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Alfie Moon

Age As A Factor In Deciding When To Buy

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Many of us here are connected to each other by our conviction that house prices are set to crash/fall significantly over the next few years and that now is a very bad time to buy property. As well as having common factors amongst us there are differences as well that may or may not have an impact on making a prudent (sorry that sounds very GB) decision about when to (re)enter the property market. One of these factors is AGE. I have been wondering about this recently but would be interested to hear other peoples thoughts about this dimension of our situation.

Polls on the HPC website have previously revealed that our age range is spread from people in their early 20s through to people in their 40s and older.

For people in their 20s I can see that the decision to wait 'as long as it takes' to enter the property market is fairly straight forward (although other factors may make it more complicated such as marriage and having children).

For people in their 30s there may be more anxiety and pressure as they get closer to being 40 and the chance of getting a 25 year mortgage diminishes rapidly. For these people waiting for house prices to drop to their lowest may be a luxery they cannot afford. So, how do they sensibly weigh up the pros and cons of waiting longer for prices to drop versus the chances of getting a 25 year long mortgage diminishing?

For people in their 40s, or older, the situation I've described above for people in their 30s is all the more acute. How do you weigh up the pros and cons of waiting 'another year' for prices to drop versus the length of mortgage being reduced by a year. How do you sensibly weigh up the costs in this situation?

Any thoughts or ideas???

Edited by Alfie Moon

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Many of here are connected to each other by our conviction that house prices are set to crash/fall significantly over the next few years and that now is a very bad time to buy property. As well as having common factors amongst us there are differences as well that may or may not have an impact on making a prudent (sorry that sounds very GB) decision about when to (re)enter the property market. One of these factors is AGE. I have been wondering about this recently but would be interested to hear other peoples thoughts about this dimension of our situation.

Polls on the HPC website has revealed that our age range is spread from people in their early 20s through to people in their 40s and older.

For people in their 20s I can see that the decision to wait 'as long as it takes' to enter the property market is fairly straight forward (although other factors may make it more complicated such as marriage and having children).

For people in their 30s there may be more anxiety and pressure as they get closer to being 40 and the chance of getting a 25 year mortgage diminishes rapidly. For these people waiting for house prices to drop to their lowest may be a luxery they cannot afford. So, how do they sensibly weigh up the pros and cons of waiting longer for prices to drop versus the chances of getting a 25 year long mortgage?

For people in their 40s, or older, the situation I've described above for people in their 30s the situation is all the more acute. How do you weigh up the pros and cons of waiting 'another year' for prices to drop versus the length of mortgage being reduced by a year. How do you sensibly weigh up the costs in this situation?

Any thoughts or ideas???

Things change quite a bit if you calculate the time when you will finish paying off the mortgage, rather than calculating when you will buy.

Providing that it is cheaper to rent rather than buy, and providing that the houses in your target area aren't going up, then it makes financial sense to wait. People I know who have bought were shocked when I talked about houses in cheaper areas meaning a five year mortgage, or houses in slightly more expensive areas meaning a ten year mortgage. That's the benefit of a chunky deposit.

I'm not sure where I will buy, but every single way of looking at house prices in my local area suggests that they are considerably overpriced, and already falling. Why should I buy now?

As someone pointed out in another thread some time ago, it is more important for people who are older to not buy at outrageous prices as they have less time to make up for their mistake. If it was a 50 year or even 20 year cycle, then it would be a different matter.

Billy Shears

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Many of us here are connected to each other by our conviction that house prices are set to crash/fall significantly over the next few years and that now is a very bad time to buy property. As well as having common factors amongst us there are differences as well that may or may not have an impact on making a prudent (sorry that sounds very GB) decision about when to (re)enter the property market. One of these factors is AGE. I have been wondering about this recently but would be interested to hear other peoples thoughts about this dimension of our situation.

Polls on the HPC website have previously revealed that our age range is spread from people in their early 20s through to people in their 40s and older.

For people in their 20s I can see that the decision to wait 'as long as it takes' to enter the property market is fairly straight forward (although other factors may make it more complicated such as marriage and having children).

For people in their 30s there may be more anxiety and pressure as they get closer to being 40 and the chance of getting a 25 year mortgage diminishes rapidly. For these people waiting for house prices to drop to their lowest may be a luxery they cannot afford. So, how do they sensibly weigh up the pros and cons of waiting longer for prices to drop versus the chances of getting a 25 year long mortgage diminishing?

For people in their 40s, or older, the situation I've described above for people in their 30s is all the more acute. How do you weigh up the pros and cons of waiting 'another year' for prices to drop versus the length of mortgage being reduced by a year. How do you sensibly weigh up the costs in this situation?

Any thoughts or ideas???

All being well I'm going to have my first child in August. The idea of buying scares me, as renting is cheaper, and, more to the point, I'm going to be the sole breadwinner for a few years. The idea of having the pressure of having to pay off a mortgage while changing jobs (eg if my current, well paid one gets too stressful) is frightening. Renting gives you the freedom to trade down more easily.

Also, something I've not seen mentioned on here is that, while I'm happy to rent a decent two bed flat for my family, I would be less comfortable buying that same property, since it's not where I'd like to end up. Ideally I'd like to buy one place to remain in for the rest of my natural, not move several times with all the costs that that incurs. It would be unnecessary to buy a three bed house yet, so we can save money buy spending on shelter what we need and saving the remainder.

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Things change quite a bit if you calculate the time when you will finish paying off the mortgage, rather than calculating when you will buy.

All you do is just overpay on the mortgage then you can get your mortgage paid off surprisingly quicker. If like me you start in a position of having no debt at all and a reasonable salary then it's perfectly possible.

Should house prices get cheaper which they inevitably will then the efficacy of overpayments will be even stronger.

At 31 I'm starting to feel the "settling" instinct a bit more but I absolutely will not sacrifice my financial future and pay prices which were set by irrationality and greed, and that's that.

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I'm almost 30 and the desire to buy is definitely starting to get to me. Whether it's because of my age though, or just the fact that I've been waiting for a few years now and am starting to get impatient is difficult to say.

I agree with Warwickshire Lad that I'm not overly concerned about when I'll finish paying off a mortgage, as if things go to plan I'll be able to overpay as I go along.

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if your 20 years-ish. they you can wait the next cycle anyway.

if your 30+ -ish. then you have a choice to make.

wait the next cycle or hand over your hard earned savings to some in-debt home owner.

for me id rather just wait. if they dont crash at least ill be cash rich and can choose to stay in the uk or not.

if i handed over my savings to hpi what was the point of earning/working for it anyway ?

its devalued your earnings to nothing when you consider houses were rising at 10% a year.

thats a larger sum each year than most people gross in annual earnings.

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All you do is just overpay on the mortgage then you can get your mortgage paid off surprisingly quicker. If like me you start in a position of having no debt at all and a reasonable salary then it's perfectly possible.

Should house prices get cheaper which they inevitably will then the efficacy of overpayments will be even stronger.

At 31 I'm starting to feel the "settling" instinct a bit more but I absolutely will not sacrifice my financial future and pay prices which were set by irrationality and greed, and that's that.

If it's cheaper to rent, and if you can afford to pay off the mortgage quicker by overpaying, then you can grow your deposit even faster by putting the extra money you can afford to save into a bank account. Can you please explain how overpaying the mortgage speeds up finishing paying off the mortgage compared to saving more and having a bigger deposit?

Billy Shears

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If it's cheaper to rent, and if you can afford to pay off the mortgage quicker by overpaying, then you can grow your deposit even faster by putting the extra money you can afford to save into a bank account. Can you please explain how overpaying the mortgage speeds up finishing paying off the mortgage compared to saving more and having a bigger deposit?

Billy Shears

Well, it means that anything you overpay is not charged to you at 6% or whatever the rate is at the time, so in effect (and, given you have this loan) you're getting a return of 6%.

If you simply save the money your return will be about 5%, much less if you're taxed on it.

But you are right, having a bigger deposit is better - if you assume no capital growth on the property.

Edited by the_duke_of_hazzard

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wait the next cycle or hand over your hard earned savings to some in-debt home owner.

Or leave.

No-one is forced to stay in the UK anymore unless they're in jail. Why do so when you could have a much higher standard of living in most other European countries? Ok, it's a pain due to language barriers, but if you're motivated enough to move you're motivated enough to learn the language of where you're moving to.

Britain is a country in deep decline: the only reason we've been able to avoid dealing with the real problems we have here is oil money, and that's running out. Anyone taking out a 6-7x mortgage for twenty-five years now is either poorly paid or a fool.

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I think the important factor to remember with a mortgage is to look at it as a credit card.

If you paid minimum payments per month on a credit card then the chances are you will have payed A MASSIVE SUM in comparison to the monies borrowed.

In a downturn I think that a lot of banks and BS's would look at a lot of factors. The first being affordability. In order for the repayments to be 'COMFORTABLE' then the 25 year mortgage is the obvious choice. The fact that you may have saved 20,30,40,50K plus means that you have enough expendible income to save that could easily pay of the mortgage if you wished to get a 15 year mortgage for example.

The simple trutch is, as Billy Shears says, start it as a 25 and you decide when you want it to finish. I think the majority of people on this board are 'used' to living well within our means. And I know that I NEVER HAVE and NEVER WILL pay minimum payments on a Credit card. Your mortgage should be treated the same.

I hope to get a mortgage that will allow me to overpay up to £499 p.c.m. If I want a holiday then I miss 3-4 months overpayments. This Overpayment will only come from OVERTIME or other incomes (might put the missus on the game;)) and is payed on a 'can I afford to overpay this month' basis.

When this gets deeper in the do-do. All the stupid FTB's that are getting 100%/95% mortgages of which there are a lot will not be lent that money. This is a massive proportion of prospective FTB's. The banks would expect at least 10% down as a buffer zone for their investment. I think the level of this bubble will take it to 20% like BTL i.m.h.o.

This will force prices down BIG STYLE at the lower end of the market. THe problem I see when saying lower end of the market. The average FTB is SOOOO OLD know that I cannot see anyone making their way UP the ladder any more! In my opinion we no longer have a ladder - we have 3 steps!

TB

* Billy shears - where are you located - just curious???

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I agree with much of what has been said here, particularly in regard to making overpayments so as to pay off a mortgage early. I think what has been said easily applies to people in their 20s and 30s. However, I do think the situation is more tricky for people in their late 30s and people over 40. The risk analysis must be more complex in terms of weighing up the risk of waiting another year for prices to fall versus knocking a year off the length of mortgage you can get. For people who are 40 or over there must be pressure to think about the need to get a mortgage under control asap so that they can maximise their AVC's for their pension. I'm not sure that we have yet clarified the situation for people in this position. I think teddyboy's comment about the 'property ladder' not existing is particularly pertinent for the older group of people. There must be a temptation to go for the best house they can afford to buy as they are unlikely to be making many moves in the future (perhaps sideways rather than upwards if a job means they have to move geographical location at some point).

I also understand the comments about leaving the UK. Personally I'm in a rather unusual situation. I have property abroad (no mortgage) but live and work in the UK but don't own (or have a mortgage) any property here. I do intend at some point starting a mortgage here.

Edited by Alfie Moon

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At 21 the thought of having a house scared me.

At 31 the thought of not having a house scares me.

Ironically, if I'd bought about six years ago at 25 (still too scared then) when there was plenty of affordable property about, even for someone on my crap wage, I'd be laughing now.

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  • 301 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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