economic issues at play. We should actually be hoping NOT to see rates that low again, IMO. 

FreeBear

EssexHebridean said:

Ady87 said:

How many times do we have to have the chat about interest rates and relativity?

House prices got where they are because of low interest rates/cost of borrowing. This is the worst time ever to buy when you consider national average income, average house prices and interest rates at those higher prices.

Can we stop rambling on about high interest rates of the past when house prices were much lower as a % of average incomes and so less of an issue. If you’re a first time buyer now buying at near all time high prices as a % of income compounded by highest cost of borrowing it’s the hardest it’s been in generations to buy a home.

The point here isn't the high interest rates of the past, it's that there is currently a whole clutch of young FTBs who genuinely believe that interest rates right now are "high" and that this in turn means that if they sit back and wait for a while, those rates will drop back to "normal" - with their "normal" being sub 2%. As Martin has routinely said, not only can we not expect that to happen, but if it DID happen it would indicate more significant economic issues at play. We should actually be hoping NOT to see rates that low again, IMO. 

I remember a time when mortgage rates peaked at 16% and were at 10-13% for most of the 1980s. During the 1990s, 7-8% was the norm, and for the last 20 years or so, 5-8% was typical. 2% and lower should be regarded as a short term blip.

Bigphil1474

The problem is if interest rates do drop to those low levels again, house prices will inevitably go up more significantly again, so there'd never be a good time for a FTB to buy. Personally, I think now is the best time to buy as property prices are largely suppressed, although that is starting to change, certainly where I live. If you wait for interest rates to come down, then the increase in property prices may off set any interest rate gains. Only difference is if you are selling and buying where you can possibly gain as much from your sale as it costs extra when you buy.

We're selling and buying now (over the last couple of months) as we are upsizing, and the 'saving' we made on our newer home is more than we've 'lost' from the sale of our old home - we accepted £10k below asking on our sale, but had an offer £20k below asking on the house we bought. Appreciate they are just EA valuations but they are pretty similar around here. If we'd have waited until this month, we probably wouldn't have had a lower offer accepted as houses are starting to sell much quicker and going for asking price rather than the second half of last year where bigger houses were dropping prices quite significantly. 

And yes, we were glad to get a mortgage rate below 8% around 97/98 if I remember correctly. 

Jude57

FreeBear said:

glmrz said: it appears it hasn't been maintained for a long time, and the current tenant doesn't seem to be bothered about keeping it tidy.

If this property is currently rented, do nothing until the tenant has vacated.

The last thing you want to be doing is buying a property and then having to evict a tenant (not that a solicitor would allow you to proceed).

I'm glad I'm not the only one to have spotted this. OP, just to explain a bit why @FreeBear says this, assuming you used the word 'tenant' correctly: The current owner (landlord) cannot terminate a tenancy even by selling the property. Only the tenant or a Court Order can terminate a tenancy. So if there's a tenant living in the property, anyone buying it becomes their landlord, with all the legal requirements that brings. The new landlord would also have to seek possession via a Court Order and if the tenant is reluctant to leave, that could take many months and be quite expensive, as well as stressful. Your mortgage lender is unlikely to allow you to proceed unless you are getting a 'Buy to Let' mortgage which you don't seem to be. A normal mortgage requires 'vacant possession' at exchange of contracts (the point in the process at which both sides are legally committed to the sale and purchase) and your solicitor will not release the mortgage funds without confirmation that the property is indeed vacant. Your solicitor also acts for the mortgage lender in that aspect of conveyancing.

Please don't rely on promises from the owner, the estate agent or even the tenant themselves that the property will be vacant on a given date. They all have a vested interest which isn't in YOUR best interests. As FreeBear rightly says, do nothing until the property is vacant.

Albermarle

The problem is if interest rates do drop to those low levels again, house prices will inevitably go up more significantly again, so there'd never be a good time for a FTB to buy. Personally, I think now is the best time to buy as property prices are largely suppressed, although that is starting to change, certainly where I live. If you wait for interest rates to come down, then the increase in property prices may off set any interest rate gains.

I agree that now is a good a time as any for a FTB, although prices in some of the cheaper parts of the country are already moving up.

The only thing I would advise a FTB would be to not fix the mortgage rate for too long. Although rates will not come down to 2%, I suspect they will trend very slowly down from todays level.

Of course it could be very bad advice with hindsight !

BobT36

Ady87 said:

How many times do we have to have the chat about interest rates and relativity?

House prices got where they are because of low interest rates/cost of borrowing. This is the worst time ever to buy when you consider national average income, average house prices and interest rates at those higher prices.

Can we stop rambling on about high interest rates of the past when house prices were much lower as a % of average incomes and so less of an issue. If you’re a first time buyer now buying at near all time high prices as a % of income compounded by highest cost of borrowing it’s the hardest it’s been in generations to buy a home.

I was just about to post this myself. 
"Back in my day I bought house down at the pub" etc. And there's a BIG difference between taking a mortgage for £40k at a high %, and £350k at a lower %... 


As to the topic, I always take a tape measure to viewings with me, and measure up if I don't hate the place. 
I NEVER trust estate agent's measurements, even when there's a good floor plan. They nearly always measure into small passageways or noggins, even if that's not usable space. Measure the room as a square/oblong, and ensure to take a separate measurement for wardrobe depth (as they always measure into those, too!)

Bigphil1474

Albermarle said:

The problem is if interest rates do drop to those low levels again, house prices will inevitably go up more significantly again, so there'd never be a good time for a FTB to buy. Personally, I think now is the best time to buy as property prices are largely suppressed, although that is starting to change, certainly where I live. If you wait for interest rates to come down, then the increase in property prices may off set any interest rate gains.

I agree that now is a good a time as any for a FTB, although prices in some of the cheaper parts of the country are already moving up.

The only thing I would advise a FTB would be to not fix the mortgage rate for too long. Although rates will not come down to 2%, I suspect they will trend very slowly down from todays level.

Of course it could be very bad advice with hindsight !

I'd probably recommend the opposite. If you can fix now for a few years knowing you can afford the payments, then you are safe even if rates go up or down. If you don't fix for a number of years you may be okay or may not be. We're going for a 5 year fix, partially because it ties in with other financial gains to be made in about 5 years time, but partially so we know we won't struggle to pay the mortgage no matter what, all other things being equal. I'm not a gambler.

Albermarle

Bigphil1474 said:

Albermarle said:

The problem is if interest rates do drop to those low levels again, house prices will inevitably go up more significantly again, so there'd never be a good time for a FTB to buy. Personally, I think now is the best time to buy as property prices are largely suppressed, although that is starting to change, certainly where I live. If you wait for interest rates to come down, then the increase in property prices may off set any interest rate gains.

I agree that now is a good a time as any for a FTB, although prices in some of the cheaper parts of the country are already moving up.

The only thing I would advise a FTB would be to not fix the mortgage rate for too long. Although rates will not come down to 2%, I suspect they will trend very slowly down from todays level.

Of course it could be very bad advice with hindsight !

I'd probably recommend the opposite. If you can fix now for a few years knowing you can afford the payments, then you are safe even if rates go up or down. If you don't fix for a number of years you may be okay or may not be. We're going for a 5 year fix, partially because it ties in with other financial gains to be made in about 5 years time, but partially so we know we won't struggle to pay the mortgage no matter what, all other things being equal. I'm not a gambler.

Of course personal circumstances come into it, affordability etc.
I suppose my opinion was a purely financial one, based on the assumption the person would not go bankrupt if rates did go up.
I'm not a gambler.
It could be argued that fixing the rate is a gamble, just like not fixing it is.