Ftb Rant!

[Guest giove]

I am a FTB - about buying a property in London. Don't have much money to invest and it will have to be a studio flat, so that I can put down a 10% deposit on a purchase of 115/120K

The repayments with my bank are more or less same as my current rent, (I am paying 650 pcm for a studio/bedsit in south london), I am not sure if the house prices are going to crash but what risks am I taking by buying such a small property?

anti.

[tahoma]

I am a FTB - about buying a property in London. Don't have much money to invest and it will have to be a studio flat, so that I can put down a 10% deposit on a purchase of 115/120K

The repayments with my bank are more or less same as my current rent, (I am paying 650 pcm for a studio/bedsit in south london), I am not sure if the house prices are going to crash but what risks am I taking by buying such a small property?

anti.

You are taking a risk buying any property. I presume those £650 repayments refer to an interest only mortgage, in which case they are not 'repayments' at all, but rent paid to your bank.

Lenders interest rates will probably go up both this year and next, whether the BOE raise their base rate or not. Have you priced this in? Not to mention the fact that prices are stagnating or falling throughout the country.

[JBeau]

So long as you can fit the next 10/12 years of your life into a studio, I suppose then it's your decision.

Just remember life changes, who knows what lies ahead. Partners, marriage? children?

I know personally of two couples who bought studios at the height of the last boom - and they openly admit that this was financial suicide. It took at least 10 years to for the price falls to come back up to purchase price.

[dog]

I am a FTB - about buying a property in London. Don't have much money to invest and it will have to be a studio flat, so that I can put down a 10% deposit on a purchase of 115/120K

The repayments with my bank are more or less same as my current rent, (I am paying 650 pcm for a studio/bedsit in south london), I am not sure if the house prices are going to crash but what risks am I taking by buying such a small property?

anti.

The risks are that you will lose money if prices go down and you have to sell. Duh!

[Guest giove]

You are taking a risk buying any property. I presume those £650 repayments refer to an interest only mortgage, in which case they are not 'repayments' at all, but rent paid to your bank.

Lenders interest rates will probably go up both this year and next, whether the BOE raise their base rate or not. Have you priced this in? Not to mention the fact that prices are stagnating or falling throughout the country.

Thanks for your reply tahoma, but the 650 repayments are repayments and not interests, that would be something like 430 I think.

The rate is fixed to 4.9% until 2011 it's a 5 year fixed rate.

I am not still sure if it's the best move but yet Ican't stand renting a small place when I can invest 12K deposit and buy my own.

anti.

[Guest Winners and Losers]

Studio flats are hit hardest in a crash.

[Guest giove]

The risks are that you will lose money if prices go down and you have to sell. Duh!

hey dog if the prices go down I will still have to pay my rent.

anti.

So long as you can fit the next 10/12 years of your life into a studio, I suppose then it's your decision.

Just remember life changes, who knows what lies ahead. Partners, marriage? children?

I know personally of two couples who bought studios at the height of the last boom - and they openly admit that this was financial suicide. It took at least 10 years to for the price falls to come back up to purchase price.

That is one thing I thought about, but I am hoping that if the market stays the same I can maybe revert my mortage to interest only and rent the place, hence move to a bigger accomodation if I decide to marry/have childer or leave the country..

ant.

[Guest Winners and Losers]

That is one thing I thought about, but I am hoping that if the market stays the same I can maybe revert my mortage to interest only and rent the place, hence move to a bigger accomodation if I decide to marry/have childer or leave the country..

And where is the money going to come from to move to bigger accommodation, have children or leave the country? Having done this myself, it is not as easy as it sounds.

[Golden Shower]

Thanks for your reply tahoma, but the 650 repayments are repayments and not interests, that would be something like 430 I think.

The rate is fixed to 4.9% until 2011 it's a 5 year fixed rate.

I am not still sure if it's the best move but yet Ican't stand renting a small place when I can invest 12K deposit and buy my own.

anti.

If you can, try take defensive measures. For example, if prices do tank will the property you are buying take a unusually large hit? A good example of what I am trying to say is new builds, see how these have been hammered recently? I would guess a better property would have held more steady in a tight market.

[Charles_Darke]

650pcm doesn't look like much can go wrong if you can afford repayments (factoring in rate hikes). It's pretty hard to find a decent place in London to rent for 650pcm.

I'm currently paying 950pcm to rent on a 1 bed flat. If I could find a studio/1bed that is big enough for me (and located where I want) for 120k, I'd jump at the chance.

[Guest giove]

And where is the money going to come from to move to bigger accommodation, have children or leave the country? Having done this myself, it is not as easy as it sounds.

The money will come from my beautiful wife lol

I am sure it's not an easy move, but I have to take this risk otherwise I will be stuck in a bedsit for the next 2/3 years, I can't afford a big place but a studio flat seems to be the only option.

anti

[tahoma]

Thanks for your reply tahoma, but the 650 repayments are repayments and not interests, that would be something like 430 I think.

The rate is fixed to 4.9% until 2011 it's a 5 year fixed rate.

I am not still sure if it's the best move but yet Ican't stand renting a small place when I can invest 12K deposit and buy my own.

anti.

Apologies for my presumptuousness, but £650pcm sounded low for a £110K repayment over 25 years? I was paying approx £450pcm for my old place with a 60K repayment mortgage.

You have to do what you feel is right, of course.

Obi-Wan Ben Kenobi, 1977

[Guest giove]

650pcm doesn't look like much can go wrong if you can afford repayments (factoring in rate hikes). It's pretty hard to find a decent place in London to rent for 650pcm.

I'm currently paying 950pcm to rent on a 1 bed flat. If I could find a studio/1bed that is big enough for me (and located where I want) for 120k, I'd jump at the chance.

exactly, that is my point, I have to pay rent anyway, and if I can fix my rent for the next 5 years that is good enought for me.

Unfortunately I will have to compromise with the location, the areas I can afford in london are not the ones I would live in if I had a choice, but hey can't have it all..

anti.dreams

[Seen It Before]

Apologies for my presumptuousness, but £650pcm sounded low for a £110K repayment over 25 years? I was paying approx £450pcm for my old place with a 60K repayment mortgage.

You have to do what you feel is right, of course.

Obi-Wan Ben Kenobi, 1977

110k mortgage is £639 on a 2 year fixed or £679 for a 10 year fixed

60k mortgage would be about £349 for 2 years and £370 for 10 year fixed.

http://www.halifax.co.uk/mortgages/payment_calculator.shtml

[DonnieDarker]

1.You have to factor in the expenses that you will incur above and beyond the repayments:

Service Charges

Insurance

Upkeep and maintenance

Furnishings

As a ballpark I am of the opinion that there are approx £2k (minimum) pe annum of hidden expenses like this when it comes to buying vs selling.

2. After all these expenses and the repayments will you still be able to save a decent amount each month?

If no, dont do it.

[Guest giove]

1.You have to factor in the expenses that you will incur above and beyond the repayments:

Service Charges

Insurance

Upkeep and maintenance

Furnishings

As a ballpark I am of the opinion that there are approx £2k (minimum) pe annum of hidden expenses like this when it comes to buying vs selling.

2. After all these expenses and the repayments will you still be able to save a decent amount each month?

If no, dont do it.

thanks DonnieDarker that is a good point, I am investigating on these charges, I think service charge and ground rent + council taxt + Bills will bring the repayment to 800 pounds circa.

As for the furnishings I will live squat style for a bit

anti

[Guest Cletus VanDamme]

... but I am hoping that if the market stays the same I can maybe revert my mortage to interest only and rent the place, hence move to a bigger accomodation if I decide to marry/have childer or leave the country..

Stop me if I'm wrong, but I understand IO mortages to be a recent phenomenon. I would not bank on these continuing to be available once the banks tighten their lending criteria.

However, I would buy a studio if it was in central London, because I would feel the risk of these tanking would be lower. You'd also have a much greater chance of letting it out.

Also, although I'd generally avoid new builds, a purpose-built studio might be a better bet than a studio in a converted house (which would basically be a bedroom with a baby belling and a shower in the corner).

[dog]

hey dog if the prices go down I will still have to pay my rent.

Or your mortgage interest.

[jonewer]

B every aware of leaseholdings.

Bear in mind the current service charge but also bear in mind additional charges that may be levied at the whim of the freeholder. £15,000 per unit for new paint anyone?

I think that Leaseholds are a feecking ripoff! Wouldnt touch a flat with a bargepole!

[apom]

I am a FTB - about buying a property in London. Don't have much money to invest and it will have to be a studio flat, so that I can put down a 10% deposit on a purchase of 115/120K

The repayments with my bank are more or less same as my current rent, (I am paying 650 pcm for a studio/bedsit in south london), I am not sure if the house prices are going to crash but what risks am I taking by buying such a small property?

anti.

http://www.proviser.com/regional/towns/exe...1995/index.html

Exeter...

http://www.proviser.com/regional/towns/lon...es/price_trend/

London..

Look and reckon>?

http://www.proviser.com/regional/towns/exe...1995/index.html

Exeter...

http://www.proviser.com/regional/towns/lon...es/price_trend/

London..

Look and reckon>?

these are automatically updated from the land registry..

[trompe le monde]

there's a similar thread here with some good advice:

http://www.housepricecrash.co.uk/forum/ind...showtopic=30382

TLM

[Guest giove]

thanks all for the good/bad replies.

I will have a proper thought next week....a real fast one.. and make up my mind!!

anti.