First Time Buyers, looking to start family soon.Advice needed please

teabelly

Renting a place is investing in your future as you are getting on with your life rather than still being at home with your parents. Once you have children and know the costs of living independently then you are better able to budget on to what type of home you can afford. You may find you still can't afford anything much and decide renting is more sensible. It doesn't stop you investing in property as it might be easier to buy somewhere to rent out which you could eventually move into in the longer term. Property ownership and renting somewhere to live in aren't mutually exclusive.

carolt

For a scary moment there, I thought teabelly had turned into me.

What teabelly says is absolutely right except for the daft bit about buying a BTL as an investment whilst renting yourself - apart from the fact that financially it's completely a non-starter as you'd never get a mortgage on your kind of deposit and with no other equity to draw on, it's also financial suicide in a drastically falling market - your deposit would be wiped out on fees etc alone, without the market falling at all, and any void periods would wipe you out completely as you'd be paying 2 lots of rent instead of just the one. Madness.

Yes, rent is usually cheaper by a LOT. There may be a few pockets of the country where renting is more expensive than the INTEREST part of the mortgage, but very, very few. So in other words, you'd be paying more each month just to pay an interest-only mortgage - not a repayment mortgage. You'd be paying absolutely nothing towards actually repaying the mortgage debt. That makes sense in a rising market, as you have 'fixed' the price of your house at the price you bought it at, so when you eventually do start to repay the capital, you pay less than if you had bought it later.

But in a falling market, the reverse applies, and you are 'stuck' with repaying the capital, even though the house is now worth a lot less. Even if you can't afford the payments and your house is repossessed, you don't escape the debt. Lenders will continue to chase you for it.

So anyone should think very carefully before buying in this market, but ESPECIALLY first time buyers. We are at particular risk as haven't built lots of equity previously to shield us from falls in property prices.

In answer to what we do to save for the future, the answer, at the moment, will vary from person to person - but personally I wouldn't recommend the stockmarket or housing market.

Cash ISA's or National Savings look good at the moment. Gold?

Not that we never plan to buy a house, but buying at the bottom rather than near the top of the market makes sense to me. In the meantime we've invested in real estate - just got our first allotment - secure tenure (maybe we could live in the shed?? :eek:), only £11 a year, massive, and will hopefully reduce our fruit & veg bill come the summer...

teabelly

Buying a BTL isn't daft. The OP had said they wished to own a property. This is another route. Buying now without a good deposit is unwise due to family considerations and lack of spare capital; it was more a suggestion for several years into the future when they had more saved up and a more secure financial footing. Income isn't a bar to owing a BTL, what restricts borrowing is the rental achievable to it it naturally encourages purchase of sensibly priced property in popular areas which will hold its value in turbulent times much more easily.

There is no such thing as the 'top of the market'. I thought it was the top when I bought in 2000, when my friends did in 2002 and pretty much every year since then. The housing market is pretty much the same as the FTSE. That keeps on rising most of the time. Some times it falls back but the general trend is an upward one. In laws have been investing in property since the 60s and they have always felt that. They never lost on a single property they bought, they held them for the long term. My own folks are convinced the market was going to top out in 1998 and they're still waiting. They bought in the 70s and lived through the 80s in high interest times.

Like I said before, what triggers large price drops is repossessions being sold for peanuts. Lenders are not allowed to do this now so they'll either hang onto the property or sell them to other lenders or other investors and make sure the prices remain sensible to underwrite the value of their other assets.

There will never be enough houses to satisfy demand as a shortage is necessary to keep prices rising and the well off happy. Mortgage companies wouldn't want to lend on an asset there was over supply of which is why they have dropped new build flats like a hot potato. Us at the bottom don't matter. We are just supposed to work til we drop and suck it up and make do with whatever we can afford to buy (if anything).

pollyanna24

I haven't read through all the threads, so I apologise if what I say has been said before, but I think the problem is that you have spent too long enjoying yourselves.

Me and my bf are 26 and 27 and I am pregnant. We have been together for almost 9 years and straightaway I decided I wanted a house to live in together. So we started saving and bought a house in 2003 when I was 21 and he was 22. We had £12,000 saved between the two of us.

We took advantage of the fact that my parents very kindly let us live with them for not very much and for the first year lived life to the full. We went on three holidays, and one of them was six weeks long!

Then we buckled down and saved, saved, saved.

Granted, we bought in 2003 for £110K, but it was in a terrible area, and we could just about afford it.

I realised from a very early age that you have to work to get things. £5,000 is not a very good deposit in this day and age.

Even though we have a mortgage which costs us almost £1,000, (we have moved since our original house purchase) and when we bought our house, we were cleared out of savings, I am a panicker and a worrier, and after 24 months, we have savings again of £13,000 for when I am off work.

Basically, you have to work so hard to get what you want and that is what we did. We don't go out much, we don't earn mega bucks, but we know what we want and we know what we have to do to get it.

Lotus-eater

The good thing is that you don't have any debts, the bad as others have said is the frankly terrible £5000 deposit. You should be able to save £15000 a year living at home on £25k?
What do you think, is that doable?
Either rent together and move on as a couple, or stay at home for a while and save like mad for a deposit.......... then probably rent as the expected house price drop won't have finished yet.

izzybusy23

teabelly wrote: »

If you earn 41k between you and can only save £5k then you can't afford to buy unless you saved that in the last few months. As your fiance is 33 odd you don't have that much time if you want a family so you either buy now, rent somewhere suitable now or forget about children altogether On your single salary you are looking at somewhere around 100-110k realistically. Look at minimum of 10% deposit. House price falls don't matter one bit if you aren't forced to sell. Make sure you have enough spare cash to cover unforseen events such as redundancy or illness etc. Buy somewhere that will last you 5 years if you choose to buy. If you have put off having a family due to waiting for the right time then you could wait forever and miss that boat entirely.

In your shoes I think renting a suitable home is probably the best thing to do as unless you are somewhere cheap you'd be stretching yourself when you are starting a family and babies are phenomenal money pits! Renting isn't dead money if you see it as money in exchange for the use of a house. You don't have to maintain it, you just live in it.

I said the exact same thing in a previous thread. You can't put your life on hold to have children. I went into a long winded response on a previous thread about this, but the bottom line was I was pregnant after many years of fertility treatment but found myself going through a divorce and potentially homeless. I chose my child over keeping that roof over my head and rented privately. OK, still renting, but DD starts school next year so no more nursery fees, finances will be in better order, can save more and hopefully house prices will have returned to some sort of normality by the time I have saved a big enough deposit.

YOU CANNOT PUT A PRICE ON NOT HAVING CHILDREN!!!

pollyanna24

izzybusy23 wrote: »

I said the exact same thing in a previous thread. You can't put your life on hold to have children. I went into a long winded response on a previous thread about this, but the bottom line was I was pregnant after many years of fertility treatment but found myself going through a divorce and potentially homeless. I chose my child over keeping that roof over my head and rented privately. OK, still renting, but DD starts school next year so no more nursery fees, finances will be in better order, can save more and hopefully house prices will have returned to some sort of normality by the time I have saved a big enough deposit.

YOU CANNOT PUT A PRICE ON NOT HAVING CHILDREN!!!

Thanks for that. It took me quite a while to realise this.

I always thought that we simply couldn't afford on bf's wages alone. We have spent some time saving up and I am happily 9 weeks pregnant.

I wanted to have a baby years ago, but I accept now that this is probably the best time for me to have one. I can enjoy it more, and even though we are not completely financially secure, we will manage somehow.

izzybusy23

mickym wrote: »

Great feedback, thanks again.

So by renting how do you guys invest in your future?

I know with the current climate, looking to make a house an investment is probably a stupid idea, but when you are at retirement age, would not owning a house be an issue?

Nobody is saying 'rent forever'. Whilst you are renting and raising a family, the money that you would had put towards the mortgage (because I bet the rent is cheaper then a mortgage you would had go) put away in a savings account and keep building on it. When house prices bottom out in about 5 years time you should have enough of a deposit saved up to have a smallish mortgage or a shorter term mortgage...

I am aiming to have enough of a deposit saved in 4 years when I am 40 to buy a house that I can either pay off in 15 years or have a small monthly payment instead.

izzybusy23

pollyanna24 wrote: »

Thanks for that. It took me quite a while to realise this.

I always thought that we simply couldn't afford on bf's wages alone. We have spent some time saving up and I am happily 9 weeks pregnant.

I wanted to have a baby years ago, but I accept now that this is probably the best time for me to have one. I can enjoy it more, and even though we are not completely financially secure, we will manage somehow.

Congratulations!! :T

You can't buy a baby at any price. Enjoy your pregnancy!

sugarpants_2

We started our family when we were in our mid 20's and we opted for the rental path. Its worked for us so far and have got 2 gorgeous children who are aged 5 + 20 mths. Lifes too short in my eyes and get yourself a nice little rented 2 bed house.Good luck and let us know what you decide.Weve been told we need at least 10k deposit by IFA if we want to get n the property ladder.Sugar xxx

mickym wrote: »

Hello Board!

Ive been lurking on these forums for a while now, and have
got to say you all seem a great and knowledgable bunch...
but despite searching and reading so many posts im a
little stuck on how my fiancee and I are to make our step
on the housing market.


My Situation...

I am 30 and my fiancee is 33 and have been together now for
almost 7 years, we both still live at home with our parents
as we have tried to hold off getting on the property ladder
until market prices seemed to be more 'sensible'

We have a combined saving of approx. £5,000.

We earn a salary of £25,000 (me) / £ £16,000 (her) / COMBINED £41,000


We dont have any loans or credit cards.

The major outlay is proably fuel costs for my car which costs £200+
per month to travel to work.

There is a possibilty of being able to work from home for a few days
a week, once we buy a place and I can arrange a dedicated office in it.

We are on the Housing Association list for Shared oWnership and
Open Market Homebuy. However recent research on here seems to strongly
advise agianst these schemes, which I cant understand, as surely if
the market heads for a great fall, the damaged is halved between you
and the Association?

ALso renting seems such a waste of money that we could be saving
towards a deposit.


As many other people in this situation are finding, it is
incredibly frustrating to find the right moment to make a
move.

We are very eager to get a place of our own and start a family
together.


Having known people close to us to have gone through repossession
in the 90s we are eager not to go through a similar experience,
and would like to get a mortgage and place that will allow
flexibility in possibllity intrest rate rises.

One other factor is that as we plan to start a family over the
next year or so, sensibly we should base a morgage on my sole
earnings.

What are we likely to be able to realisticly afford and safely?

Also, for those who have got a mortgage and are due to have a baby
soon, how do/have you been managing?

Big thanks in advance!