Ben is Back Posted January 27, 2011 Share Posted January 27, 2011 I used to be on here a while back as Ben from Dover. I'm abroad now so haven't been keeping up with news in the UK so I need your help with arguments to convince my brother not to buy a house. He and his wife have saved up about £50,000 and can get a decent 4 bed house in our home town for about £150K. At the moment they pay £550 p/m rent for an old 2 bed flat and a £100K mortage is looking like costing them about £150 less a month. Prices have drop a fair bit down there and compared to what they would have got for £150,000 a few years ago I was surprised. I need some amo to change their minds with... Quote Link to comment Share on other sites More sharing options...
Lagarde's Drift Posted January 27, 2011 Share Posted January 27, 2011 If they can service the mortgage and kids when both of them are unemployed, then go for it. Quote Link to comment Share on other sites More sharing options...
exiges Posted January 27, 2011 Share Posted January 27, 2011 (edited) He and his wife have saved up about £50,000 and can get a decent 4 bed house in our home town for about £150K. At the moment they pay £550 p/m rent for an old 2 bed flat and a £100K mortage is looking like costing them about £150 less a month. So they're going to hand over £50,000 so they can save £150 a month Interest on that £50,000 is about.. £150 a month too.. so they won't be saving £150 a month, they'll be handing over £50,000 to be no further forward, in a falling market, plus having to pay all the repairs on the property. Edited January 27, 2011 by exiges Quote Link to comment Share on other sites More sharing options...
babesagainstmachines Posted January 27, 2011 Share Posted January 27, 2011 Tell them to buy now. Interest rates are ridiculously high at the moment, their payments are bound to come down, and wage inflation is rampant. Quote Link to comment Share on other sites More sharing options...
Caveat Mortgagor Posted January 27, 2011 Share Posted January 27, 2011 If they've got £50k, they can afford to take the hit on behalf of someone who is maxed out and needs to pass on their financial risks. They would be helping to save the banks from a possible default and helping a maxed out mortgageholder/reckless gambler. Tell them their country needs them to do this and its their duty as good citizens. Ask them to imagine the warm glow they would get from jizzing their hard saved £50k so they can do their bit. PS - Although I am cheerleading them to do it, I am sure you wont mind if I dont follow this advice. I'll sit tight for a little while longer thanks. PPS - This is meant as no offence to you Ben, I recall the sterling work you've done for the HPC cause, but maybe a bit of shock therapy is needed. Quote Link to comment Share on other sites More sharing options...
Vagabond Posted January 27, 2011 Share Posted January 27, 2011 As long as they get it for below asking they'll be skewing the stats down. With that in mind, start trying to convince everyone you can to fill there boots. Quote Link to comment Share on other sites More sharing options...
DotBomb Posted January 27, 2011 Share Posted January 27, 2011 If: Your income is secure Your commuting costs are low You can afford mortgage rates of 7% Prices have already suffered at least 20% from peak drop You can secure an additional discount of say 10-15% The place is easy to keep ( heat, council tax etc) Low crime area. It will suffice as a home for a long time. It will make your missus happy then get ready to pull the trigger - and lock in a good mortgage deal. Cos you should always buy into a weak market, as you can neg a good discount, have little competition. Buying into a recovering market can be difficult, as everyone suddenly jacks up prices. Quote Link to comment Share on other sites More sharing options...
Pent Up Posted January 27, 2011 Share Posted January 27, 2011 I used to be on here a while back as Ben from Dover. I remember when you changed your name to 'from Dover' after we phoned in that radio 4 program early last year and someone got your location mixed up House prices are declining slow but steady now. I expect next the falls will accelerate. Things are looking better for us. Get your brother to listen to this: http://www.housepricecrash.co.uk/forum/index.php?showtopic=158391&pid=2871632&st=0entry2871632 It was on the radio Tuesday night and is very bearish Quote Link to comment Share on other sites More sharing options...
Gigantic Purple Slug Posted January 27, 2011 Share Posted January 27, 2011 I used to be on here a while back as Ben from Dover. I'm abroad now so haven't been keeping up with news in the UK so I need your help with arguments to convince my brother not to buy a house. He and his wife have saved up about £50,000 and can get a decent 4 bed house in our home town for about £150K. At the moment they pay £550 p/m rent for an old 2 bed flat and a £100K mortage is looking like costing them about £150 less a month. Prices have drop a fair bit down there and compared to what they would have got for £150,000 a few years ago I was surprised. I need some amo to change their minds with... Why would you want to change their minds ? Sounds to me like they may be wanting to start a family so they will need a bigger place. Some things that you may want to alert them to : Have they factored in the extra costs of living in a 4 bed house ? Maybe higher council tax, water rates, insurance, bills etc ? Will it be further away from their place of work so they incur more fuel costs ? Have they got a good financial cushion in case they are made unemployed ? Are the wages split equally between them or is all the money earnt by one ? If they are going to have a family how will that impact their take home pay ? Can they rent a four bedder at a reasonable price ? I think you have to draw the line somewhere between buying at good value and not buying at any price. If I could get a place that cheap that would fulfill my requirements I'd go for it. Remember that although the overall price indicies may not show that much of a drop because they are being held up by prices in London and the SE, but in some parts of the country hefty drops have taken place. And if you believe that prices are going lower over the next year or so by 10%, that's only a 15K loss. OK I don't know about their personal situation, it may be that they have scrimped and saved for 5 years to make that deposit, but it doesn't sound too much to me. I would just try and talk it through with them and make sure they have considered all the issues, especially the financial ones. At the end of the day you'll find it difficult ro get through the (non) logic of a wanting to be pregnant woman NEEDING a house to start a family and if you bang on forever about how prices are going to drop 30% in the next 2 years it will just come across as if you are jealous of them or something. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted January 27, 2011 Share Posted January 27, 2011 It's all down to affordability. If you can afford to pay £10 for a bag of crisps, go for it. Quote Link to comment Share on other sites More sharing options...
VeryMeanReversion Posted January 27, 2011 Share Posted January 27, 2011 Prices have drop a fair bit down there and compared to what they would have got for £150,000 a few years ago I was surprised. Just buy the house and get on with their lives then. Quote Link to comment Share on other sites More sharing options...
cardiffone Posted January 27, 2011 Share Posted January 27, 2011 Gor for it, even if you managed to get £150 a month interest on £50 K, it would still be wiped out by inflation... Quote Link to comment Share on other sites More sharing options...
Ben is Back Posted January 27, 2011 Author Share Posted January 27, 2011 So they're going to hand over £50,000 so they can save £150 a month Interest on that £50,000 is about.. £150 a month too.. so they won't be saving £150 a month, they'll be handing over £50,000 to be no further forward, in a falling market, plus having to pay all the repairs on the property. Can kind of see your point but they would get a 4 bed house for £150 less than a 2 bed flat. think I need some stronger arguments. come on guys - your normally so convincing! Quote Link to comment Share on other sites More sharing options...
winkie Posted January 27, 2011 Share Posted January 27, 2011 I used to be on here a while back as Ben from Dover. I'm abroad now so haven't been keeping up with news in the UK so I need your help with arguments to convince my brother not to buy a house. He and his wife have saved up about £50,000 and can get a decent 4 bed house in our home town for about £150K. At the moment they pay £550 p/m rent for an old 2 bed flat and a £100K mortage is looking like costing them about £150 less a month. Prices have drop a fair bit down there and compared to what they would have got for £150,000 a few years ago I was surprised. I need some amo to change their minds with... How about putting £25k down for a two double bed freehold in a nice area with a garden....plenty of time to buy a four bed, they may even find they will never want that four bed....less is more, less is more affordable, less is less to worry about, less is cheaper to run and maintain....less is best. Quote Link to comment Share on other sites More sharing options...
tomandlu Posted January 27, 2011 Share Posted January 27, 2011 I used to be on here a while back as Ben from Dover. I'm abroad now so haven't been keeping up with news in the UK so I need your help with arguments to convince my brother not to buy a house. He and his wife have saved up about £50,000 and can get a decent 4 bed house in our home town for about £150K. At the moment they pay £550 p/m rent for an old 2 bed flat and a £100K mortage is looking like costing them about £150 less a month. Prices have drop a fair bit down there and compared to what they would have got for £150,000 a few years ago I was surprised. I need some amo to change their minds with... What area is this? (a stupid question if the answer is 'Dover'). What would a 4 bed have cost in 2000? How about 2007? I've no idea if 150K is a good deal or not. If this is Putney, then fill yer boots... as far as I can tell, there is no way currently to answer your question since we've got no idea whether 150K is good value or not. Assuming not, I'd suggest trying to convince them to hang on at least 6 months and then make a decision. There's no way house prices are going up after all. Quote Link to comment Share on other sites More sharing options...
Patfig Posted January 27, 2011 Share Posted January 27, 2011 I used to be on here a while back as Ben from Dover. I'm abroad now so haven't been keeping up with news in the UK so I need your help with arguments to convince my brother not to buy a house. He and his wife have saved up about £50,000 and can get a decent 4 bed house in our home town for about £150K. At the moment they pay £550 p/m rent for an old 2 bed flat and a £100K mortage is looking like costing them about £150 less a month. Prices have drop a fair bit down there and compared to what they would have got for £150,000 a few years ago I was surprised. I need some amo to change their minds with... Leave them alone and stop being so nosey Quote Link to comment Share on other sites More sharing options...
Ben is Back Posted January 27, 2011 Author Share Posted January 27, 2011 Tell them to buy now. Interest rates are ridiculously high at the moment, their payments are bound to come down, and wage inflation is rampant. this (or the reverse of it) was kind of my first argument but it seems hard to scare them with interest rate rises as they will need to rise quite significantly before it even brings their payments up to what they are paying at the moment. My bro is an accountant so much better at the figures than me. Anyone know how much interest rate rises will effect a £100K mortage, for every 0.5% IR rise, how much would that effect their monthly payments. Pulling my hair out as I always felt I was on home ground in a argument on house prices but the figures seem to have turned against me Quote Link to comment Share on other sites More sharing options...
Dorkins Posted January 27, 2011 Share Posted January 27, 2011 Can kind of see your point but they would get a 4 bed house for £150 less than a 2 bed flat. think I need some stronger arguments. come on guys - your normally so convincing! I'm afraid there is no magic one liner that is going to convince anybody. Going from property bull (as most people are, thought they don't realise it) to bear is a complex transition which involves a lot of reading and thinking before you open your eyes. Show them the graphs, do a few interest rate calculations with them, talk about scenarios where one or both of them are unemployed at a time of higher interest rates. Unfortunately though, you can lead a horse to water but you can't make it drink. So many people think the last 40 or 50 years of the property market is the way it is always going to be, despite the fact that we are in the worst recession for 80 years. If they could afford the mortgage and food and bills at 12% interest rates on one income with at least 6 months' living costs in savings (in a different bank!), then it's up to them. If they can't, then they are overstretching themselves. Quote Link to comment Share on other sites More sharing options...
Ben is Back Posted January 27, 2011 Author Share Posted January 27, 2011 I remember when you changed your name to 'from Dover' after we phoned in that radio 4 program early last year and someone got your location mixed up House prices are declining slow but steady now. I expect next the falls will accelerate. Things are looking better for us. Get your brother to listen to this: http://www.housepricecrash.co.uk/forum/index.php?showtopic=158391&pid=2871632&st=0entry2871632 It was on the radio Tuesday night and is very bearish Yes that was hilarious! The radio guy (quite famous now - I think he covered the election) got my name wrong and instead of 'my real name' from dover called me 'Ben from Dover' - wonder what was on his mind! I've read the thread on that program, perhaps I'll tied him down and make him listen to it... Quote Link to comment Share on other sites More sharing options...
Ben is Back Posted January 27, 2011 Author Share Posted January 27, 2011 If: Your income is secure Your commuting costs are low You can afford mortgage rates of 7% Prices have already suffered at least 20% from peak drop You can secure an additional discount of say 10-15% The place is easy to keep ( heat, council tax etc) Low crime area. It will suffice as a home for a long time. It will make your missus happy then get ready to pull the trigger - and lock in a good mortgage deal. Cos you should always buy into a weak market, as you can neg a good discount, have little competition. Buying into a recovering market can be difficult, as everyone suddenly jacks up prices. what would repayments be if IR's at 7%? Quote Link to comment Share on other sites More sharing options...
Ben is Back Posted January 27, 2011 Author Share Posted January 27, 2011 What area is this? (a stupid question if the answer is 'Dover'). What would a 4 bed have cost in 2000? How about 2007? I've no idea if 150K is a good deal or not. If this is Putney, then fill yer boots... as far as I can tell, there is no way currently to answer your question since we've got no idea whether 150K is good value or not. Assuming not, I'd suggest trying to convince them to hang on at least 6 months and then make a decision. There's no way house prices are going up after all. Yer Dover - Not sure on the historical prices, any idea how I can find out? Dover is cheap - loads of choice at arround that price - http://www.rightmove.co.uk/property-for-sale/Dover.html?sortByPriceDescending=false&minPrice=130000&maxPrice=180000&minBedrooms=3&maxBedrooms=4 Quote Link to comment Share on other sites More sharing options...
LiveAndLetBuy Posted January 27, 2011 Share Posted January 27, 2011 What area is this? (a stupid question if the answer is 'Dover'). What would a 4 bed have cost in 2000? How about 2007? I've no idea if 150K is a good deal or not. If this is Putney, then fill yer boots... as far as I can tell, there is no way currently to answer your question since we've got no idea whether 150K is good value or not. Assuming not, I'd suggest trying to convince them to hang on at least 6 months and then make a decision. There's no way house prices are going up after all. Yup, the area is vital. Not just in terms of value for money but also because some areas will probably crash a hell of a lot more than others. If it's an area with a lot of public sector workers, or young professionals with large mortgages then it's best to stay away. If it's an established area full of older people who bought over 10 years ago, and have probably paid off their mortgages, then it may be worth it if they can negotiate the price, and if the properties like the one in question rarely come to market. However the fact that it's a 4 bed house for 150k implies that this isn't the case. Quote Link to comment Share on other sites More sharing options...
harumph Posted January 27, 2011 Share Posted January 27, 2011 this (or the reverse of it) was kind of my first argument but it seems hard to scare them with interest rate rises as they will need to rise quite significantly before it even brings their payments up to what they are paying at the moment. My bro is an accountant so much better at the figures than me. Anyone know how much interest rate rises will effect a £100K mortage, for every 0.5% IR rise, how much would that effect their monthly payments. Pulling my hair out as I always felt I was on home ground in a argument on house prices but the figures seem to have turned against me www.emortgagecalculator.co.uk tells you interest only, and capital repayment cost at whatever rate you type in. nice tool Quote Link to comment Share on other sites More sharing options...
Dorkins Posted January 27, 2011 Share Posted January 27, 2011 (edited) If his partner is pregnant or they want to have a family, your brother needs to ignore all monetary aspects. There are things more important than money. You need to grow some empathy attennae and get with the programme. True, but if they are both on £15k then a £100k mortgage is not a good idea. If they are both on £30k then dive right in. Money is not everything, but it does matter. Edited January 27, 2011 by Dorkins Quote Link to comment Share on other sites More sharing options...
Ben is Back Posted January 27, 2011 Author Share Posted January 27, 2011 www.emortgagecalculator.co.uk tells you interest only, and capital repayment cost at whatever rate you type in. nice tool Nice one thanks (I do love a nice tool) Quote Link to comment Share on other sites More sharing options...
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