Worried First Time Buyer - In Too Deep?

amosp

Yes with us both being on the young side (at least for buying a house, anyway, lord knows I don't feel it!) we weren't adverse to a long mortgage term so it was over 35 years.

I know we haven't ran into this blindly and it has had SOME forethought but still think we're quite naive and that's caused us a problem.

I feel much less anxious than I did this morning thanks to all of your posts. Thanks again all.

PasturesNew

I never looked at the figures to be honest.

£137,950 - price tag
£13,795 - 10% deposit
£124,155 - mortgage

Interest only is £589
Repayment is £789

Looks like a: half-n-half to me. Half interest only; half repayment

However, after the 2 years fixed, the property will be worth less. So the OP will have to go onto the SVR at, what? 7%? If 7% then that would be £724 interest only or £887 repayment. Or £ 800 on half-n-half.

So, if in 2 years' time, he could afford the figures in his budget. And if they were still together. And if they both still had jobs. And if she weren't up the duff. The mortgage would be £800 with no chance to remortgage.

Still doable if you really, really, really wanted that house and if you were really, really frugal and didn't mind staying in all the time. And if you really, really loved each other.... and if you really, really were lucky nothing had broken ....

Badger_Lady

I'd just like to point out that, although I'm a little doubtful as to how affordable this house is for the OP, I wouldn't necessarily say "rent first"... he and his girlfriend have already decided to make the leap into mortgage-land and there's a lot to be said for that, but there's no reason why they shouldn't start with a cosy, affordable flat, perhaps with a spare room for a potential lodger, or with long-term options for renting out / easily selling on in future.

The safety net could also be there with splitting up - if one partner moves out, the other can keep the flat with a lodger (consider good, central locations).

I bought my first flat at 21 (earnings were much lower then - I think our declared joint income was £28k, which dropped to £21k when I got a new job and kicked OH out) and it worked out perfectly for me But, if we'd bought a 3-bed semi and OH had lost his job, we'd have been in real trouble.

gfplux

This is a little off topic but has been mentioned a few times in this thread.
"New builds always go down in price after they are bought"
To put my view in perspective.
I bought my first house, new build, in 1966.
I have bought and sold a number of houses and flats since that date.
Now my point:-
Where has this idea come from that new builds are more expensive than "second hand". Until the last few years no one on these or other boards would have agreed with that statement. however it is now taken as correct. have builders managed to brain wash young people.
When ever I bought new build in the 60's, 70's and 80's I bought them because they were cheaper than second hand allowing me to get more for my money.

moneysavinmonkey

poppyolivia wrote: »

But at the end of your term what do you have? Nowt! A big fat hole in your bank balance,

Depends what way you look at it.

My sister bought a house at last summer whereas I choice to continue renting. we earn roughly the same and have roughly the same spending habits. She lives in a small 2 bed terrace, I live in a large 3 bed semi.

At present she has a big fat overdraft and the equity that she did have in her property is the same if not falling off slightly... I have a big fat savings account growing with regular contributions. In the scenario where the present conditions went on for the next 25 years, yes she would own her house outright but I would probably have enough cash to buy her out 5x over.... I certainly wouldn't have a big fat zero.

And before you say that of course the present conditions won't last, I'm well aware of that.. and will alter my strategy when they do!

moneysavinmonkey

gfplux wrote: »

have builders managed to brain wash young people.

yes - have you every been to a development showroom!!!

Badger_Lady

gfplux wrote: »

Where has this idea come from that new builds are more expensive than "second hand".

It's the way developers have moved in recent years to maximise their profits - flooding local markets with estates of "luxury newbuild" housing, popped up as quickly and cheaply as possible with all sorts of marketing gimmicks to help maximise Land Registry prices.

Sadly, this tactic has meant that there is now a Developers' premium on most new build properties (which some people are prepared to pay!), and in the current climate these are the most vulnerable to a crash since many don't have the real estate value to back them up. This is most notable in purpose-built flats, which have attracted a shocking premium recently and are now suffering from a market realisation that they're simply not worth the money.

Out of curiosity, I had a little poke on Rightmove earlier today to see how my old flat in Wiltshire is getting on... since I sold up, two new developments have appeared within 100 yards - half of these were sold off-plan last year for 20% more than my little Victorian conversion, but the other half are sitting empty, and are now being marketed at 5% below my little flat. Unfortunately, this does mean that if anyone tried to sell my little flat now they would really struggle (good timing for me, bad for my buyer).

moneysavinmonkey

Badger_Lady wrote: »

Out of curiosity, I had a little poke on Rightmove earlier today to see how my old flat in Wiltshire is getting on... since I sold up, two new developments have appeared within 100 yards - half of these were sold off-plan last year for 20% more than my little Victorian conversion, but the other half are sitting empty, and are now being marketed at 5% below my little flat. Unfortunately, this does mean that if anyone tried to sell my little flat now they would really struggle (good timing for me, bad for my buyer).

even worse for the people who bought the new build flats offplan
- 25% fall you say?!

barnaby-bear

amosp wrote: »

Yes with us both being on the young side (at least for buying a house, anyway, lord knows I don't feel it!) we weren't adverse to a long mortgage term so it was over 35 years.

I have to say now mortgaged and settled (OLD :eek: ) and on career ladder there are things I half mild regrets about not doing - when we rented why on earth didn't we use the under 30s working visa to oz and rent somewhere different and maximise the benefits of renting - you can do low paid jobs all over the world with few qualifications when young without responsibilities.... once you have a mortgage to pay you can't jack in the cr^p job and worry about keeping it.... you will never buy a flat in london on those salaries but you could rent there for six months and have some fun and even get some career experience that might boost your future earnings....

after the mortgage comes the kids so you may be 50 before you can just do something for experience/fun again and by then they'll probably be sponging off.....

barnaby-bear

barnaby-bear wrote: »

I have to say now mortgaged and settled (OLD :eek: ) and on career ladder there are things I half mild regrets about not doing - when we rented why on earth didn't we use the under 30s working visa to oz and rent somewhere different and maximise the benefits of renting - you can do low paid jobs all over the world with few qualifications when young without responsibilities.... once you have a mortgage to pay you can't jack in the cr^p job and worry about keeping it.... you will never buy a flat in london on those salaries but you could rent there for six months and have some fun and even get some career experience that might boost your future earnings....

after the mortgage comes the kids so you may be 50 before you can just do something for experience/fun again and by then they'll probably be sponging off.....

And when you are older - foreign lands are more reluctant to let you in - you have to be under 30 for a year in oz etc....