First Time Buyers

lawtz04

Hey all,
Let's pretend im totally clueless (oh yes very funny - i didnt mean generally!) about buying a house. Im a first time buying still living with parents. Whats my best options with the current market? (no one seems to know whats its doing!)

Help me!!!
Lawtz

Robert_Sterling_3

Help me!!!
Lawtz

In what way?

deemy2004

Lock your money away for a couple of years 5.6% to 5.7%. Save on the regular savers for a couple of years 6.5% to 7%

THEN see where the market is

Personally, I think its going to go DOOOOWWNNNN

How much ? cannot say could be anywhere from 5% to 25% over 2 yearsl, but what ever the decline, if any, you will have a whopping big deposit in 2 years time !

aidsy

Mmm lock up ur money for a couple of years ... does that mean u have to stick another 2years with ur parents.. and after 2 years when u do decide to move out the house prices have gone up so much that u have been forced out of the property game and will be forced to rent if u want out of ur parents house.... i say get on the ladder now and quick.

just my view

scheming_gypsy

Or go shared ownership if you can, buy 50 / 60 / 75% of the house and rent the remainder at a low rate.

budgetflyer

ButThe trouble is, unless you are lucky you may buy too high . But when is too high? I'd say buy now ride the waves and in 10 years youwill be quids in.
Im assuming you give something to your parents for your keep (although in reality this probably isn't a true reflection of your costs )
But the sooner you are on the property ladder ,the better IMO

deemy2004

Yes, its one or the other - Buy now and ride it out any drop or wait a couple of years and buy lower IF theres a drop.

It's a case of place your bets and take your chances.

As for the long-long run.

I can't see how house prices can experience the type of growth thats occured over the last 8 years. FOR fundementally house prices ARE VERY over valued ! You can't escape that fact, when people are taking out mortgages at 5-6X earnings instead of the 3.5X limit.

So I think they will fall. and if they don't I don't see the upside for a decade or more, especially with an aging population.

Jezza101

First off, in the current climate, you must win the lottery to be able to afford a first home. Well paid jobs are just not enough these days when you need to borrow 5/6 times your salary.


I have been forced to rent, with my partner, at a very nice rate - thanks to all the buy-to-let greedy investors who are forcing young people looking to start a family in a family home, like myself, out of the housing market.

Remember to negotiate and re-negotiate - when it comes to renting: you are in control! Most landlords would rather drop the rate than have the place empty - especially now that their mortgages are rising. If they dont agree, dont hesitate in moving - Ive had no problems re-negotiating lower and lower rents until now I pay virtually nothing for a luxury 2 bed flat in London. Dont be tempted to just go for what they are asking...

Now you are free to clear debts, save and invest money. Once you have enough you can emigrate. Problem solved

No need to thank me.

Robert_Sterling_3

Soon you will be able to invest in Buy to Let as part of your pension fund. Demand for property to let will rise. Property prices will rise. Stamp duty is a percentage of the house price so the stamp duty will rise.
Things are looking up.

deemy2004

Yeh

So much for the future of pensions !
Now when house prices get hit, it will hit pensions at the same time ! Ridiculous !

dag_2

Like aidsy says - are you able to tie money up for two years, and stay with the folks? Do you have to pay your parents any rent?

If you have grown up and still live with your parents, then technically you are a "licensee". This means your parents can legally evict you without a court order - however, they do have to give you reasonable notice. Maybe they don't charge you rent now, but they could change their mind at a later date, and you legally don't have a leg to stand on. The same is true if you go stay with mates.

If you're in rented accommodation, you're in a stronger position. If you have no income or savings, you can probably get housing benefit - but it's limited to a bedsit or flatshare until you turn 25. Your landlord can still evict you for no reason, but has to give you two months notice, and needs a court order. I'm not sure exactly what rights you have when the bank is trying to repossess your house for mortgage arrears, but I do know that you can't get housing benefit for mortgage interest payments.

That's pretty much the worst case scenario ... now for the choices.

Why is it such a good idea to buy a house? Because your equity is largely untaxed. If you make a profit on selling the house that you've lived in, you don't have to pay capital gains tax. Your equity is not assessed for means-tested benefits and tax credits - unlike your bank balance - and you don't have to pay any income tax on the money you save from not paying rent. However, MIRAS has been scrapped, and your equity is counted if you're made bankrupt.

I think it's a bad idea to put money in a pension when you don't own a house. The age of retirement is expected to rise, but life expectancies are going down, due to obesity and diabetes. Even if you do live to retirement, chances are you'll be on means-tested benefit if you don't own a house. So the house is more important than the pension.

I also think it's a bad idea to buy a house when the rent you have to pay is less than the interest you'd have to pay on the mortgage. Especially if you take out unsecured borrowing to put up the deposit. In other words - don't do it unless you have a fairly secure income. Even if you do find a lender willing to consider you, there's too much risk of blowing what little savings you have on the last mortgage interest payments before repossession.

Be particularly wary of leaseholds with high service charges.

Some people suggest buying houses in low-demand areas as a way of getting on the housing ladder - but I recommend against this, unless you can really afford to lose your entire investment. Houses in certain parts of Manchester, Liverpool or Newcastle don't even sell for as much as the cost of the double glazing or fitted kitchens they've got.

Have you considered a career in nursing, teaching or social work? A few years at college might get you the skills you need to land a public sector job that qualifies for key worker housing assistance.

Hope these ideas help.