Sticking Their Head In The Sand

WTF?_2

thriftybabe wrote: »

he more you save = Less you need to borrow/payback.

From a lenders point of view, the less you borrow the smaller the risk you are - Making it easier to get the mortgage you need.

Sounds so obvious but gather together every penny you can afford for your deposit!

The only thing is that there are so many people who do not want to sacrifice their luxuries to save and just want to get into debt!

And not to forget - the less money your borrow the less you spend on interest paying it back!

You'll pay over two quid back for every pound borrowed on a typical mortgage.

poppysarah

And the more you save, the more likely you are to continue to save. And that is a very good habit.

bloomfield_24

Hi
i am a little bit worried about the recession!
I am saving for a house deposit and my OH is self-employed so as a result we cannot get a mortgage at the moment, and i read in the paper today that house prices are expected to drop 40%! I don't believe everything i read though - i work in the media industry. So while the house prices dropping will benefit us, my OH might have to return to working for an employer doing something that he might not enjoy as much just so we can get a house! also i was speaking to someone who worked for a newspaper during the last recession and media jobs are one of the first to go!

baileysbattlebus

We will be in a postition to down size in the next few years, we currently have a 5 bed house which we hope to sell sometime within the next 2 to 6 years, we haven't decided on an exact time yet.
We live in Berkshire, though we are not originally from the area, we hope to move to either the North East, where I'm from and still have a lot of family or to South Yorkshire where OH is from.

If prices fall 30% where we live, we will have about £300k to buy another house, I have been looking at both areas for the last year or so, keeping an eye on prices and if in the North East they were to stay the same as they are now, we would be able to buy a nice house in a decent area. the same for South Yorkshire and have a bit of change.

The house has never really come into our retirement plans, other than the fact we knew we wouldn't stay in it forever, we have savings (a bit), have small investment, have some debts, car loan and a couple of credit cards and both have index linked final salary pensions and OH has been in his scheme for well over 30 years and is on a good salary.

The pensions are really the deciding factor for our retirement not the house, when they reach a level we are happy that we could live on comfortably, then it's time to retire and move on.

PasturesNew

If they planned to downsize, then (health allowing) they've got a good chance of staying in the house until the price goes up.

They are unlikely to suddenly find one of them is pregnant, be out of a job or have to relocate for a new job. At the retirement stage you should theoretically just be getting older.... and it wouldn't be uncommon for them to still be really perky in 10-15 years' time, say. In fact I expect my parents to live into their 90s.

The only problem comes if they are having to retire and never planned to pay off their mortgage, but mortgaged up to the hilt with a view to maximising the opportunity HPI gave them with a larger mortgage.

Then they're stuffed.

However, they can sell, rent, buy later, if they believe house prices are going down and staying down.

They do have the luxury of various choices of some sort.

They can play one of several games now.

baileysbattlebus

PasturesNew wrote: »

If they planned to downsize, then (health allowing) they've got a good chance of staying in the house until the price goes up.

They are unlikely to suddenly find one of them is pregnant, be out of a job or have to relocate for a new job. At the retirement stage you should theoretically just be getting older.... and it wouldn't be uncommon for them to still be really perky in 10-15 years' time, say. In fact I expect my parents to live into their 90s.

The only problem comes if they are having to retire and never planned to pay off their mortgage, but mortgaged up to the hilt with a view to maximising the opportunity HPI gave them with a larger mortgage.

Then they're stuffed.

However, they can sell, rent, buy later, if they believe house prices are going down and staying down.

They do have the luxury of various choices of some sort.

They can play one of several games now.

I agree, if you are not mortgaged up to the hilt, for a downsizer with little or no mortgage there are lots of options, not least, as you say, staying where you are.

Barring an absolute collapse in house prices in Berskhire, of say 70 or80 % and very little downward movement any where else, we will not have a problem down sizing, we may have a problem selling the house , but we wouldn't be desperate, not from a financial aspect any way and would be in postition to price the house realistically.

Renting for us, I don't think will be an option we would want to take up, unless it was for the winter in St Lucia!! I wish. Seriously, though I wouldn't want to rent, we could possibly rent while we found what were looking for.

johng_uk

The only thing is that there are so many people who do not want to sacrifice their luxuries to save and just want to get into debt!

And that's their lookout not ours lol

tomstickland

I'm quite worried about recession too. I mean, 3 years ago I had a full head of hair, but now it's "exceptionally fine" on the top.

Trollfever

From the OP:

My bosses (husband and wife team) were adament that the only reason property prices were falling is because we are talking ourselves into a recession and its all rubbish and that house prices will always stay at this level.

I wonder if the owners of the business have used their house as security for any business bank borrowings.

moanymoany

We are two of the 'idiots' relying on our large house to help finance our retirement. Our intention was to downsize and use the balance for some income. I don't see why that was any worse a decision than investing in pension plans that now pay peanuts or company pension schemes where the goalposts have been moved so often we are all tripping up in the holes being left.

Last year I could see that the market was slowing in our little corner of the South East. My fear was not that house prices fell - there is always knock on adjustment - BUT that houses wouldn't sell at any price. Having lived through the last big crunch when our house value fell by a third and houses stayed on the market for years.

So, we worked like stink to get the house to 'show home' standard and put it on the market end of feb. In four weeks the market hardened so we decided to pre-empt the inevitable price reductions. We were also selling with no chain. Result was a cash buyer who had sold six months before and waited for the prices to drop 10%.

Now locally we have many 'no chain' and 'reduced price' houses in the EA's.

Now we have our money in the bank and will wait 6 months before looking. No-one knows what will happen to the housing market, it is all best-guessing on information available.

My advice to anyone intending to downsize for whatever reason is to do it now, the last time things went pear shaped it lasted a long time. I know the circumstances were different, but people tend to react in the same way to the same stimuli. House prices will be no different.