My Story

[The Atomic Bull]

I graduated in 2001 and moved from Cheshire to Essex and then to Kent for work. I decided to rent because I thought the housing market was over-heating and I appreciated the flexibly of renting. Being able to relocate quickly was a key factor in getting my first job.

For eight years I shared a flat / house or rented a room. Although I had a few bad experiences with landlords the low cost of rent allowed me to save a substantial amount of money for a deposit. In 2009 I married, we moved in together and rented for a year. The rental property was quite expensive compared to my house share (marital home and all that). My wife had also been saving hard. So in 2010, with house price slightly lower than peak, we found our ideal home which offered excellent value for money – a 3 bedroom period property with a large garden 50 minute commute to London. An old couple had lived there for 30 years and the property needed updating but it was mostly cosmetic (my level of DIY). We knocked them down to £249,995 to save paying stamp duty as first-time buyers. With a 40% deposit First Direct gave us a mortgage which tracks the base rate plus 1.69% - so 2.19% over 15 years.

The premise of the decision was – money in bank earning no interest and wanting the freedom to make our home our own (without landlord hassle). We could cope with 15% interest rates and if interest rates remain low, worst case scenario re: house prices, the property will not deprecate quicker than we pay off the mortgage. Fortunately, as we speak, the property is worth a little more than we paid for it.

[Tired of Waiting]

I graduated in 2001 and moved from Cheshire to Essex and then to Kent for work. I decided to rent because I thought the housing market was over-heating and I appreciated the flexibly of renting. Being able to relocate quickly was a key factor in getting my first job.

For eight years I shared a flat / house or rented a room. Although I had a few bad experiences with landlords the low cost of rent allowed me to save a substantial amount of money for a deposit. In 2009 I married, we moved in together and rented for a year. The rental property was quite expensive compared to my house share (marital home and all that). My wife had also been saving hard. So in 2010, with house price slightly lower than peak, we found our ideal home which offered excellent value for money – a 3 bedroom period property with a large garden 50 minute commute to London. An old couple had lived there for 30 years and the property needed updating but it was mostly cosmetic (my level of DIY). We knocked them down to £249,995 to save paying stamp duty as first-time buyers. With a 40% deposit First Direct gave us a mortgage which tracks the base rate plus 1.69% - so 2.19% over 15 years.

The premise of the decision was – money in bank earning no interest and wanting the freedom to make our home our own (without landlord hassle). We could cope with 15% interest rates and if interest rates remain low, worst case scenario re: house prices, the property will not deprecate quicker than we pay off the mortgage. Fortunately, as we speak, the property is worth a little more than we paid for it.

It's always a bet.

In your case you are also betting on low inflation.

ToW

Edit: For over 10 years you did the right thing. And I do understand your impatience, as your situation was almost identical to ours. But I fear you've given up just a few years too soon. Sorry.

.

Edited June 6, 2012 by Tired of Waiting

[Si1]

I know people on excellent salaries who can't save that much because of their student debt payments coming first, need a car, high tax rates, rental costs etc etc - impressive savings, that's all i can say

Edited June 6, 2012 by Si1

[Killer Bunny]

What's your point?

You bought in the biggest bull trap in history.

The property, which you own along with the bank, is NOT worth more than you paid for it. Once again (altogether now), ASKING PRICES ARE NOT SELLING PRICES!

Note readers - he married in 2009 and THEY bought in 2010.

[The Generation Game]

I graduated in 2001 and moved from Cheshire to Essex and then to Kent for work. I decided to rent because I thought the housing market was over-heating and I appreciated the flexibly of renting. Being able to relocate quickly was a key factor in getting my first job.

For eight years I shared a flat / house or rented a room. Although I had a few bad experiences with landlords the low cost of rent allowed me to save a substantial amount of money for a deposit. In 2009 I married, we moved in together and rented for a year. The rental property was quite expensive compared to my house share (marital home and all that). My wife had also been saving hard. So in 2010, with house price slightly lower than peak, we found our ideal home which offered excellent value for money – a 3 bedroom period property with a large garden 50 minute commute to London. An old couple had lived there for 30 years and the property needed updating but it was mostly cosmetic (my level of DIY). We knocked them down to £249,995 to save paying stamp duty as first-time buyers. With a 40% deposit First Direct gave us a mortgage which tracks the base rate plus 1.69% - so 2.19% over 15 years.

The premise of the decision was – money in bank earning no interest and wanting the freedom to make our home our own (without landlord hassle). We could cope with 15% interest rates and if interest rates remain low, worst case scenario re: house prices, the property will not deprecate quicker than we pay off the mortgage. Fortunately, as we speak, the property is worth a little more than we paid for it.

I don't understand. Why is this fortunate? You've cashed in your chips, your asset class is housing and presumably you'll always live somewhere. Is your only move in the future going to be downsizing?

I want to pay a price that won't put me in penury for the rest of my life. After that, the lower the value of the house, the more productive society will be. If I want to upsize and prices have gone northwards, I have a second potential life of penury to look forward to.

[Tired of Waiting]

I know people on excellent salaries who can't save that much because of their student debt payments coming first, need a car, high tax rates, rental costs etc etc - impressive savings, that's all i can say

True.

[TheCountOfNowhere]

"We knocked them down to £249,99"

The agents positioned the asking price in such a way some mug would pay 250K for a property probably worth 150K ( in the normal interest rate levels, bank repossessing world ) and think they were getting a good deal.

Meanwhile in the real world your nominal house prices is probably worth less than you paid for it, your fees for buying and selling will mean a guarantee loss and your real house price is probably down 10%.

"money in bank earning no interest" - My money in the bank earns nearly 4%, relative to house prices about 6%, some of my savings in NS&I index links were getting nearer 10% ( APR ) so about 12% relative to houses.

I'm not sure what the point of your post is other than to say...I'm an estate agent and you can;t loose ( much ) on houses.

You should have told your wife to stop moaning about buying a house and kept saving.

Good luck...you will need it.

Errrrrr..sorry, I mean, well done and thanks for sharing your tale of happiness.

Edited June 6, 2012 by TheCountOfNowhere

[Tired of Waiting]

I don't understand. Why is this fortunate? You've cashed in your chips, your asset class is housing and presumably you'll always live somewhere. Is your only move in the future going to be downsizing?

I want to pay a price that won't put me in penury for the rest of my life. After that, the lower the value of the house, the more productive society will be. If I want to upsize and prices have gone northwards, I have a second potential life of penury to look forward to.

Very good post.

[19 year mortgage 8itch]

Note readers - he married in 2009 and THEY bought in 2010.

Are you divorced, KB?

[Si1]

True.

I know plenty of people that SAY 'my parents never helped me with a house deposit, it was easy to save'

BUT, they were able to live at home for a while whilst saving, Dad gave him his old car or bought him his first, free driving lessons, parents paid for their university costs so no or negligeable student debt to pay off

easy to save loadsa money for a deposit when nothing else costs you anything

[The Atomic Bull]

What's your point?

You bought in the biggest bull trap in history.

The property, which you own along with the bank, is NOT worth more than you paid for it. Once again (altogether now), ASKING PRICES ARE NOT SELLING PRICES!

Note readers - he married in 2009 and THEY bought in 2010.

no point, I have been a follower of HPC for some time and thought I would share. Maybe you're right. I know it's a gamble.

[TheCountOfNowhere]

Where my prize for claiming it's an EA Troll ( sorry if you are not, I'd not like to be called one of them horrible things ).

[LC1]

"We knocked them down to £249,99"

The agents positioned the asking price in such a way some mug would pay 250K for a property probably worth 150K ( in the normal interest rate levels, bank repossessing world ) and think they were getting a good deal.

Meanwhile in the real world your nominal house prices is probably worth less than you paid for it, your fees for buying and selling will mean a guarantee loss and your real house price is probably down 10%.

"money in bank earning no interest" - My money in the bank earns nearly 4%, relative to house prices about 6%, some of my savings in NS&I index links were getting nearer 10% ( APR ) so about 12% relative to houses.

I'm not sure what the point of your post is other than to say...I'm an estate agent and you can;t loose ( much ) on houses.

You should have told your wife to stop moaning about buying a house and kept saving.

Good luck...you will need it.

Errrrrr..sorry, I mean, well done and thanks for sharing your tale of happiness.

Harsh!

(but all fair points....)

EDIT: To wish OP best of luck. Live in it, enjoy it and try not to worry about whether it was the right thing to do!

Edited June 6, 2012 by LC1

[swissy_fit]

My wife had also been saving hard.

You're going to be fine, believe it or not this is the key thing in your favour, the mentality and work ethic of your wife, the rest is detail.

Don't listen to the naysayers on here, they're bitter because the BOE printed and made them wrong when they should have been right, and are going to continue to do so.

Best of luck.

[Si1]

...We could cope with 15% interest rates and if interest rates remain low, worst case scenario re: house prices, the property will not deprecate quicker than we pay off the mortgage. Fortunately, as we speak, the property is worth a little more than we paid for it.

so it's a calculated risk..Ok

no point, I have been a follower of HPC for some time and thought I would share. Maybe you're right. I know it's a gamble.

no! now it's a gamble! what?

[Si1]

Where my prize for claiming it's an EA Troll ( sorry if you are not, I'd not like to be called one of them horrible things ).

possibly not a deliberate troll, maybe looking for some kind of moral support to his decision, I come across a lot of this

[Ungeared]

I honestly thought this post would begin with this music!

[Tired of Waiting]

You're going to be fine, believe it or not this is the key thing in your favour, the mentality and work ethic of your wife, the rest is detail.

Don't listen to the naysayers on here, they're bitter because the BOE printed and made them wrong when they should have been right, and are going to continue to do so.

Best of luck.

In which case he should have fixed it - the mortgage rate.

[swissy_fit]

In which case he should have fixed it - the mortgage rate.

It's not a given that interest rates will rise anytime soon. It should be, but remember the old rules clearly don't exist anymore.

If you're trying to predict future policy, my suggestion is to think what policy would best suit the major banks.

[Si1]

How much did you parents give you anyway - being from Cheshire, unless you're from Runcorn, implies they may have a bit of properdie wealth of their own, most Cheshire-peeps I've ever met bung the odd X-ten-K to their kids from time to time, it's fashionable

[cybernoid]

Point is, if you haven't already bought by what - 2004,2005? You're damned if you do and damned if you don't.

Bull trap is a nice thought but when are they coming down again? The irresponsible are winning so far aren't they?

[Si1]

It's not a given that interest rates will rise anytime soon. It should be, but remember the old rules clearly don't exist anymore.

If you're trying to predict future policy, my suggestion is to think what policy would best suit the major banks.

oh yes, it's different this time!

[TheCountOfNowhere]

possibly not a deliberate troll, maybe looking for some kind of moral support to his decision, I come across a lot of this

Try:

www.mumsnet.com

or if you don't mind Martin Lewis getting 10's of millions of quid:

http://www.moneysavingexpert.com/

Edited June 6, 2012 by TheCountOfNowhere

[Si1]

Point is, if you haven't already bought by what - 2004,2005? You're damned if you do and damned if you don't.

Bull trap is a nice thought but when are they coming down again? The irresponsible are winning so far aren't they?

in my experience, those with a hefty external source of wealth appear to be winning but time will tell that they've blown it, and those without a hefty source of wealth are really feeling the strain

that's all

[swissy_fit]

oh yes, it's different this time!

Sadly, it really is. QE and artificial low interest rates have changed the game. Not that I think it will turn out well in the long term.

The major banks are global, and it is not in their interest that Britain's banking system is brought down. So the UK will continue unmolested by the markets for a long time yet. Maybe not forever though.