Worried First Time Buyer - In Too Deep?

Badger_Lady

moneysavinmonkey wrote: »

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

I didn't work it out exactly, but:

I sold my flat (completed in September) for £125,000 (I marketed it at £129,500). The newbuild flats of similar size (they came with a parking space, but mine came with a garden, so very comparable) were on the market at the time for £155,000 and sold quickly (don't know how much for)...

The empty ones are now on the market for £122,000 with the loft flat on for £114,995. There are 5 still available.

All the flats are 1-bedroom, but mine was a solid Victorian conversion with good sound-proofing (I can't vouch for the new ones). Area is very family-friendly, with a top Grammar school, leisure centre and Waitrose within 200 yards, but only 10 mins walk to the City Centre.

Bear in mind that, in this particular circumstance, the whole City has been overpriced for a long time, with a lot of celebrity / 2nd home / retirees pushing up the market values beyond affordability. Wages in the area are disproportionately low, and so has been dominated by Buy To Let.

poppyolivia

moneysavinmonkey wrote: »

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!

You want to show your sister this site then!

To rent my house that I have now there is no way on earth I could afford it...comes down to the area you live in, the time you get your property etc...maybe I was lucky or whatever but I still can't understand why renting is a good thing.
For me it was the way I was brought up, my grandfather was in the property game and owned a lot of property, my parent never had a morgage just paid it outright and they never put anything on credit...my dad was doing his dinger because we got a morgage so to rent I would have been disowned!:rolleyes:

Lavendyr

poppyolivia wrote: »

To rent my house that I have now there is no way on earth I could afford it...

That's funny, to buy the house that I rent now there is no way on earth I could afford it (rent £750 per month, house value £220k). As you say, depends on the area you live in, just remember that not everyone is in exactly the same situation as you.

poppyolivia wrote: »

I still can't understand why renting is a good thing.

As you said - depends on your situation. If you are moving out of home to live with a partner for the first time, it's much better to 'test the water' for just 6 months (especially if you can rent for less than a mortgage would cost, which will help you to save up a bigger deposit) and get used to living away from home, with someone else, sorting out bills and so on. I'm not talking about renting forever - just a short term period for OP and partner to learn how to live together - and save up some money - before committing to a long-term, expensive mortgage.

Also, in the current climate with such ridiculously high house prices, renting is a sensible option while saving up a deposit for a house. Bigger deposit = better interest rates and less borrowing required in the first place. Add that to the very real probability that house prices will, at the very least, flatline, and you've got a very good argument for renting rather than being a first time buyer at this time.

moneysavinmonkey

poppyolivia wrote: »

You want to show your sister this site then!

To rent my house that I have now there is no way on earth I could afford it... but could you afford to buy it at the present price either!!

comes down to the area you live in, the time you get your property etc...
that is exactly it - timing - now is a good time to rent, previously it was a good time to buy. You need to be more flexible, it is not one or the other at all times, it depends on the market.

maybe I was lucky or whatever
exactly- spare a thought for anyone who was born too late to buy a house at 3x income!

but I still can't understand why renting is a good thing.

it is simple...
if rent = less than the interest to borrow the money it's a better strategy
then financially you are better off.
i'm not talking about renting for the rest of your life just timing the decision to buy property to make the most of your money! = moneysaving!

For me it was the way I was brought up, my grandfather was in the property game and owned a lot of property,

times are very different from then! -it's not a good idea to base your decisions based on the market conditions your grandfather experienced.


my parent never had a morgage just paid it outright and they never put anything on credit...my dad was doing his dinger because we got a morgage so to rent I would have been disowned!:rolleyes:

surely if your parents were very sensibly against putting things on credit then they wouldn't approve of getting a stupid sized lie to buy mortgage to buy when you could rent for half the cost? Because that is the reality facing young people today.

Why is renting seen as a bad thing by people- i just don't get it

dannyboycey

amosp wrote: »

Again thanks for the replies.

Seraphina, don't worry about being harsh as long as you're being honest This is the reason I posted here as I DO feel pressured.

I am aware that the salaries are very low and I am making progress (albeit slow) toward changing that. I did want to have a better job sorted out prior to investing in a house but as I said we didn't want to miss this one.

Barnaby, it is a fixed 2 year mortgage with RBS at 5.7%.

Here is a list I've come up with (very quickly and off the top of my head, I'm not at my usual PC) as requested by merlin.

Net Monthly Income £1739
Mortgage £688
Life Insurance £29
Home + Contents £20
Gas/Water/Electricity £75
Council Tax £100
Home Phone £15
Mobiles £30
TV License £22
Car Tax £20
Car Ins. £65
Services £10
MOT £10
Petrol £90
Food Shopping £260
Pets (Just fish) £5
Dentistry £2.5
Optical Health £5.5
House/Garden Maintenance £10
Health & Beauty £5

Remaining:277

Life is rarely that neat and tidy. Every now and again, an expense will crop up that you just couldn't have forseen. It's important to keep a bit aside for this.

Leisure money is also really important. It's important to socialise, eat out, rent movies etc every now and again for the sake of your sanity! Make sure you have enough for this.

Addy1

It seems as if we are lucky (depending on your point of view) in my area, we will actually have lower monthly repayments (on 25yr repayment) when we buy than we currently do renting.
We will be moving round the corner from a 2 bed semi with a garage to another 2 bed semi with a garage.

We are not much older than OP (22 and 23) but we have been together 7 years and lived together for 2 of those. (In rental)

We also both lived away from home for 4 years separately house sharing before we moved in together, so we are more aware of the cost of running a home etc.

poppyolivia

moneysavinmonkey wrote: »

Why is renting seen as a bad thing by people- i just don't get it

I can see what you and Lavenyr are saying and don't get me wrong I'm not sitting here in a big posh house or anything, I can't move to a bigger house at the moment (I have a 4 bed 2 bathroom terrace) but (and I swear I'm not trying to argue the point) if I was in the position to rent a 4 bed house or buy a 2 bed house, I would buy the 2 bed, its just the way I am and alot of people, its not wrong and it not right its just the way it is just like it is for renting, its for some people but not all. For me spending £750 to rent a property is scarey!

We will have to agree to differ I'm afraid, I know I was lucky catching the property market at a good point and I do feel bad for first time buyers.

all the best xx

Lavendyr

poppyolivia wrote: »

I was in the position to rent a 4 bed house or buy a 2 bed house, I would buy the 2 bed

Thing is, olivia, a lot of us are not even in the position to buy the 2 bed - or even a 1 bed. If I was in the position to buy a 2-bed house rather than rent one, I would. But I can't afford to. Nor can a lot of people.

poppyolivia wrote: »

For me spending £750 to rent a property is scarey!

For me, having to take out a mortgage of over £150k just to get on the property ladder near enough to my place of work to commute to it, is scary.

mlz1413

poppyolivia wrote: »

You want to show your sister this site then!

To rent my house that I have now there is no way on earth I could afford it...comes down to the area you live in, the time you get your property etc...maybe I was lucky or whatever but I still can't understand why renting is a good thing.
For me it was the way I was brought up, my grandfather was in the property game and owned a lot of property, my parent never had a morgage just paid it outright and they never put anything on credit...my dad was doing his dinger because we got a morgage so to rent I would have been disowned!:rolleyes:

My mum was into buying and I so my first boyfriend and me felt compelled to buy. We bought in the late 80's we didn't even make a year before spliting up and then the house prices had gone crazy I wanted to sell ASAP (could have doubled our money) and he wanted to sell for the highest price, we argued for over a year (of which the house stood empty for) and then the prices fell. Luckily for me he got a new gf who persuded him to sell at any price and we managed to get out before we lost money.
I WISH WE HAD RENTED.
Had we rented we would not have been pressuried so would have stood a chance of talking things through together and doing what we wanted.
Had we rented and fallen out we could have walked away and gone back home.
Had we rented and stayed together we would have known the real costs of running a house.

Everyones situation is different but what we are all trying to say to OP is there are options - explore them all. Especially if like him you are worried, stressed and feel you are being pushed to do something you are not sure about.

Hoario54

Never, ever, buy any property with someone unless you have lived with them for at least 6 months previously.

Of course this does not guarantee the relationship will be a resounding success but living with someone is very different to being with someone.
On the flip side, if you make this step and your love continues to grow (:eek:) what happens if your girlfriend becomes pregnant or one of you loses a job?

My advice (for what it's worth) is similar to some others...

There will always be an opportunity to buy, so make sure you are right for each other by renting somewhere first (I would suggest for at least 12 months), and use this time to build your deposit further in order to bolster your safety cushion (minimise your LTV) as you will be paying a premium for a new build. Also ensure you have a decent emergency fund (you should always have at least 3 months outgoings stashed in an easy access account).

You could also look at ways to maximise your income during this period.

Good luck with whatever you decide.