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pyewackitt

My New Flat - Ftb Seeking Advise!

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Hi there,

My name is Pye and i've just (today) had mortgage approval on my first property - Yay!

This is my background and rationale for being an FTB at a time when everyone else must think i'm mad.....

The background:

--------------------

I'm a 27 yr old prof. guy and i've spent the last three years thinking about going into the property market and constantly backing out... in which time i could perhaps have moved sooner in buying a first property but its honestly been such a difficult time to make such decisions that i didn't, i spent some of my savings on an MSc and rebuilt the rest into savings and clearing all my student debts. My income is a little above the national average but most importantly i'm now debt free.

My preparation to buy consisted of savings the equivilent of an 5% deposit on a 200K property, then finding a lender where rates would be reasonable (under 5%) and no HLC or MIG charged for my 95%LTV. Fortunately i found a lender. The fact is even for someone on a reasonable income, such as myself, london is hidiously expensive.

About a month ago i was browsing the net for places i could afford when i amazingly stubbled across one i could: a three bed flat in london, nr tube, spacious, kitchen/dinner. living room. victorian building, own entrance, potential for loft development, three stops from Kings X (10mins) and in resonable condition (some modernisation needed, but not immeadiately). The drawbacks... on a busy street, above commercial premises, Tottenham not the best of areas in london (but not too bad).

But the biggest pro - Negotiated the price to just under £150,000 !!!

The mortgage will be aprox. £750 pcm - roughly the same as renting a 1 bed flat in the same area at the going price of £170 per week.

The rationale:

----------------

At this point all my old considerations came back to haunt me.... is the market going to crash? if interest rates go up can i afford this? is it a bargain really or is there something i don't know?

So i gave this some long hard thinking....

is the market going to crash?

- well most likely yes, there's probably going to be a depression in house price rises and even falls in some areas over the short term. The talk of stagnation is unlikely, confidence rises and falls and the property market is as based on confidence as anything else, perhaps too much some might say. Property value to earnings is unbelivably high and probably has to come down.

- but i'm young and there's no reason i can't sit on the property and live in it over the short term and then rent it out in the medium/long term - After all over 10-25 yrs i should be fine recouping my investment.

Also in a market crash its the one bed flats in very overpriced areas that tend to fall first, a large three bed place is more likely to hold onto its value for longer.

if interest rates go up can i afford this?

- the nation is leveraged on debt to a degree never known before in this country, therefore its unlikely interest rates could rise more than a few percent without huge numbers or reposessions and/or bankruptcies, but what if they rose to 9% or even 10%?

- well, i couldn't afford to live there alone... thats for sure. But if i let out rooms at the market rate of 80pw i'd be fine - i could do this with one room under the Governments 'rent-a-room' scheme and not even have to declare it... TAX Free (up to £4,250 pa)! With two rooms let i'd have to pay some tax, but i'd still be able to ride out any reccession without dipping into savings.

- There's even the option to add in a loft conversion, would probably cost £15-25K but would easily fit another bedroom and en-suite - then giving me 4 rooms and 2 wc, which in the medium/long term i might be able to let it for as much as £1250 pcm, or more. (based on current rental valuations). Typically then i can expect to get 137% to 167% of the mortgage... the top end of which should cover me through interest rates of 10% (without spending any of my own money). I mentioned this because i've had an offer of financial help to create this space from a family member - so it may well happen.

is it a bargain really or is there something i don't know?

- Well i've had my parents look over the building and they've got through a few properties in their time :-)

neither saw any problems with it that they could detect and to be honest i can't either, my gut tells me its good value for money, my head tells me its just a realistically priced flat amidst the background of a very overpriced market.

- But obviously not being content with simply my parents say so i'm still having a full building survey completed before finalising the mortgage. I have a list of three pages for the surveyor - he's going to love me! But it's worth it if there no major works required. I have some extras capital available (£5k) which i've held back in case some is needed - its the reason i've had to go 95% LTV instead of the 90% i would have preferred.

----

Well thats about it really - That's about all the info i think you'll need to let me know if i'm making a smart move in the long term or just rushing in too soom before the market really, really, really crashes.

I'm interested in those who think it will work/or not as rental more than anything else, for those who think the market will lose 20-25% in the next years i say great.... available london property is always decreasing comapred to the residents so in the long run i'll be fine.

Oh, and if no major work is needed on this place i'll be saving the extra money to buy a second property once the market really has bottomed out in a couple of years time.

All input appreciated!!!

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Hi Pye, welcome to the forum.

Not too sure what i'd do in your position, but it sounds like you've thought it out and if you can afford it, then go for it.

How much was the flat originally? Could you get it any cheaper? Be as cheeky as you possibly can be. You may be able to knock off another 10k.

I am not going to try and persuade you to change your mind, if I had the money and could get the mortgage and liked the property I expect I'd go for it. But only if I thought I was getting value for money.

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A couple of obvious questions. How long is the lease? What are the ground rent and maintenance charges? I am sure you have thought to ask.

Also I would have thought it would be a good idea to check with the council what use permissions they have granted for the commercial premises below. You probably wouldn't want it being converted into a fish and chip shop for example.

Sounds like you have thought it through and understand the risk that you are taking. If you are confortable with that then go for it.

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New lease of 125 yrs - ground round of £150 per anum, no service charges or other costs.

Buying from the freeholder too so no lease chain to worry about.

I have a note to make sure my solicitors make it a requirement that i'm notified if the commercial property unit, currently a launderette (not dry cleaners) changes use.

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Hmm, 3 stops from Kings X? I guess you're talking about Seven Sisters Area? I know you've thought it all through but surely 150K is still way too much for that area? Is it around West Green Rd? Are you sure you want to be stuck in that area for years?

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But why buy it now, knowing you will be able to afford something better, later?

You seem pretty convinced of a crash of somekind, so if you think that the property has already crashed, go for it.

If not don't.

I personally wouldn't like to have to rent out rooms. It could make your life a misery.

As for this house being special or desirable in someway to you, ask yourself: Would a bigger, better house seem more special or desirable *if only you could afford it*

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There has never been a better time to buy. Good on you you have done all the hard number crunching and have "snapped up" a lovely bargain.

If you, a self professed Professor why post here if you had any doubts.

Good luck from all at HPC. :lol::lol::lol::lol:

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i take it your calling an official awooga on this new poster ?

Sorry Im so drunk I forgot where the big red plastic button was. Besides theres a good Hitchcock just started. Can you press it for me? :P:P:P:lol:

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tis done. ive also emptied the washing machine and prepped your bed with hot water bottle. lemsip and port, plus wrapped both your work shoes in newspaper. your nudie mag is turned and left open at your favourite page sir...readers wives.

is that all m'lud ?

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tis done. ive also emptied the washing machine and prepped your bed with hot water bottle. lemsip and port, plus wrapped both your work shoes in newspaper. your nudie mag is turned and left open at your favourite page sir...readers wives.

is that all m'lud ?

I think I have misplaced my Dunroamin crack pipe. Bugger it. I am so embarresed especially in front of new guests.

The shame of it all. :(

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Hi there,

My name is Pye and i've just (today) had mortgage approval on my first property - Yay!

Go away... and relax. Have a holiday. Buy shares from companies dealing with IVA's...and have a big smile like me

:lol::lol::lol:

House buying now ......................It’s the wrong time

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you know jeeves, theres only one snag about staying over at lord shakerbabys for the weekend.

'his lordships dia-morphene sir ?'

absolutley jeeves.

thats why i took the liberty of briging with us some of your favourite ampoules of LSD sir.

dash it jeeves. top hoe. beats me why the old bugger doesnt get some in.

i fear lord shakerbaby is very set in his ways sir. i fear he ragards a drug with such clarity and mind bending substance is rather too modern for his tastes and pallette.

sheer nectar jeeves.

compared to his jolly old brown stuff. liquid LSD is a clear winner.

i say jeeves - clear winner. its a joke.

...very nearly sir...

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you know jeeves, theres only one snag about staying over at lord shakerbabys for the weekend.

'his lordships dia-morphene sir ?'

absolutley jeeves.

thats why i took the liberty of briging with us some of your favourite ampoules of LSD sir.

dash it jeeves. top hoe. beats me why the old bugger doesnt get some in.

i fear lord shakerbaby is very set in his ways sir. i fear he ragards a drug with such clarity and mind bending substance is rather too modern for his tastes and pallette.

sheer nectar jeeves.

compared to his jolly old brown stuff. liquid LSD is a clear winner.

i say jeeves - clear winner. its a joke.

...very nearly sir...

Bloody hell what is it Winston? I thought I told you never to disturb me whilst I was cleaning out my pipe especially when I am expecting Dunroamins crack arrival tomorrow.

Sorry my Lord but a strange dishevelled individual has turned up at the door rambling and incoherent. He speaks the tongue of house price crash Sir.

Winston.

Yes Sir?

Let him in immediatly. In fact take him down to my own personal Interest Rate insertion room this instance. I will be down soon Winston, just as soon as I knock one out. God that London Rent Girl and Dunroamin have a lot to answer for. I have not been this hard since touching 'bells' in a Govan toilet.

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bring forth the dobber...

weigh the anchors. splice the mainbrace and set a course for drug fuelled exploits of a sexual nature...

aye aye sir.

captain....

HPC meet. dead ahead.

bosun. aye sir, aye.

sound the four bells.....

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bring forth the dobber...

weigh the anchors. splice the mainbrace and set a course for drug fuelled exploits of a sexual nature...

aye aye sir.

captain....

HPC meet. dead ahead.

bosun. aye sir, aye.

sound the four bells.....

Capt'in this is uncharted waters. There be Property Guru Pirates about these High Seas here. Should we...

Look out Capt'in... flaming Singing Pig cut an paste crap incoming from starboard.

Battle stations.

Man the Riser charts.

Take aim and....

... FIRE.

Its not working Capt'in. We all out on DrBubb 1% Monthly projections and Risers charts have drooped...

whatever next Sir?

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The drawbacks... on a busy street, above commercial premises, Tottenham not the best of areas in london (but not too bad).

Well since you asked for honest opinions...Tottenham - I never lived there but feel I know the area well seeing as I'm there every other week to watch the lillywhites...I have to say that despite the presence of the world's greatest football team, you would have to pay me to live there (and I'm not too fussy - I live in Hackney!). Apart from all the obvious drawbacks, if the economy starts to struggle you will see a repeat of what's going on in the Paris suburbs in places like Tottenham. After all, it's got some previous...

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... above commercial premises.

If the laundry downstairs becomes a burger bar you will find it harder to get tenants, or find the rental drops.

You never get rid of the smells, there's a flat above the Texa fried chicken on Fulham Palace road, awful.

No amount of new paint/carpets can disguise it!

Banks can get very cagey about lending on these places.

In a bad slump you will find it practically impossible to sell.

Just make sure you don't find yourself in a forced sale position.

Edited by BandWagon

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Hmm, 3 stops from Kings X? I guess you're talking about Seven Sisters Area? I know you've thought it all through but surely 150K is still way too much for that area? Is it around West Green Rd? Are you sure you want to be stuck in that area for years?

I have to say I agree.

Also, a flat above any kind of shop is bad news in my opinion. I have rented flats in the past above shops and it has been nothing but trouble as shops attract chavs. They are usually the first places to suffer in a crash, the only difference was that as a renter, I could move with a months notice, as a buyer you could be stuck with this place until the next property boom (as this is usually the only time these places sell). It could easily become a milstone around your neck.

Edited by laughing_goat

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You think you're getting it cheap - fact is, no-one else wants to buy it.

Flats above shops - Tottenham - yeuk.

How are you ever going to move up the market?

You're 27 I think you said. Think you might want a family some day? How you going to move up the ladder to a house when you're 35 and want your children to grow up somewhere more pleasant?

When you are 35 you are going to have to take on a mortgage of 250k or more? With wife and kids in tow, are you going to be able to afford that? What if interest rates are 8% by then?

Unless today's generation of FTBs is happy to live in crummy flats all their lives, the current level of property prices is completely unsustainable.

When prices start falling in earnest - flats above shops will fall a long way.

The current market has been built on cheap credit - and people borrowing way too much as a result - and investors piling into the market thinking it was going to make them all rich.

It's a bubble, it is bursting. Don't be one of the last ones in.

That, as a 53 year old who has seen all this before, is my advice. Good luck anyway - you will need it to make your way through life if you buy into this madness.

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Unless today's generation of FTBs is happy to live in crummy flats all their lives, the current level of property prices is completely unsustainable.

I think that says is all although I would change it to;

Unless everyone under 30 today is going to be happy to live in a crummy flats all their lives, the current level of property prices is completely unsustainable.

It seems that 30 divides those that did buy from those that didn't or those that have bought very expensive small flats with very big mortgages which they will be stuck in.

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While I think about it I have a good example in my own family.

My nephew is in IT and earns about 35k. He is in his early 30s. Married and recently had a baby. His wife works in the public services and earns about 25k. So average people. They bought a tiny 2 bed cottage a couple of years ago for about £160k (and could afford this comfortably taking both salaries and the current low interest rates into account). They want another child in due course. They would like the quality of life that ensues from the mother not having to work full time with the children dumped in nurseries all day.

To move up to a 3 bed semi will require another 90k on the mortgage. To move up to a 3 bed detached would require another 130k on the mortgage. He already has a managerial position. Unless he gets a serious promotion, his money is not likely to go up much - just with inflation - if he's lucky (when you think how much IT is now getting oursourced.)

The reality is they will struggle all their lives with a big mortgage around their neck - working long hours around the children's lives just to put a roof over their heads.

And all because property prices are so high. My nephew is very laid back but still pragmatic. He does not want a life like this and is already looking for a way out - a move abroad perhaps. He is not keen on working like a dog all his life.

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While I think about it I have a good example in my own family.

My nephew is in IT and earns about 35k. He is in his early 30s. Married and recently had a baby. His wife works in the public services and earns about 25k. So average people. They bought a tiny 2 bed cottage a couple of years ago for about £160k (and could afford this comfortably taking both salaries and the current low interest rates into account). They want another child in due course. They would like the quality of life that ensues from the mother not having to work full time with the children dumped in nurseries all day.

To move up to a 3 bed semi will require another 90k on the mortgage. To move up to a 3 bed detached would require another 130k on the mortgage. He already has a managerial position. Unless he gets a serious promotion, his money is not likely to go up much - just with inflation - if he's lucky (when you think how much IT is now getting oursourced.)

The reality is they will struggle all their lives with a big mortgage around their neck - working long hours around the children's lives just to put a roof over their heads.

And all because property prices are so high. My nephew is very laid back but still pragmatic. He does not want a life like this and is already looking for a way out - a move abroad perhaps. He is not keen on working like a dog all his life.

It really is quite shocking the effect high house prices is having on peoples lives. There is no way that those that have bought in the last couple of years of haven't bought yet will ever be able to afford family sized i.e 3 or 4 bed homes in most parts of the UK at current prices when they need them for the families they want to start. The effect will be an extremely low birth rate going forward.

I can categorically say that if things don't change then there is no way that I will stay in this country and I'm sure that will be the case for many others. With an ageing population in most of the western world there will be plenty of decent job opportunities in other countries. I would rather live in this country but right now the UK is an absolute rip off.

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It really is quite shocking the effect high house prices is having on peoples lives. There is no way that those that have bought in the last couple of years of haven't bought yet will ever be able to afford family sized i.e 3 or 4 bed homes in most parts of the UK at current prices when they need them for the families they want to start. The effect will be an extremely low birth rate going forward.

I can categorically say that if things don't change then there is no way that I will stay in this country and I'm sure that will be the case for many others. With an ageing population in most of the western world there will be plenty of decent job opportunities in other countries. I would rather live in this country but right now the UK is an absolute rip off.

Well he's thinking of leaving. His father's first house was a 3 bed detached - mortgage paid off by the time he was 52.

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Well he's thinking of leaving. His father's first house was a 3 bed detached - mortgage paid off by the time he was 52.

I think it's a case of if there isn't a house price crash this country is going to the scrapheap. It's all ready happening. Young people enslaving themselves in debt that will be with them for most of their productive working lives.

I choose life.

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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