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bankstersparadise

Morpheus

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A very good mate of mine has asked for some advice "getting on the housing ladder". So far, I've told him, "sure, but lesson 1; there is no ladder". Any advice from the masses appreciated. I'm much younger than the average HPCer. All my conversations about this stuff have previously always been with older colleagues or family. This time it's a bit more delicate.

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A very good mate of mine has asked for some advice "getting on the housing ladder". So far, I've told him, "sure, but lesson 1; there is no ladder". Any advice from the masses appreciated. I'm much younger than the average HPCer. All my conversations about this stuff have previously always been with older colleagues or family. This time it's a bit more delicate.

He's going to be asking a lot of other people, may of whom will be older and will encourage him. So, lesson 2 should be "there was a ladder when prices started low and grew fast, along with wage inflation, but that is very very unlikely to happen again. Our parents did very well out of the property market, but there is lots of evidence that we will not."

Lesson 3 should be "buying in the UK is for putting roots down due to the massive costs involved - stamp duty, legal fees. if you meet a fit foreign bird or get a great job offer somewhere else, you are stuck with a house somewhere you do not want to live"

Lesson 4 should be "Then again, I can;t see the future and governments have for 30 years interfered in the housing market. They might make it grow even more!"

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Don't. He'll only remember you tried to stop him doing somethimg he wants to do.

At most find a good blog on housing and refer him to it and leave at that.

Edited by Killer Bunny

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Might be worth pointing out the 'three times a lady' rule - every £1 borrowed, costs roughly another £1 in interest and a further £1 of tax in order to earn it.

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Read this (free but may need to register/login)

http://ftalphaville.ft.com/2014/02/19/1776182/affordability-backwards/

I assume you're trying to warn someone so they can adapt their buying strategy ather than put someone off buying completely

Yeah he has about 60 years of housing need ahead of him that he needs to work out how to fill.

This is a great little blog entry isn't it - thanks. He's pretty smart so he's probably worked most of it out but it is nice to have such a concise piece on the old ladder and why thins are a bit different.

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He's going to be asking a lot of other people, may of whom will be older and will encourage him. So, lesson 2 should be "there was a ladder when prices started low and grew fast, along with wage inflation, but that is very very unlikely to happen again. Our parents did very well out of the property market, but there is lots of evidence that we will not."

Lesson 3 should be "buying in the UK is for putting roots down due to the massive costs involved - stamp duty, legal fees. if you meet a fit foreign bird or get a great job offer somewhere else, you are stuck with a house somewhere you do not want to live"

Lesson 4 should be "Then again, I can;t see the future and governments have for 30 years interfered in the housing market. They might make it grow even more!"

Thanks. This is roughly the sort of thing I was going to go for.

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Don't. He'll only remember you tried to stop him doing somethimg he wants to do.

At most find a good blog on housing and refer him to it and leave at that.

This. If you want to keep him as a good mate.

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Don't. He'll only remember you tried to stop him doing somethimg he wants to do.

At most find a good blog on housing and refer him to it and leave at that.

I agree with this. There are not many people who are really open to others opinions once they've made their mind up about something. In my view the best way would be to explain to him that the state of the market these days is a speculative one, not like in the old days. It is entirely at the whim of government policy and market events, re easy lending, cheap credit. You should tell him your view on what the government might do in the future and ask him to think about that and decide for himself. Just trying to get people to open their mind to the possibility that housing isn't a one way bet is difficult given all the history behind it.

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If he's intent on pursuing buying, act logically.

Once he's found a few houses that suit him, calculate price by the square foot.

Use Zoopla to check all prices sold recently

Use the EPG register to plug in individual postcodes to get the square foot of each property

That builds up an average picture of price per square foot for the area.

Then apply that price per square foot to the square foot of the prospective property.

and of course start 15-20% down on that price for an offer.

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Thanks for all the great advice above, apart from "Trinity" ;-).

I have no idea yet how far he is towards making his mind up. I'll keep my ears open and adapt accordingly.

Edited by bankstersparadise

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This is your last chance. After this, there is no turning back. You buy the house - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes.

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Oh dear.

Mind was made up unfortunately. Kept asking things like how far should we stretch affordability? Should we tell the bank that the missus will stop working soon? If we put it off another 18 months we'll be even more behind the curve.

I tried to drop the odd bit of practical advice (have you thought about what will happen in 5 years time when you will need to remortgage? etc) but as Killer Bunny advised I stayed away from any advice or opinions.

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Oh dear.

Mind was made up unfortunately. Kept asking things like how far should we stretch affordability? Should we tell the bank that the missus will stop working soon? If we put it off another 18 months we'll be even more behind the curve.

I tried to drop the odd bit of practical advice (have you thought about what will happen in 5 years time when you will need to remortgage? etc) but as Killer Bunny advised I stayed away from any advice or opinions.

Yep, he and his missus have clearly made up their mind! Just toying with the idea on how much they can stretch to now. Monday morning he will march into the estate agent and shout proudly 'give me the biggest house I can't afford!' :P

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I have an update.

As predicted by many on the thread things have moved apace. My mate is one of the people that have caused that massive mortgage print this morning. He is doing 95% loan to value (HTB 2) mortgage on a terraced house in deepest, darkest SW London. Offer accepted, mortgage approved and solicitors already mobilised.

Good luck to all.

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