Am I Crazy?

[hibbs]

Hi,

I have recently had an offer accepted on a house and I'm starting to worry that I am doing the wrong thing. The house is a 2 bed end of terace in Beverley, East Yorkshire, it was originally on the market for £130,000, was £125,000 when I went to view it and the offer that they've accepted is £113,000. I'm a FTB and have a deposit of £35,000, my take home pay is £1400 per month and my mortgage repayments will be £382 (on a 5 year tracker which I can fix at any time). I know interest rates are likely to rise but don't think that will happen in the near future and I am planning on overpaying as much as I can.

My reasons for buying are mainly that renting a place in Beverley that allows dogs will cost me about £500 per month and will not be in as nice an area or have off street parking. I am currently renting a room in someones house and have had enough of being confined to one room as my dog is not allowed anywhere else in the house (the kitchen is also revolting and like being back in uni halls). I am fed up of moving from place to place as in the last 4 years the longeset I have lived in the same place is 8 months and want somewhere to call home! I could also get a lodger in (if I can find one) which would allow me to overpay the mortgage even more.

My main worries are that I am buying a house in an area which has high levels of unemployment and also that house prices are still falling. I know that in the next 5 years I will probably want to move out of the area and so therefore will need to be able to sell it again, hopefully without losing all of my deposit. I guess I could rent it out if I can't sell it but then if everybody does the same thing there will be loads of properties available to rent and no market for it. I also saw the other day that the house next door sold for £110,000 in April although mine has a conservatory and a slightly larger garden but also needs £1000 spending on the roof. I am starting to think that I should have bargained harder to get it for a lower price!

Anyway I have been going backwards and forwards over the pros and cons and just wondered what other peoples views were and if there was anything I hadn't considered?

[Asheron]

Can you please just rent for just 2 more years? I think you will regret buying right now.

New Build houses + 95% Loans are going to drive 2nd hand houses down very fast over the next few years.

Edited July 25, 2012 by Asheron

[plummet expert]

Can you please just rent for just 2 more years? I think you will regret buying right now.

New Build houses + 95% Loans are going to drive 2nd hand houses down very fast over the next few years.

ABSOLUTELY RIGHT. THE PRECIPICE IS EDGING CLOSER DAY BY DAY. IT MAY BE SLOW, BUT THE CLIFF EDGE CAN BE REACHED SLOWLY AND THEN FOLLOWED BY A RATHER SHARP FALL WHEN THE EU CAVES IN. SUGGEST SAVE AND RENT. JUST FIND SOMEWHERE A BIT BETTER TO RENT AND REMEMBER YOU WILL BE HAPPIER WHEN YOU SEE WHAT A BURSTING BUBBLE LOOKS LIKE. SEE THE ARTICLE ON SHIPPING - WHO WOULD HAVE THOUGHT IN 2008 SHIPPING COULD LOSE 99% OF DAILY INCOME VALUE..?

[porca misèria]

Cold feet are perfectly normal. If you like and can afford the house, and anticipate it'll meet your needs for the foreseeable, then just go for it!

[The Knimbies who say No]

Hi,

I have recently had an offer accepted on a house and I'm starting to worry that I am doing the wrong thing. The house is a 2 bed end of terace in Beverley, East Yorkshire, it was originally on the market for £130,000, was £125,000 when I went to view it and the offer that they've accepted is £113,000. I'm a FTB and have a deposit of £35,000, my take home pay is £1400 per month and my mortgage repayments will be £382 (on a 5 year tracker which I can fix at any time). I know interest rates are likely to rise but don't think that will happen in the near future and I am planning on overpaying as much as I can.

My reasons for buying are mainly that renting a place in Beverley that allows dogs will cost me about £500 per month and will not be in as nice an area or have off street parking. I am currently renting a room in someones house and have had enough of being confined to one room as my dog is not allowed anywhere else in the house (the kitchen is also revolting and like being back in uni halls). I am fed up of moving from place to place as in the last 4 years the longeset I have lived in the same place is 8 months and want somewhere to call home! I could also get a lodger in (if I can find one) which would allow me to overpay the mortgage even more.

My main worries are that I am buying a house in an area which has high levels of unemployment and also that house prices are still falling. I know that in the next 5 years I will probably want to move out of the area and so therefore will need to be able to sell it again, hopefully without losing all of my deposit. I guess I could rent it out if I can't sell it but then if everybody does the same thing there will be loads of properties available to rent and no market for it. I also saw the other day that the house next door sold for £110,000 in April although mine has a conservatory and a slightly larger garden but also needs £1000 spending on the roof. I am starting to think that I should have bargained harder to get it for a lower price!

Anyway I have been going backwards and forwards over the pros and cons and just wondered what other peoples views were and if there was anything I hadn't considered?

Just say you buy it, and sell it in five years and lose £7k due to costs of buying/selling, other maintenance costs for which you are not liable when renting, plus the interest on your deposit you'd lose by not having it in the bank. Not implausible- £3k buying/selling costs, £2k deposit interest, £2k maintenance.

That's £120 a month on top of your illustrative mortgage costs over your expected period of ownership. Now you have to factor in a 'what if' regarding prices- for every % fluctuation, add or subtract about £15/month, again based on a 5 year ownership period. If you think prices might drop 5% in the period, then your ownership costs to compare with renting are £382+£120+£75=£577/month.

10% drop means £650/month total costs.

How much would it cost to rent a place in an area you want to live, which caters for your needs?

Not trying to tell you what to do, just pointing out that if the flexibility to get out in 5 years is important, you ought to try and consider all the costs in the round to hopefully ensure that you have the leeway to do what you want when the time comes. And that the buying vs renting sum is often not as simple as it seems. Good luck.

Edited July 25, 2012 by cheeznbreed

[15stiftgasse]

Hi,

I have recently had an offer accepted on a house and I'm starting to worry that I am doing the wrong thing. The house is a 2 bed end of terace in Beverley, East Yorkshire, it was originally on the market for £130,000, was £125,000 when I went to view it and the offer that they've accepted is £113,000. I'm a FTB and have a deposit of £35,000, my take home pay is £1400 per month and my mortgage repayments will be £382 (on a 5 year tracker which I can fix at any time). I know interest rates are likely to rise but don't think that will happen in the near future and I am planning on overpaying as much as I can.

My reasons for buying are mainly that renting a place in Beverley that allows dogs will cost me about £500 per month and will not be in as nice an area or have off street parking. I am currently renting a room in someones house and have had enough of being confined to one room as my dog is not allowed anywhere else in the house (the kitchen is also revolting and like being back in uni halls). I am fed up of moving from place to place as in the last 4 years the longeset I have lived in the same place is 8 months and want somewhere to call home! I could also get a lodger in (if I can find one) which would allow me to overpay the mortgage even more.

My main worries are that I am buying a house in an area which has high levels of unemployment and also that house prices are still falling. I know that in the next 5 years I will probably want to move out of the area and so therefore will need to be able to sell it again, hopefully without losing all of my deposit. I guess I could rent it out if I can't sell it but then if everybody does the same thing there will be loads of properties available to rent and no market for it. I also saw the other day that the house next door sold for £110,000 in April although mine has a conservatory and a slightly larger garden but also needs £1000 spending on the roof. I am starting to think that I should have bargained harder to get it for a lower price!

Anyway I have been going backwards and forwards over the pros and cons and just wondered what other peoples views were and if there was anything I hadn't considered?

If would recommend that you proceed no further with the buying process until you are absolutely certain that you are doing the right thing., as it could end up being a big mistake, and not just financially.

Don't be afraid of backing out (assuming that you've not signed anything) as you are not obliged to buy. You can be 100% certain that if this was a seller's market, the seller would not hesitate to drop you for another buyer prepared to pay just a bit more.

Some time ago my wife and I were looking to rent, but ,as you yourself will have found, there are only few properties that allow tenants with pets. It the end we ended up having to rent a 4-bed detached for just us two and the moggy. So I can understand the pressure on you to find a 'place of your own'.

If I was in your position, I would look further afield for rented accommodation. I used to rent in Market Weighton, which, although expanded in recent years, is still quite nice and seems to have a glut of houses in relation to the limited employment prospects there. There are also many quite pleasant small villages dotted around where you might find it easier to get the right place to rent - North & South Cave, Pocklington, Holme-Upon-Spalding Moor, for example. Try to broaden your 'catchment area' to maximise your chance of finding a suitable house to rent.

Remember, buying a house in a falling market is a bit like hard drugs.

Easy to get into. NOT so easy to get out of.

Good luck, and I hope you make the right decision for the best.

[long time lurking]

If you like it and want to proceed why don't you try playing the game and revise your offer down at the last moment ,after all its a buyers market and you are in a good position

[Alm0stCerta1n]

I just want to disagree slightly with 15stiftgasse and say as a FTB you will never be absolutely certain in your decision. Either way, you will wonder.

The hard bit is feeling that it doesn't matter how things develop because you will be happy with what you've got. If you get that feeling then you have made the right decision.

[Ausdave]

Hi,

I have recently had an offer accepted on a house and I'm starting to worry that I am doing the wrong thing. The house is a 2 bed end of terace in Beverley, East Yorkshire, it was originally on the market for £130,000, was £125,000 when I went to view it and the offer that they've accepted is £113,000. I'm a FTB and have a deposit of £35,000, my take home pay is £1400 per month and my mortgage repayments will be £382 (on a 5 year tracker which I can fix at any time). I know interest rates are likely to rise but don't think that will happen in the near future and I am planning on overpaying as much as I can.

My reasons for buying are mainly that renting a place in Beverley that allows dogs will cost me about £500 per month and will not be in as nice an area or have off street parking. I am currently renting a room in someones house and have had enough of being confined to one room as my dog is not allowed anywhere else in the house (the kitchen is also revolting and like being back in uni halls). I am fed up of moving from place to place as in the last 4 years the longeset I have lived in the same place is 8 months and want somewhere to call home! I could also get a lodger in (if I can find one) which would allow me to overpay the mortgage even more.

My main worries are that I am buying a house in an area which has high levels of unemployment and also that house prices are still falling. I know that in the next 5 years I will probably want to move out of the area and so therefore will need to be able to sell it again, hopefully without losing all of my deposit. I guess I could rent it out if I can't sell it but then if everybody does the same thing there will be loads of properties available to rent and no market for it. I also saw the other day that the house next door sold for £110,000 in April although mine has a conservatory and a slightly larger garden but also needs £1000 spending on the roof. I am starting to think that I should have bargained harder to get it for a lower price!

Anyway I have been going backwards and forwards over the pros and cons and just wondered what other peoples views were and if there was anything I hadn't considered?

First step on housing market is always daunting.

If your survey highlights issues that will cost you money to remedy (that were not apparent or pointed out to you on viewing) then you are perfectly in your rights to go back to the vendor to negotiate a price reduction.

Providing you're not being silly or unreasonable there is no vendor in their right mind in this market that won't negotiate slightly further to ensure the sale. Saying this I'm not in favor of gazundering just for further discount because you feel you didnt negotiate well enough in first place.

You're always free to walk away up to exchange.

[Democorruptcy]

It's a lot of money to spend on something you don't seem sure you want to buy. It must be one hell of a dog.

Good luck with whatever you decide.

[hibbs]

Thanks for your replies, that's given me some more to think about.

The survey didn't bring up anything major I didn't already know about - I could see the roof needed some work (Possibly not £1100 amount of work though) I don't want to go down the route of gazundering as feel that's unfair and I either need to bite the bullet and go for it or pull out before it goes any further.

I do really like the house otherwise I wouldn't have put an offer in, but it's also a hell of a lot of money to lose! I've been looking at the properties for rent at the £500/550 mark and they aren't somewhere I want to live or if they are won't accept pets (I've tried offering higher deposits/having carpets cleaned etc), maybe I should go and have a look at some that are in the £600+ region and see if I can find anything then. I hate the idea that I'm spending half of my wage to rent somewhere which is probably paying off someone elses mortgage though!

And yes he is one hell of a dog!

[Bruce Banner]

.......paying off someone elses mortgage.......

[hibbs]

Well if it's not paying off their mortgage it's lining their pockets!

[Bruce Banner]

Well if it's not paying off their mortgage it's lining their pockets!

There are three ways of putting a roof over your head and all of them cost money.

1, Pay rent to a landlord.

2, Buy a house with borrowed money and pay interest to a lender.

3, Buy a house outright and lose the interest on the money that you would otherwise have had in the bank.

[hibbs]

There are three ways of putting a roof over your head and all of them cost money.

1, Pay rent to a landlord.

2, Buy a house with borrowed money and pay interest to a lender.

3, Buy a house outright and lose the interest on the money that you would otherwise have had in the bank.

Thanks, I know that I'm just trying to work out which is the best way to put that roof over my head - If I had the money I'd go for option 3.

[Bruce Banner]

Thanks, I know that I'm just trying to work out which is the best way to put that roof over my head - If I had the money I'd go for option 3.

For what it's worth, I have the money and go for option 1. The interest on the money I'd have tied up in a house more than pays the rent and my money is not tied up in an illiquid, depreciating, asset.

[tim123]

Thanks, I know that I'm just trying to work out which is the best way to put that roof over my head - If I had the money I'd go for option 3.

All other things being equal, then option 3 (if you have the money) or 2 (if you don't) are the best because you don't have to put up with all the landlord "shit" of renting.

But all things are not equal. House values go up and down and market condition sometimes make it impossible to sell a house in a reasonable time if you find that you neeed to move in a hurry.

Only you can decide how much these factors impact on your decision.

Do you think house values (in your locality) will be lower or higher in three years time?

Do you think that selling a house within a week will return in three years time?

For me the answers are: at best the same, perhaps lower and no. But I'm still prepared to buy if I find the right property because I'm pretty certain that it will be a 15 year purchase [1]. - But you're not!

tim

[1] unless I die before then.

[Si1]

Well if it's not paying off their mortgage it's lining their pockets!

I'm gonna have to flame you, after the above argument, you are clearly numerically illiterate

may as well buy the house

and how the h3ll did someone who can't do numbers get 30 odd grand in the bank?

[Si1]

The hard bit is feeling that it doesn't matter how things develop because you will be happy with what you've got. If you get that feeling then you have made the right decision.

no it isn't. it is not about feelings. it is about money, security, status. All 3 are important. That is it. Not about 'it felt right to lose £50k' because I always wanted burgundy printed wallpaper.

Edited July 27, 2012 by Si1

[hibbs]

Well I got a letter from my solicitor today saying that she isn't able to complete until November and has offered £400 to cover my costs. My offer was accepted at the end of May and I was told that she wasn't in a chain and could move straight away. Think that's my decision made for me and I'll be looking for somewhere to rent tomorrow!

[longtomsilver]

Well I got a letter from my solicitor today saying that she isn't able to complete until November and has offered £400 to cover my costs. My offer was accepted at the end of May and I was told that she wasn't in a chain and could move straight away. Think that's my decision made for me and I'll be looking for somewhere to rent tomorrow!

Congratulations on saving yourself a fortune!!!

My guess is that the housing market is going to tumble in areas such as yours where there are pockets of high unemployment, regardless of how nice the house actually is without trying to sound snide.

IMO the house you described could very well be available to yourself for £75-85k in 2-5years. Buy then with a smaller mortgage and repayments might be a third less or the same and you could clear the balance 10 years earlier without having to live like a pauper.