Answer To 'should I Buy Now Or Rent' Questions

[redgenieuk]

Hi

I'll keep this short and sweet.

I am about to buy a 2 bed 2 bath flat on a 75% mortgage 25% deposit in form of 10 year int free loan from Fairview Homes. Am I mad?

My logic =

I really really like the flat

No deposit = no significant financial input upfront

I am comfortable with the monthly repayments

Even if i enter neg equity for even 2-3 years, in 5 - 6 years the flat will be worth at least what i paid for it.

Thoughts?

1) A loan isn't a deposit.

2) "You really like" is not logical. Its emotional.

3) Gee, your comfortable. I'd be comfortable, but I have more sense.

4) Its a flat. Flats are hit the hardest. I am afraid if you want to become one of the suckers, feel free. Otherwise do the sensible thing.

I don't actually think now is the worst time to buy, but a flat, with no deposit and a full rate. IMHO your trolling and it worked because you wound me up enough to make it visible, move it and reply.

Maybe I am the sucker this second.

[Jim B.]

Hi

I'll keep this short and sweet.

I am about to buy a 2 bed 2 bath flat on a 75% mortgage 25% deposit in form of 10 year int free loan from Fairview Homes. Am I mad?

My logic =

I really really like the flat

No deposit = no significant financial input upfront

I am comfortable with the monthly repayments

Even if i enter neg equity for even 2-3 years, in 5 - 6 years the flat will be worth at least what i paid for it.

Thoughts?

You're mad : )

Seriously though, we are in the middle of the biggest crisis in capitalism for decades, god knows where this will all end, so any large financhial investment at this time is a huge risk.

Ask yourself would you still be happy if in 10 years time you were still in negative equity.

[clowns]

Hi!

I am looking to buy a house in Telford, Shropshire. There is a new build detached property which was advertised for 479,000 pounds last year. It was initially bought but the sale fell through earlier this year. After much haggling the builders have reduced it to 360,000 and have agreed to pay the stamp duty.

What do the forum members feel? Is it a good buy or should I wait a touch longer? I currently live in rented accomodation. I have arranged a good mortgage deal in principle with HSBC. Will this price drop further? Any advice would be much appreciated.

Thanks in advance.

clowns

[Si1]

Hi!

I am looking to buy a house in Telford, Shropshire. There is a new build detached property which was advertised for 479,000 pounds last year. It was initially bought but the sale fell through earlier this year. After much haggling the builders have reduced it to 360,000 and have agreed to pay the stamp duty.

What do the forum members feel? Is it a good buy or should I wait a touch longer? I currently live in rented accomodation. I have arranged a good mortgage deal in principle with HSBC. Will this price drop further? Any advice would be much appreciated.

Thanks in advance.

clowns

yeah go for it the world is your oyster it's only numbers after all

crash. tears. regret. ruined lives.

whatever. not my problem mate. enjoy ther crash.

[Jim B.]

yeah go for it the world is your oyster it's only numbers after all

crash. tears. regret. ruined lives.

whatever. not my problem mate. enjoy ther crash.

Yeah, what he said.

A third of a MILLION pounds for a house in Telford?

[Fool]

Yeah, what he said.

A third of a MILLION pounds for a house in Telford?

I am new here and do not have much idea about the housing market , but as I do wish to buy , I decided to start to inform myself . How long should one wait, one year , two years? . How do I know when is the right time to buy ? I once bought an appartment and have not made any profit on it., only loss. I do not want to repeat my mistake again. I want this time to have my share of profit and to buy at the right time. Thanks for any advice.

[Paddles]

Hi

I'll keep this short and sweet.

I am about to buy a 2 bed 2 bath flat on a 75% mortgage 25% deposit in form of 10 year int free loan from Fairview Homes. Am I mad?

My logic =

I really really like the flat

No deposit = no significant financial input upfront

I am comfortable with the monthly repayments

Even if i enter neg equity for even 2-3 years, in 5 - 6 years the flat will be worth at least what i paid for it.

Thoughts?

Hi!

I am looking to buy a house in Telford, Shropshire. There is a new build detached property which was advertised for 479,000 pounds last year. It was initially bought but the sale fell through earlier this year. After much haggling the builders have reduced it to 360,000 and have agreed to pay the stamp duty.

What do the forum members feel? Is it a good buy or should I wait a touch longer? I currently live in rented accomodation. I have arranged a good mortgage deal in principle with HSBC. Will this price drop further? Any advice would be much appreciated.

Thanks in advance.

clowns

And still they come and ask the same old question.

This thread has absolutely destroyed my respect for the intelligence of my fellow Britons. It's depressed me beyond belief to be honest.

Seriously, I understand the desire to "own" your home, but don't these people watch the news? Do they think that somehow the articles about economics don't have an effect on their world?

[Jim B.]

I am new here and do not have much idea about the housing market , but as I do wish to buy , I decided to start to inform myself . How long should one wait, one year , two years? . How do I know when is the right time to buy ? I once bought an appartment and have not made any profit on it., only loss. I do not want to repeat my mistake again. I want this time to have my share of profit and to buy at the right time. Thanks for any advice.

Only a fool would buy in a falling market. If you are not in a rush for any reason then just sit back and wait. I think it's impossible to call when the market will hit bottom.

[West Hampstead]

OK, there seem to be lots of posts popping up asking 'should I buy now or rent'.

And as Paddles has stated they are always from recent new members with less than 10 posts to their name, but of course they have been looking at this site for years. And yes, they missed out on the opportunity to buy a few years ago.

Pllleeeaaasseee.

Anyway, I'd like to suggest the following as a stock answer to these posts:-

OK, I currently rent a property for £750 per month and similar properties in the area are advertised at £180,000 (notice I said advertised, not worth).

So, I'm going to work out some figures based on this property for someone with zilch savings to their name.

If they purchase the property at £180k and pay a repayment mortgage at 6% over 25 years they would be paying £1,159 per month as opposed to £750 a month rent. Now if that house price drops 30% over the next 4 years they will be down £19,641 having overpaid for the mortgage for 48 months and this property is now worth £126,000. So in reality they have lost £73,641. If the house goes down by 40% they will have lost £91,641.

On interest only, it works out that they will be down £7,200 on overpaying a mortgage as opposed to rent meaning on 30% downturn in property prices they have made a total loss of £61,200 and on 40% drop £79,200.

A STR with dosh in the bank can also pay some/all of the rent with the interest on their savings so they are effectively living rent free.

Take for example a friend of mine. She and her husband have a property which an estate agent would value at £380,000. The have a mortgage of £80k and pay £491/month (repayment). Now if they were to sell tomorrow for £380k they would net around £280k after costs. This would provide £1400 in net interest per month which would pay for the rent of an equivalent property. So they get to live rent free, save £491 per month and watch the house prices drop. Now working on 4 years again that would mean a 30% drop saves them £137,568 and a 40% drop £175,568.

It's a no brainer really!!!!!!!

Comments please - especially all you EA's out there with your first posts!

[Moderator: This thread is now pinned and any new threads started on the subject will be merged into this one]

Very well put. You wrote that in February this year so has anything changed? I hope that while you are paying the rent out of you 360k interest you have not put it in Iceland or the Isle of Man. Theres only opinion, so read them all and make up your own mind.

http://www.paramountproperties.co.uk/

[Scott]

Very well put. You wrote that in February this year so has anything changed?

No, nothing has changed for me. Just increased my savings by about £5k since Feb 2008. Still paying £750 a month rent. Unfortunately I don't have the 360k savings as you quote, just £215k from STR'ing which pays my rent and leaves me £255 leftover each month. And no, none of my savings are in Iceland or the Isle of Man. All UK based. Majority now of it in B&B, Nationwide and NS&I.

Do I wish I owned a property? No. I don't miss the DIY or having to replace any major appliances. This is all done for me.

But yes, give it a few more years when property has dropped 40-50% from the peak and I will enjoy owning my own property.

I see you're into lettings as well as sales. This must be helping you through these hard times. It's actually a nice little site you have there.

Regards

Scott

Edited October 20, 2008 by Scott

[deeplyblue]

Okay, I'm another b****y newbie posting on the same old topic - and without having read all of the previous pages even. However, I'm here to add a few thoughts on why I/others might want to buy now.

1 You want to start a family. Some people are happy coping with a full time job 1/2/3 small children AND house hunting/buying, but many want to separate the two. And if you want a house you can adapt for small children, then a rented property is not always the best bet. You may not feel that you can wait - many couples are already in their 30s and can't leave that decision for another 4-5 years. Clearly every couple of months seems to make a small difference to house prices, so you can go slowly, but anyone in that sort of position may not want to sit it out even for a couple of years.

2 You are retiring. If you have a large house in an expensive location, then the costs of heating, insurance, council tax etc may be substantial. Perhaps all these were worth it when you wanted somewhere close to good schools, within walking distance of your employment and suitable for kids, but now you want out. But you don't to spend the next 4-5 years of your life hoping that prices will fall, you want to have a place where you can get a garden going whilst you still do the heavy digging yourself. And the stresses of moving all that stuff is not something you want to go through more than once - and particularly you don't want to risk eviction by a cash-strapped landlord.

3 You hate the whole business of watching the housing market. MY OH is that type. I quite enjoy sitting here are waiting for what our savings can buy go up, but not everyone does. "Oh God, not another b****y evening talking about houses." The topic gets wearisome, and the waiting frays at the nerves. In times like these waiting to buy a house can become a way of life - and it doesn't suit everyone. If we knew that the house price drop was scheduled to keep going until, say, July 2009, then stop, we'd sit it out, simply ignoring the matter, but for some reason, no one seems prepared to tell us what the timetable is.

4 You are pessimistic about inflation. One solution to a debt mountain - personal, governmental or societal - is to have a good old fashioned dose of double-digit inflation. Providing that wages go up somewhat in line, then you restore the earnings:house-price link not by bringing the price of houses down, but by bringing the rate of earnings up. This also helps anyone staying put with a mortgage. We are renting, but our lease has a clause which stipulated that the rent will go up by at least the RPI.

5 You have really difficult requirements for a house. You may want to sit in rented only until that 1 in 10,000 house comes on the market, and then buy it.

6 The housing market you are looking at does not seem to be dropping that much. Perhaps owners there seem to be taking their houses off the market, rather than sell at a loss. (Irrational, I know - if they're buying, then the places they want to buy are dropping too, but that's how it seems to me. Several of the places I had some hopes might drop into our price range have simply gone off the market. Some of them have been rented out instead.)

7 You think that GB will do anything to get re-elected. He wants mortgage lending back to 2007 levels and everyone buying again, and, now he owns the banks he can tell them (has told them!) just to start lending and damn the consequences (though he didn't mention that bit). He can even instruct them to ignore BofE base rates and set low interest rates for mortgages, and hence for savers. He may even have ways of getting round the consequences - see note on inflation above, and my suggestion on increasing the taxes on savings. This would not be the first time that GB has decided that a substantial raid on people's savings is the best way to solve a shortage in the public purse. See what 10% inflation, 4% return on savings and a 35% tax on savings interest (under the newly fashionable "soak the rich" principle) would do to your capital.

8 You're so rich you don't care!

Sorry; this post should have been cut into several shorter ones, but I'm tired!

db

Edited October 21, 2008 by deeplyblue

[athom]

I think the phrase, heard often lately "we are on the VERGE of a recession" has more than enough argument for waiting.

I'm waiting for the average house price to be in reality £80,000 but reporting takes time so i'll start looking when it hit's £100k IF the economy is looking up, and thats a big important IF.

If it falls any further than that it'll be slow, reducing the benifit of lower price verses rent down the drain and pain of renting etc.

[OMG]

I am about to buy a 2 bed 2 bath flat on a 75% mortgage 25% deposit in form of 10 year int free loan from Fairview Homes. Am I mad?

GASP

I am looking to buy a house in Telford, Shropshire. There is a new build detached property which was advertised for 479,000 pounds last year. It was initially bought but the sale fell through earlier this year. After much haggling the builders have reduced it to 360,000 and have agreed to pay the stamp duty.

GASP

Really, this thread scares me.

[athom]

Really, this thread scares me.

Yes why do people not seems to grasp why these sellers are so desperate to sell?

[ReadytoBuy]

OK.. little background.. been renting now for 4 years, saving like mad, have around 60K saved up just waiting for the right house to come along.. 37 years old and paying £725 pcm rent.

There's a detached house that was originally up for £179K, dropped initially to £159K and its just dropped today to £135K, 25% drop from peak? (http://www.rightmove.co.uk/property/16990283?utm_medium=email&utm_source=emailupdates&utm_content=ealertspropertylink&utm_campaign=emailupdates_Aug08) stood empty and round the corner where I'm renting.. perfect location for my little one's school, next door to one of her school mates, been watching it for ages and was thinking next spring of putting an offer in when my current lease is up (May 09).. with it dropping so much I'm tempted to go for it now.. would I acting too soon??

Just after some advice... read the forums every day and respect peoples opinion on here...

[rach!]

hi all

i was advised to post this here from someone on MSE forum, where i was also told i need balls of steel(i havent but i really need to sort this)

so here goes............

have had some ups and downs on this and now nothing is happening.

firstly the d.i.p. said we could borrow £84,575 we were told find a house make the offer get it moving, found a house made the offer, offer accepted ( i should add now so you know as much as poss, we are doing it with 10% gifted deposit) anyway gets to surveyors they survey wrong house they agree to survey right house for "free" but halifax say after recieveng actual application they can only lend £70,000. 2 weeks ago tomorrow i sent a letter to vendor explaining this and asked her to contact me, EA contacted us left answerphone message(on the friday) so my partnher rang back and was told someone would call back monday no one did so he rang on tuesday, were told she wouldnt make a decision until we had spoken to EA's FA to see if this was definately all we can get. So he seemed satisfied that we arent pulling a fast one which is why we assumed we had been told this, our FA put letters through vendors door and EA's door stating this is our offer (this was thursday last week, so another week has passed). We havent been informed of any decision yet, but the sold sign is still on and on the website it still says sale agreed.

have tried emailing and got no reply (this may sound daft but...............i darent ring the EA as the manager which is who i always get put onto is really not a nice person and makes me feel rubbish to be honest) i am thinking of ringing the manager at a different office who is also the EA's FA and asking him to find out for us.

have been advised by a friend who had almost the same situation to give them a timescale of when we want an answer by, as we want to move before xmas if possible and if she turns it down can at least go private for the time being to get my kids off this estate.

our FA's advice now is to find another house and say nothing to vendor until we move but i really want this house and as it has come so far im sure it can go ahead quicker if we get a decision.

im sorry if this post makes no sense and seriously hope it does make sense as i really need advising as to what to do next.

[Jason]

hi all

A couple of questions:

Where's this gifted deposit coming from?

Are you using the Financial Advisor of the EA that is selling that house?

I personally would say stick to the revised offer, which is lower and in your favour (you are paying less). Anyone else who buys that house will get the same valuation as you (well probably less, because house prices are crashing and all).

[Si1]

hi all

i was advised to post this here from someone on MSE forum, where i was also told i need balls of steel(i havent but i really need to sort this)

so here goes............

have had some ups and downs on this and now nothing is happening.

firstly the d.i.p. said we could borrow £84,575 we were told find a house make the offer get it moving, found a house made the offer, offer accepted ( i should add now so you know as much as poss, we are doing it with 10% gifted deposit) anyway gets to surveyors they survey wrong house they agree to survey right house for "free" but halifax say after recieveng actual application they can only lend £70,000. 2 weeks ago tomorrow i sent a letter to vendor explaining this and asked her to contact me, EA contacted us left answerphone message(on the friday) so my partnher rang back and was told someone would call back monday no one did so he rang on tuesday, were told she wouldnt make a decision until we had spoken to EA's FA to see if this was definately all we can get. So he seemed satisfied that we arent pulling a fast one which is why we assumed we had been told this, our FA put letters through vendors door and EA's door stating this is our offer (this was thursday last week, so another week has passed). We havent been informed of any decision yet, but the sold sign is still on and on the website it still says sale agreed.

have tried emailing and got no reply (this may sound daft but...............i darent ring the EA as the manager which is who i always get put onto is really not a nice person and makes me feel rubbish to be honest) i am thinking of ringing the manager at a different office who is also the EA's FA and asking him to find out for us.

have been advised by a friend who had almost the same situation to give them a timescale of when we want an answer by, as we want to move before xmas if possible and if she turns it down can at least go private for the time being to get my kids off this estate.

our FA's advice now is to find another house and say nothing to vendor until we move but i really want this house and as it has come so far im sure it can go ahead quicker if we get a decision.

im sorry if this post makes no sense and seriously hope it does make sense as i really need advising as to what to do next.

jeez, why stressing so much, I mean, if you walk away, the house will probably still be there in 6 months 10%+ cheaper.

you're not in a race

edit: realised you need to move out of the estate you live in, just get a nice private rental somewhere nicer. neighboyur near me did this, lives 2 doors up with young family for decent rent in nice area, moved away from knife crime area, worked for him and his missus. it is possible to live like this happily for years as there is a big oversupply of property to rent, if you do the legwork, in most areas.

Edited October 28, 2008 by Si1

[Roy]

Now that its the following year with recession breathing down a lot of peoples necks, what is everyones thoughts of how far house prices are likely to drop? In fact how far for the north east as a region?

[athom]

Now that its the following year with recession breathing down a lot of peoples necks, what is everyones thoughts of how far house prices are likely to drop? In fact how far for the north east as a region?

Seriously, terrace in Goole for under £10k easily, look at this on http://www.ourproperty.co.uk/showroad.html...6order%3Ddateup -

2001-01-26 30 Heber Street, Goole, East Riding Of Yorkshire, DN14 5RU £7,000

2004-10-22 30 Heber Street, Goole, East Riding Of Yorkshire, DN14 5RU £45,500

2007-09-21 30 Heber Street, Goole, East Riding Of Yorkshire, DN14 5RU £64,000

and

2001-01-26 10 Heber Street, Goole, East Riding Of Yorkshire, DN14 5RU £7,000

2004-10-22 10 Heber Street, Goole, East Riding Of Yorkshire, DN14 5RU £44,000

2007-09-21 10 Heber Street, Goole, East Riding Of Yorkshire, DN14 5RU £65,000

Uncanny isn't it. Sold for the same amounts on the same day each time, what's happening there i wonder! If the records went back to mid nineties prices they'd show them in this road changing hands for £1000

Here for sale today we have one for £58k. Good investment it says!

http://www.propertyfinder.com/cgi-bin/rsea...mp;id=503762121

And another for £70k, gold fittings in this one i guess

http://www.propertyfinder.com/cgi-bin/rsea...mp;id=503964362

But Goole unfortunately is not a happy town and recession will no doubt hit it hard. There will be defaults and there will be no demand for houses even as BTLs. Maybe a house for a £1000 will be seen again.

[athom]

hell's teeth i'm seeing the same 2 up 2 down terraces in different streets in Goole going for £100,000+ in 2007. Imagine the poor people who bought them :-/ fooked big time. I do have sympathy for them, i can just imagine the twit of a 20 something EA in his branded Mini, "prices have only been going up in the area.... if you don't get on the ladder you'll be priced out of the market...." Bank 20 something nudge winks the right income figures out of them, maybe they have a reasonable deposit from their last house equity rise. Bank computer says yes. It must have all seemed so easy and fool proof.... 100k doesn't seem much compared to the national average. Only now does 100k seem like a lot of money again....

I wonder how long before we get the first EA revenge murder?

[ReggiePerrin]

OK.. little background.. been renting now for 4 years, saving like mad, have around 60K saved up just waiting for the right house to come along.. 37 years old and paying £725 pcm rent.

There's a detached house that was originally up for £179K, dropped initially to £159K and its just dropped today to £135K, 25% drop from peak? (http://www.rightmove.co.uk/property/16990283?utm_medium=email&utm_source=emailupdates&utm_content=ealertspropertylink&utm_campaign=emailupdates_Aug08) stood empty and round the corner where I'm renting.. perfect location for my little one's school, next door to one of her school mates, been watching it for ages and was thinking next spring of putting an offer in when my current lease is up (May 09).. with it dropping so much I'm tempted to go for it now.. would I acting too soon??

Just after some advice... read the forums every day and respect peoples opinion on here...

Hi ReadytoBuy

You only buy when it's right for you, not when numpties like us say it's a good time to buy (and especially if the idiots on TV say it's a good time to buy). Do the math and work out whether the mortgage is cheaper than your rent, minus interest from your deposit ... is it really affordable? If it's more than 3x your income, it may be best to wait. Also don't forget to factor in a few increases in interest rates.

There's no harm either in making a stupid offer, if they don't bite, wait a few months and make the same offer again or slightly better (They may forget who you are, but not the offer you made )... This worked for Mrs Perrin and me in the last housing crash.

If you do buy - stay away from Rightmove, HPC, property programmes, this government (this last one may be difficult to do), and enjoy life.

edit: typo

Edited October 28, 2008 by ReggiePerrin

[deeplyblue]

In fact how far for the north east as a region?

Try going to the regional HPC forum

North-East HPC sub-forum

posts here seem to be dominated by what I think of as the "real" North-East - i.e. North of Yorkshire. There is a Yorkshire/ Humberside forum as well.

Yorkshire/Humberside HPC sub-forum

db

Edited October 29, 2008 by deeplyblue

[ReadytoBuy]

Hi ReadytoBuy

You only buy when it's right for you, not when numpties like us say it's a good time to buy (and especially if the idiots on TV say it's a good time to buy). Do the math and work out whether the mortgage is cheaper than your rent, minus interest from your deposit ... is it really affordable? If it's more than 3x your income, it may be best to wait. Also don't forget to factor in a few increases in interest rates.

There's no harm either in making a stupid offer, if they don't bite, wait a few months and make the same offer again or slightly better (They may forget who you are, but not the offer you made )... This worked for Mrs Perrin and me in the last housing crash.

If you do buy - stay away from Rightmove, HPC, property programmes, this government (this last one may be difficult to do), and enjoy life.

edit: typo

Hi Reggie - Many thanks for the reply and your advice, all comes down to maths, and its such a close call, spreadsheet says "yes".. just... Thanks for taking the time to reply

[compton_mo'fo]

A house purchased in 1992 was problably worth less in 1995 yeah?. [...] That's my business yeah?

I predict that you are Nathan Barley / Jamie Oliver and claim my five pounds.

Pukka!