Is the credit crunch really that bad?

jamtart6

Im a FTB and now nervous to buy, but have found an amazing house (similar are up for £230k at the moment), this is on for £190k (hope to get it down to £170k) as it needs complete modernisation.

It is in a great area, and big enough to stay in forever. It would mean we would have to use all our savings for the deposit, have no wonga to do it up, but do it up slowly. It looks liveable, plus we have about 18mnths before we have to move out of home, which would make it fine for us to live in, just perhaps not 100% perfect, but it would be a project for life.

Ok in the next 10 years the country is having a mortgage crisis, but if I dont intend to move, is this such a big thing? In 15 years time that house will most likely be worth £170k minimum anyway, so yes I havent made any money, but I won't have lost any either.

Would I be crazy to buy now if I don't want to move in the next 20yrs?

phil_b_2

It sounds like you've done the research and that you can maintain its value. I personally dont think prices will drop nearly as bad as some on here.

If its a home which you'll stay in for such a long time and can afford the mortgage etc then you shouldnt worry and just make the leap. Many will be hanging on forever hoping houses will reach a level they can afford, so you should just move forward and be happy .

Just dont stretch youself financially as you could end up bother that way.

I would, however, be somewhat weary of moving into a house and having to spend a lot of money on it at the moment. It could be money you wont see back. Make sure you haggle hard and get it for the 'right' price.

PasturesNew

If it's the perfect house and you can afford it and don't want to move for 10+ years, then get it.

If it's not perfect, if you think you might lose your job, reproduce, fall out, have failing health, such that your financial might change significantly, then think each scenario through.

If you're stretching yourself to buy it and there are a lot of "IF" statements in your decision (if we keep our jobs, if we don't have kids, if neighbours from hell don't move in next door) then it might be ill advised.

The answer will only unfold with hindsight, when you're reviewing your life decisions in 10-20 years' time.

However, if it's a house like many others and you could knock it down to £170k now, you might be able to knock a similar one down to £140-150k in 2-3 years' time.

The answer isn't black/white; it's different for everybody, for every house, for every set of circumstances you expect, for every set of circumstances that will come to pass.

jamtart6

thanks to both replies, pastures new you have wise words! we are going to view it tomorrow. my circumstances will change in september (hopefully for the better, i.e. double the wages when i qualify). we are trying to get a mortgage based on what i earn now, so that IF i do get a better wage we can live more comfortably, if i dont get a better wage, we can still afford the mortgage and a bit of leaway if interest rates rise...

thats the plan anyway!!!

nollag2006

Good luck to you jamtart6. Sounds like you've got your head screwed on.

There are some on here, who are so risk averse that they'll never move out of rented accomodation. Prices may fall, but they are more likely to rise over the longer term as they always have done.

If you really like the house, and can get it for the right price, go for it !!

Jorgan_2

jamtart6, you say the property needs modernising & that you will have to use all your savings for the deposit, what will you do id there is retention on the survey re works that need doing?

I don't wish to put you off the property, just trying to make you aware of what maybe round the corner.

It does sound like you have thought it through, only you can decide if it its the right thing to do.

jamtart6

i might hate it when i see the inside tomorrow but from memory (have been in the one 3 doors down) they are nice! plus space to extend!

Jorgan - what does a retention on the survey mean?

brit1234

nollag2006 wrote: »

There are some on here, who are so risk averse that they'll never move out of rented accomodation. Prices may fall, but they are more likely to rise over the longer term as they always have done.

Prices will most likely fall over the next 3-4 years and then slowly rise like any previous housing cycle.

Don't forget nollag that house prices are limited to what people will pay and be lent.

Buying now and you guarantee negative equity due to the market being just falling off the peak.

jamtart6

brit1234 did you read what i wrote about 10 years in the future etc. - do you still think your statement about negativy equity applies to this situation? seriously interested in your opinion not just ttrying to throw a spanner in the works!

Jorgan_2

jamtart6 wrote: »

Jorgan - what does a retention on the survey mean?

Say you are buying the property for £100k and putting down a deposit of £15k, requiring a mortgage advance of £85k. The survey reveals that the roof needs some work & the electricals need re-doing.

The lender is happy to loan you the £85k, but they are going to retain £5k of that until the work has been done, so will only lend £80k (once the work has been done & they have re-inspected the property, they will release this £5k to you). You are now £5k short of what you need to be able to proceed with the purchase, plus you need to get the work done before the lender will give you the full amount of mortgage you require to proceed.

Does that make sense?

jamtart6

aha! yes it does... wow I didnt realise that about mortgage lenders its a pain having to pay for a survey when we might not even end up being able to afford the house. i see what you mean, thanks for telling me that!!

We have a friend who is a surveyor... he might give us a little heads up about the property if we decided to make an offer before getting a surveyor to do it properly if you know what I mean... hmmm thats one to think about anyway!!

Does anyone know if estate agents get commission from a sale? I have a another friend who is an EA, and if we went through her EA would she get any commission for the sale? Obviously only if we like the houses they had on offer, but I'd like it to go to her than the others, plus we've been dealing with her!