cold feet, please advise.

macaque_2

emmamc252

You are clearly asking someone to say 'don't buy' and I am inclined to oblige you. In your shoes, I would not buy. Things are just too turbulent right now. Major hazards lurk below the surface and things are so bad that economic comentators now speak in whispers for fear of bringing the house of cards down.

Politicians and financial institutions keep saying; 'the economy is robust' but it is not. The bouyancy of the economy has been heavily dependant on an ever rising spiral of public and private sector debt. This is just not sustainable.

Last year, £1 billion a day was lent to home owners. This borrowing and spending binge bankrolled more than 5 million jobs (financial service jobs, jobs funded by MEW, and jobs funded by tax reciepts). At the end of 2007, the music stopped and despite people clamouring for more debt, the lenders shut the doors. Unless a miracle now happens, the inevitable result will be falling incomes, rapidly rising unemployment and an exodus of recent immigrants. Any one of these factors is enough to kick the legs away from both rents and house prices.

We are in for a very bumpy ride and my preference would be to watch and wait. I think this approach is particularly valid where someone anticipates moving again in 3 or 4 years time.

moneysavinmonkey

my partner and I are on roughly the same wages as you (slightly more with bonuses i suspect) but I would never dream about getting a mortgage of the size you are contemplating. If you have a savings of 30k, don't forget to factor in all the solicitors costs, surveys, stamp duty, furniture, & bits 'n' bobs you will need to pay for. I suspect that could eat into about half your deposit.....

It's not all doom and gloom though. We do rent a 200k+ home though for less than 700pcm.
To give you an idea of your costs, our utilities, phone, Internet + insurance (contents only) council tax comes to just over 300pcm.

My advice would be ...
- check that you can still get a mortgage for the amount you want incase your offer has been withdrawn due to the change in the market.

- seriously consider renting- check how much it costs in your area.

- consider renting again! If both you and your partner are living at home (separately)with your parents it's advisable to rent before you buy anyway just to get an idea of how much monthly expenditures are + how you get along when you share a home.

merlinthehappypig

Doozergirl wrote: »

I don't want to scare you but you should really stop spending any money until your vendor has found somewhere to go. I'd advise anyone not to spend money until the chain is complete. There's more of a chance that things could fall through if they haven't yet commited to moving out; if you don't spend any money until they do then you're covered at least for the time until they do commit to a purchase.

It's quite a big mortgage. I'm not sure I'd take on that much on that salary but I can see where your logic comes from if it means you don't have to move for a long time. If you are young then I guess you will earn more as time goes on too. Perhaps you should fix that mortgage rate so you don't get any surprises for a while?

Excellent advice once again.

The two houses we are seriously considering at present are both being sold by people who have no plans and no-where to go. It's seriously putting us off. I'd far rather buy from someone who was motivated to sell, for whatever reason.

The multiples of salary that you are considering are quite high, especially when things are looking a bit dodgy for house prices (which is good, don't get me wrong).

Personally I wouldn't be buying at the moment unless I had to, but it's your decision.

The only thing I can guarantee is that it will never get any easier. This will be our 8th house and I have cold feet already and haven't had an offer accepted yet!

dannyboycey

Wether you earn 20k a year or 200k, always live below your means and you wont go far wrong.

You can't expect to just jump several rungs up the ladder into your dream house. It's a lot easier to start from the bottom and 'rough it' for a few years.

As a rule of thumb, I personally wouldn't borrow more than 3.5 x salary absolute max. So if you're on a combined income of 40k and have a 30k deposit, I make that around 170k maximum total house price. Surely there is something under that bracket to suit your needs??

macaque_2

dannyboycey wrote: »

Wether you earn 20k a year or 200k, always live below your means and you wont go far wrong.

You can't expect to just jump several rungs up the ladder into your dream house. It's a lot easier to start from the bottom and 'rough it' for a few years.

As a rule of thumb, I personally wouldn't borrow more than 3.5 x salary absolute max. So if you're on a combined income of 40k and have a 30k deposit, I make that around 170k maximum total house price. Surely there is something under that bracket to suit your needs??

I don't agree with this.

The phrase 'housing ladder' was invented by estate agents to encourage people to sell their houses as often as possible. The idea of a ladder however is becoming increasingly impractical as transaction costs rise. Stamp duty has risen relentlessly by a combination of % increases and fiscal drag. The latest cost to hit owners is the home sellers report. Everything about house buying and selling has become expensive. Apart from the normal costs of selling (home seller's report, solicitors fees, surveyors fees, stamp duty, search fees, estate agents fees etc), home buyers also like to negotiate all sorts of improvements to the house as part of the deal.

Some people would disagree with me and cite their successes with 'property flipping' as proof. What they don't realise however is that for every successful property flip, 10 other flips are technically a failure. In a bull market, these failures are hidden by a flowing tide of rising prices.

Buying and selling houses is a very expensive and stressful business. It is not something you want to repeat any more than you have to. When you do decide to buy, I would be inclined to skip as many rungs as possible.

merlinthehappypig

macaque wrote: »

I don't agree with this.

The phrase 'housing ladder' was invented by estate agents to encourage people to sell their houses as often as possible. The idea of a ladder however is becoming increasingly impractical as transaction costs rise. Stamp duty has risen relentlessly by a combination of % increases and fiscal drag. The latest cost to hit owners is the home sellers report. Everything about house buying and selling has become expensive. Apart from the normal costs of selling (home seller's report, solicitors fees, surveyors fees, stamp duty, search fees, estate agents fees etc), home buyers also like to negotiate all sorts of improvements to the house as part of the deal.

Some people would disagree with me and cite their successes with 'property flipping' as proof. What they don't realise however is that for every successful property flip, 10 other flips are technically a failure. In a bull market, these failures are hidden by a flowing tide of rising prices.

Buying and selling houses is a very expensive and stressful business. It is not something you want to repeat any more than you have to. When you do decide to buy, I would be inclined to skip as many rungs as possible.

Very true.

These daft property developing programmes hardly ever include the costs of buying and selling. My wife can't watch them if I am in the same room as I just read my book with half an eye on the TV grumbling about the hidden costs!

As for the title of the thread - the new Rightmove data coupled with the panic on the FTSE today mean that my feet are getting colder by the minute.