First time buyers - now a good time?

carolt

General consensus?

DON'T BUY NOW.

In a year or two, you'll be in a fabulous position to buy, great deposit, prices much lower. Even if you're from Sussex, time will have changed - check out an area, preferably even a street you would like to buy in, and rent there first to check if it really is where you'd like to commit yourself too.

27 really isn't that old!

If you're planning to have kids, check out areas in the catchments for good schools - you might not care now, but it will matter in time, and save you having to move later (and house prices there are likely to hold up better, too, when you do buy).

Good luck!

snoopy78

I agree with most on this site just looking at the figures you'd be foolish to buy now, if you really can get a rented place for £800 pcm. Does seem a huge difference in favour of renting.

What I'd do is rent but make sure you also put away what ever you'd have paid additionally on the mortgage to see if you can manage the repayments giving yourselfs the advantage of gaining more deposit and knowledge of the lifestyle you'll have to have to get onto the property ladder.

Guy_Montag

To back up what you've already been told don't buy unless:

1) You get a very good discount, I'm talk 20% minimum & not on the asking price, but on what other similar places nearby have sold for.
or
2) You are buying a house that you will live in, bring up your kids in, retire in, & finally sell to pay for your long term residential care.

If you rent for six months (in the first instance) you won't loose anything & you can see which way the wind is blowing in the area.

ps. I'm 30 & waiting patiently to get on the housing lada.

carolt

Sage advice, Guy, except for the spelling.

Repeat after me: lose, lose, lose, lose, lose....... (And not only you - a very common mistake, but one which I've seen so often I think I'm starting to become allergic to it...;))

wharty

Hi mate, to be honest it depends on how long your gonna stay in the house you want to buy. If you plan on staying for say 10 years then i would say buy, however if you think you may need to move a couple of years down the line then you could find that this is the time when in a worst case scenario the price of your home has dropped by as much as 30%,(If you believe what the experts are saying) so for you this could be a £75000 loss. Hardly worth saving that £50k. I don't know what sort of home you are planning to buy, buts lets say you can rent a nice detached for around £1000 pcm, over two years this would be £24k spent on rent but if the prices have fallen by 30% then you would still have £26k in savings and the same house could be worth £175k. Now to me with all the uncerainty,this has got to be the best move.
I am currently considering selling my house and then renting another place to hopefully cover myself from falling into negative equity, and hopefully getting a bigger house in a couple of years time when/if they drop in price.
I am ABSOLUTLEY NO EXPERT this is just an ordinary Joe telling you what he would do in your shoes. I am sure there are people on here though who would tell you otherwise. Good luck pal.

Guy_Montag

carolt wrote: »

Sage advice, Guy, except for the spelling.

Repeat after me: lose, lose, lose, lose, lose....... (And not only you - a very common mistake, but one which I've seen so often I think I'm starting to become allergic to it...;))

Err, must have been a sticky 'o' key

JonnyBravo

carolt wrote: »

Sage advice, Guy, except for the spelling.

Repeat after me: lose, lose, lose, lose, lose....... (And not only you - a very common mistake, but one which I've seen so often I think I'm starting to become allergic to it...;))

Oh carolt..... a girl after my own heart.... can't you see we're written in the stars?? In bold!


Thanks for supporting this crusade!

http://forums.moneysavingexpert.com/showthread.html?p=9860771#post9860771

Cleaver

DEATHWISH_GHUOL wrote: »

Good question. Answer - BUY now and BUY big. With the world economy on the precipice of a MASSIVE GLOBAL FINANCIAL CRASH do best to GET OUT OF CASH as soon as possible. In the long run a house is an INVESTMENT and an ASSET you can live in, sparing yourself PAYING OFF SOMEONE ELSES MORTGAGE for them.

This thread is three and a half years old. You're doing the online equivalent of drunkenly yelling at imaginary people in an empty car park.

macaque_2

Merlinpixie wrote: »

Thanks for the comments so far, I should have said that we both come from Sussex originally and have only been in Leicester for 2 years so know the area well. Taking this out of the equation do people still thing renting is the best way forward - I only say this as if we were to rent for a couple of years at around £800 per month which is what you'd pay for what we want then you are looking around £20,000 in rent - therefore perhaps even if house prices drop we'd break even? rather than wasting more money on rent?

Rent is the cost of a service and therefore not wasted money. If you rent, you don't have to pay for property maintenance and you are free to move without the transaction costs.

If you rent:
Cost of renting per year will be £800 X 12 = £9,600 (per year)
Over 2 years you will pay out £19,200

If you buy:
Cost of servicing the debt = £250,000 X 0.05 = £12,500 (per year)
Over 2 years you will pay out £25,0000 (before paying off any capital
You could argue that it is less because you are putting up a deposit but this is wrong since you lose the income on the £50k deposit

If you only ever buy one property, then you can ignore the transaction costs. However if you decide to trade up after 2 years, you can add the transaction costs to your bill
Transaction costs
Stamp duty - £7,500
Estate agent for selling £5,000
Lawyer for buying and selling £2,000
Sorting out the new house £10,000
Annual maintenance £2,500

What if house prices fall by 10% over 2 years
Capital loss £25,000

If you want to buy one home for the rest of your life, you can ignore most of the above. If however you intend to trade up, the difference between renting over 2 years or buying is:

Cost of renting over 2 years £19,200

Cost of buying over 2 years £77,000 (and this does not include any capital repayments).

In other words could be £60,000 better off by renting over two years.

UrWntr

macaque wrote: »

Rent is the cost of a service and therefore not wasted money. If you rent, you don't have to pay for property maintenance and you are free to move without the transaction costs.

If you rent:
Cost of renting per year will be £800 X 12 = £9,600 (per year)
Over 2 years you will pay out £19,200

If you buy:
Cost of servicing the debt = £250,000 X 0.05 = £12,500 (per year)
Over 2 years you will pay out £25,0000 (before paying off any capital
You could argue that it is less because you are putting up a deposit but this is wrong since you lose the income on the £50k deposit

If you only ever buy one property, then you can ignore the transaction costs. However if you decide to trade up after 2 years, you can add the transaction costs to your bill
Transaction costs
Stamp duty - £7,500
Estate agent for selling £5,000
Lawyer for buying and selling £2,000
Sorting out the new house £10,000
Annual maintenance £2,500

What if house prices fall by 10% over 2 years
Capital loss £25,000

If you want to buy one home for the rest of your life, you can ignore most of the above. If however you intend to trade up, the difference between renting over 2 years or buying is:

Cost of renting over 2 years £19,200

Cost of buying over 2 years £77,000 (and this does not include any capital repayments).

In other words could be £60,000 better off by renting over two years.

Nice try.

Cost of renting year 1 = (800 x 12) - (50000 x 0.03) = £8100
Cost of buying year 1 = (250000-50000) x 0.035 = £7000

Assume 3% interest on the £50,000 deposit.

It's funny how the result changes when you use realistic figures. Check moneysupermarket.com for 80% LTV mortgages if you want to validate my figures.

Over 2 years and longer, the result is even more in buying's favour.