Potential FTB seriously confused. HELP!

weekend_warrior_2

Hi all, I’m new to the site after being directed here by a friend (and what a brilliant site it is btw :T ) and I’m more confused now then ever! I have a read through the other threads but I’m not sure that any of them are relevant. Here goes:

I’m currently living in rented accommodation with my friends but due to unforeseen circumstances, I need to move out by the end of Feb. I’m going to live with my parents for a couple of months, but cannot stay there any longer as they are emigrating (plus the very real possibility of me throttling my Dad!). I have been talking to my best friend who also needs to move out in the near future and we were considering getting a joint mortgage and buying a house together as a means of getting our feet on the ladder. The sort of mortgage we would require for the properties we have seen would be 2.5x our salary each (the property we have seen is £100,000 and our combined income is £40,000). Neither of us has any sort of deposit so we'd be borrowing 100% of the cost of the property plus probably an extra £5,000 to make it habitable. The house needs some TLC but we are both in the building trade and between us we have the skills to do it ourselves. Due to my current situation, I’m not in any position to save any sort of deposit, I simply can’t afford it with my outgoings, even in the two months I’ll be at my parents.

The property is in an area that is very popular with students and also has really good transport links. It also has three bedrooms, potentially for letable rooms. Our intention had been to live there for a couple of years and then possibly let the rooms out when we go our separate ways. I know we wouldn’t really be making any profit by doing this but we thought that they would be paying the mortgage plus a few other bits and in 10 years or so it may be to our benefit. The other option would be to sell it when we move. If we were to take the second option, there is another two bed property that I really liked in the same area which may be easier to sell.

Until about two hours ago before I started reading on here, I had my blinkers on and thought it was a good idea, but now I’m not to sure? I’m tempted to go back to renting for a while and see what happens to the market for a few months but in that time, I still won’t be able to save any sort of money for a deposit and I'll just be handing over my potential mortgage payments out as rent!

To those of you that have read this far, thanks for putting up with me and any advice would be greatly appreciated! Cheers

Jorgan_2

No one knows what the housing market is going to do, stagnate/soft landing/crash etc & different parts of the country may take longer to fell the effects than others.

I think you need to save some sort of deposit, you will get a wider choice of lender & better mortgage deal. Likewise, you say the property you have seen will need some work done on it, there may be a retention on the mortgage which may cause real problems if you have no way of overcoming this.

I would sit back and see what the market does for 12 months or so, prices aren't going up. Don't go & rent the best property you can afford, look at house shares as these will be cheaper than renting on your own. The money saved will go towards your deposit. House sharing may not be your ideal, but its a means to an end and for the relative short term.

lypsey

Take a look at housepricecrash.co.uk , on the forums ,I think you will definetly rent for the time being.

Also today the BoE says the lowest number of mortgage approvals since records began, ask yourself what is going to happen

I have sold my house and banked the money , I still believr house prices will be 40 -50% lower in the next fews years

Good luck

Phirefly

Since Electricemma's dressing down, I have been pondering over what it must be like to be a newbie with no firm preconceptions coming to read this board. Its really interesting that two hours' of reading threads has had such an impact on the OP. Most of us around here so entrenched in the issues, regardless of viewpoint that its quite an eyeopener to be reminded of the perceptions of those outside the bubble.

No doubt the general consensus will be rent-and-see, but all things considered, is that really the best option for the OP?

dannyboycey

Jorgan wrote: »

No one knows what the housing market is going to do

Although we can say with a degree of certainty that prices will not be rising any time soon!

Hoario54

Phirefly wrote: »

No doubt the general consensus will be rent-and-see, but all things considered, is that really the best option for the OP?

Yes. :rolleyes:

Phirefly

It just seems such a cop out, one-reply-fits-all though....

weekend_warrior_2

Thanks for your posts so far guys.

The property requires is purely superficial i.e. new kitchen desperately required, new bathroom, flooring, a bit of plastering etc, but the property is structurally sound. I have been looking at the possibility of living in a house share and everywhere in my area is approx. £300 pcm plus bills (I’m currently paying £420inc. bills) where as my mortgage would only be £350. The way I’m looking at it (admittedly rather naively) is that paying £350 on my mortgage is preferable to paying £300 into a developers holiday fund.

Unfortunately, when I was younger, I lived a rock’n’roll lifestyle on no where near as much money as a rock star and it is a mistake I’m paying for now. I have got to a point where these are successfully being payed off (again, there are some bits on here that are really useful!) but by the time I pay rent each month and other bits, I’m not left enough to save. There would be no way of getting a deposit together in twelve months

Hoario54

Phirefly wrote: »

It just seems such a cop out, one-reply-fits-all though....

Not at all, I think it is valid in this case.

If I were the OP I would rent as cheaply as possible for the next 6 months to put together some form of deposit and evaluate the housing market at that point. If there is a Spring bounce (...and I am Elvis...) he can still go for 100% LTV but at least he will have some money towards costs.

Maybe he might be able to buy something a little cheaper...

The point is getting a 100% mortgage can be risky at the best of times, but when the majority of data points towards a slowing (and in some areas reversing) of HPI then advising someone to go "all out" with no financial cushion or fall back position would be a bit silly IMHO.

Hoario54

weekend_warrior wrote: »

Unfortunately, when I was younger, I lived a rock’n’roll lifestyle on no where near as much money as a rock star and it is a mistake I’m paying for now. I have got to a point where these are successfully being payed off (again, there are some bits on here that are really useful!) but by the time I pay rent each month and other bits, I’m not left enough to save. There would be no way of getting a deposit together in twelve months

Clear your debts first.

You have no margin for error.

Phirefly

Fair dues. I just get bored of the same old sage words on here all the time. I don't mean that comment personally though