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NatterJackToad

Advice Needed On Buying

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hi guys

i am a FTB

i was looking at a house last week.

on at 124k - 3 bedroom terrace in the North West.

next doors went for 145k during the insane days.

i am thinking of offering 106k (15% off asking price).

i have 8k deposit.

im on 24k.

3 questions:

how much will i be able to borrow?

who will do the best deals on lending the money - or where can i look at this info?

should i even buy it or wait even longer? (i know opinions vary on this one)

thanks guys, you're always helpful!

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I suggest you spend a few days this week on here reading the various articles and forum threads about house prices.

I also suggest you go and read the Property section over on the Moneyweek website.

Then make your own mind up about whether you are doing the right thing.

IMPO, I think 15% offer below asking price is not low enough.

IMPO, if I was on 24K I would be waiting for the crash to halve your 125K house to 65Kish.

Of course, you might think differently.

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hi guys

i am a FTB

i was looking at a house last week.

on at 124k - 3 bedroom terrace in the North West.

next doors went for 145k during the insane days.

i am thinking of offering 106k (15% off asking price).

i have 8k deposit.

im on 24k.

3 questions:

how much will i be able to borrow?

who will do the best deals on lending the money - or where can i look at this info?

should i even buy it or wait even longer? (i know opinions vary on this one)

thanks guys, you're always helpful!

At your price level it's not as if you have found a one off riverside detached house that might not come back to the market for 10 - 20 years. Your looking at a property that you can buy now for say 106k now or any other property in the same area for a similar price! You could wait a year or two or possibly three and buy for a much lower price. So do not buy now. If your looking for a really good buy, follow the action market see http://propertyauctionaction.co.uk/

There is the risk of a lot more bad news coming, Quantitative easing has never worked before, so why not see what happens. You have earnings to house values which at this time tell you prices will dramatically fall further. You have interest rates that can only go one way now, that's up. You have unemployment which is getting worse and worse, why even think of buying now. I do not know how long you have been reading HPC website, but surly you know the answer to 'should I buy now or not'? Sit back and enjoy the falling prices and also look at the whole picture that comes with this crash. Things could get very, very hard all round, you might just look back and say thank God I did not buy back in 2009.

Do not what ever you do listen to VI's, that includes banks, building societies and estate agents, in the last crash every month for years and years they said 'Now is the time to buy'. I question why some quality papers print such rubbish sometimes, is it so they keep their jobs, is it so the paper keeps up it's income from advertisers?

Edited by Tim Miller

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An 8k deposit is under 10% of what you want to borrow. I'd be surprised if you get any sensible mortgage offers with that (don't think I'm being rude btw, 8k savings is 8k more than I've got).

Keep waiting, keep saving.

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Do you believe history has anything to teach you regarding a house price crash?

You can chose to learn some history or you can believe all the crap about green shoots.

After you have done some research answer this simple question: How long did house prices crash for the last time?

I'll give you a clue, it was not after just 18 months ;)

Oh, and have a look at my signature. Some good info for you to start with.

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hi guys

i am a FTB

i was looking at a house last week.

on at 124k - 3 bedroom terrace in the North West.

next doors went for 145k during the insane days.

i am thinking of offering 106k (15% off asking price).

i have 8k deposit.

im on 24k.

3 questions:

how much will i be able to borrow?

who will do the best deals on lending the money - or where can i look at this info?

should i even buy it or wait even longer? (i know opinions vary on this one)

thanks guys, you're always helpful!

How safe is your job?

Seriously, not being horrible or anything.

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hi guys

i am a FTB

i was looking at a house last week.

on at 124k - 3 bedroom terrace in the North West.

next doors went for 145k during the insane days.

i am thinking of offering 106k (15% off asking price).

First mistake on your part, probably, is to look at this in terms of % off asking. When you do that, you are giving credence to the asking price as an indicator of value. Asking price is no such thing, it is just part of a marketing strategy to fulfill the objectives of the seller and his agent [highest price or soonest rid, in general]. What you need to offer is what the place would be worth if you had to sell it. You need to offer £1.00 more than the next highest bidder who can complete to the seller's satisfaction. Try looking at SOLD prices over a wider area to get a feel for this.

i have 8k deposit.

im on 24k.

3 questions:

how much will i be able to borrow?

who will do the best deals on lending the money - or where can i look at this info?

should i even buy it or wait even longer? (i know opinions vary on this one)

How much would it be wise for you to borrow? Never mind what you are able to borrow yet. On my reckoning you are good for £84k mortgage, which equates to an offer of £90k after expenses. I'm allowing £2k for solicitor and everything else - you will be able to calculate that more accurately - but remember it comes off your savings, so you only have £6k to put towards the house - 6.7% on £90k. That is close on a 95% mortgage.

I would say come back when you have £12k to £15k, but if house prices drop some more, you won't need so much.

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Personally I wouldn't think about buying for at least another year (just as myself). I earn more than you, more savings than you (zero debt) and will only consider spending £120k max on the house. My job is secured for the next 20 months (named on external academic contract). So in your position I would say buying now is th worst possible thing you could do. The last crash saw 13% wiped off average house prices over 72 months. This crash is the result of a bubble of truly horrific proportions and the ensuing debt orgy. In only 18 onths it has taken 22.5% off average prices with in my opinion a further 20-25% to go. It is unlike anything the world has seen, the 'normal' methods of economic stimulus are not available as the level of indebtedness has never been before as it is now. Governments and central banks are resorting to extreme measures, but a prod here results in the system bulging elsewhere. As the print money the creditor nations become more uneasy about buying T-bills and Gilts, the currencies devalue abd the risk of very high inflation increases. If you've been on the site a while search for the threads on peter schiff or check out youtube for him. Then see where you should maybe put at least some of your money rather than property at this time.

Edited by zebbedee

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I think a mortgage that size on your salary may leave you a bit stretched. Interest rates are not too bad at the moment but they could rise in the near future.

Check out what a repayment mortgage would be per month at 8% just to give you an idea of what could happen to your repayments if interest rates rise.

Also if your job is not almost bomb proof you really don't need the stress.

I speak from experience.

I have had both mortgage payment rises and loss of income happen at the same time in the past, not fun.

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Hold out for at least another year.

Your 8k deposit will probably be lost within 4 months, with more -% dives to put you in negative equity.

I have £70k as a deposit and there's no way I'm losing any of it propping up someone else's financial loss.

Sit, wait and watch as prices fall further.

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hi guys

thanks for the link tim, i've book marked that

my job is pretty safe - defence.

just thought id get back to you on the latest

i went to see a financial advisor to see how much they'd lend me

young man about 28 and i thought "oh no, here comes the bull$hit".

anyway, i told him my details

he said the property market will do nothing but fall this year

and i should wait till Nov '09 at the earliest

and i really needed a 15k - 20k deposit to make things worthwhile

i said - "the market must be crippled"

he said - "yes".

my mums a good cook anyway so i'm happy here and saving for another 12-18 months..

thanks guys.

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Personally I wouldn't think about buying for at least another year (just as myself). I earn more than you, more savings than you (zero debt) and will only consider spending £120k max on the house. My job is secured for the next 20 months (named on external academic contract). So in your position I would say buying now is th worst possible thing you could do. The last crash saw 13% wiped off average house prices over 72 months. This crash is the result of a bubble of truly horrific proportions and the ensuing debt orgy. In only 18 onths it has taken 22.5% off average prices with in my opinion a further 20-25% to go. It is unlike anything the world has seen, the 'normal' methods of economic stimulus are not available as the level of indebtedness has never been before as it is now. Governments and central banks are resorting to extreme measures, but a prod here results in the system bulging elsewhere. As the print money the creditor nations become more uneasy about buying T-bills and Gilts, the currencies devalue abd the risk of very high inflation increases. If you've been on the site a while search for the threads on peter schiff or check out youtube for him. Then see where you should maybe put at least some of your money rather than property at this time.

Hang on surely you contradict yourself.

If you are advocating the high inflation scenario and this chaps job is safe then is debt not good?

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Hang on surely you contradict yourself.

If you are advocating the high inflation scenario and this chaps job is safe then is debt not good?

If we have high inflation then yes holding an asset that protects the value of the savings would be a good thing if you can repay the loan, but given the government indebtedness I worry that the increased taxation in the mid term will limit ability to make repayments and would prefer to hold gold than debt on which I may default not through lack of employment but rather lack of disposable income.

In the short term there will be no relenting in the pace of house price falls and so better for him to save some more for say a year then realise the 'extra saving' as a result of the falls and 'pick up a bargain' with low repayments when the sh!t of taxation or demise of services hits the fan.

Given that it is £8k cash to lose to inflation or £100k to reposession (worst case) or £30k potential realised loss in value (best case) I think it wise to put the money somewhere safe and shiny.

Edited by zebbedee

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Do you believe history has anything to teach you regarding a house price crash?

You can chose to learn some history or you can believe all the crap about green shoots.

After you have done some research answer this simple question: How long did house prices crash for the last time?

I'll give you a clue, it was not after just 18 months ;)

Oh, and have a look at my signature. Some good info for you to start with.

I haven't seen this chart before.... normally people rightly make an assumption that there is a defiantive tie between house prices and income...... this chart also shows that previous bubbles have also seen a correlation between mortgage payments and house prices ( ie affordability I suppose) which in this particular market appears to have well and truly broken with trend.... it may of course get back to trend or worse if rates rise .... then again it may not.

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