First Time Buyer Advice Sought

[nme]

So I guess I'm a typical first time buyer in most respects. I have a reasonably well paid job, and save hard. I've been trying to buy for the past three (ish) years, but its always seemed a little out of my reach. I've now reached a point where it seems that I could afford to buy - finally, having saved hard for the last five years. I've started to look at properties, and the first flat I've seen is exactly where I would choose to buy, and more or less what I would want in a flat, with the exception that its ground floor, which I'm not too keen on, but I tell myself, that you can't have everything. Now ordinarily, these flats tend to go very quickly, and in fact, in the past six months that i've been registered with the agent, this is the first time they've called me up with a flat thats come on the market and still available. Normally, by the time I hear of something in my preffered area ( close to station ), and call the agent, the property is under offer and solicitors instructed. Maybe its just my new found good luck. Anyhow, so I've made an offer, slightly less than the asking price, having checked on the 'net, what the last property went for, and brill, its been accepted! Things are looking good.

Now I've gone to see an independent mortage advisor, and we've sat down and gone through all the options, and it seems that I've not been the best prepared I could for this. Having initially wanted to put down only 15% deposit, i've been told to stand a chance of getting one of the better rates, I must put down almost 19% and take out a smaller mortgage. Ok, so the inital costs are higher, but thats ok, its still (just) in my limits. Now the Conveyancing and stamp duty etc etc. And now i'm at my limit. But it seems like I'll just make it. Happy times

So we agree a mortgage and deposit, choose a solicitor, and things are now starting to happen. And suddenly, I start getting all these emails -

NEWSFLASH: Property repossessions soar

The number of families suffering the misery of mortgage repossession and the threat of homelessness has risen sharply, new figures show.

Read the full report now.

NEWSFLASH: Rate rise stalls property market

January's shock rise in interest rates slammed the brakes on the housing market with prices rising at their slowest pace for eight months, according to Nationwide.

Read the full report now.

So now I'm worried. I've spent the best part of the last half decade saving hard to be able to get onto the property ladder, but now i'm about to invest everything I have into the flat, i'm beggining to worry that the market is going to crash. What should I do? Are my worries unfounded? Should I hold out another year, or just dive straight in?

Please help! Its confusing me so!

Thanks

[Little Professor]

i'm beggining to worry that the market is going to crash. What should I do? Are my worries unfounded? Should I hold out another year, or just dive straight in?

Yeah, just dive straight in.

Seriously, this site is called housepricecash.co.uk, you know what kind of advice you are going to get here. This is not the place for impartial financial advice.

[HovelinHove]

With a 20% deposit you might only end up with 20% negative equity, better than someone with a 100% IO mortgage, so yeah, go for it.

[mickeymouse]

Why pay all that money for a flat you dont 100% want. If you dont want it will anyone else. I always think how easy can I sell if I need to, and I would never buy a Ground floor flat. Also ask about the lenght of lease and how much service fees are. I think if you arent 100% sure dont do it, regardless of a HPC or not.

[OzzMosiz]

If you really want the place, offer 10-20% less than they're asking. Then with your 19% deposit (which will be more if the accept a lower offer), you will be better protected if prices fall.

[iLegallyBlonde]

Do you like/want the flat or not, it's that simple ? Don't try and 2nd guess, do what you think is right for you at the time with the information you have available now.

[A Fool & His Borrowed Money]

Should I hold out another year, or just dive straight in?

Please help! Its confusing me so!

Thanks

Click the link in m signature '"House prices only go up"

It's all just a little bit of history repeating (to quote that tune)

[Ro-Jaws]

If you've gone to the trouble of saving and thus being able to afford a 20% deposit, then assuming you have no other debts - you're fairly careful with money and prefer to stay in the black rather than the red.

If you do go through with the flat purchase... then just get a fixed rate for a fairly longish term [5-10 years?] and a repayment mortgage. As long as you've got job security and continue to be a frugal consumer then if a HPC does occur, then obviously you won't be making the huge profits of recent years... the book price will have to drop from an initial 20% to be in negative equity... but you will not be in any immediate danger of losing your home.

I've rented ground floor flats before... they were both in a central/student type area... so noise at night is more noticeable than if you were up a floor or two. Have a look at the area where this flat is located at night time - if you haven't already. I wouldn't think of renting a ground floor place again - you also have to factor in who will be living above you. I've had upstairs neighbours who were as quiet as church mice... and others who raved all weekend... think of the base on a powerful stereo acting as a mighty metronome.

Nobody can predict if and when a HPC will occur... but I do think the conditions behind one are ripening all the time & I think it's a definite possibility... basically because people don't suddenly have large amounts of money than they did a couple of years ago... they're just borrowing more and that can't go on indefinitely.

I can sympathise with your situation... I was an FTB 30 months ago in Belfast... saved for a year before hand... literally lived on beans, spuds and tuna and didn't order any heating oil the last winter I was renting - that was perhaps not the best money saving ploy. Drying one's shirt for work in front of the kitchen oven is as cumbersome as it is unorthodox.

Saved up a 10% deposit & then started looking, though the property market was insane back then... 6 months and 60 viewings later finally bought a terraced house.

Along with the deposit, I got a 4x multiplier standard 25 year repayment mortgage [fixed rate of course!]... Now with wage increases and over-payments I made I'm now down to a mortgage that is roughly 3x my salary. However, the house has more than doubled in value - I though the market was mental when I bought... but now it really is bonkers in Belfast.

The property market is still powering ahead as far as I can see, houses are selling in a few weeks in my area and book prices are still going up. Check out last week's article in the Belfast Telegraph about the latest property hotspot in Belfast...

http://www.belfasttelegraph.co.uk/news/loc...icle2187479.ece

In terms of property prices over here... my gut reaction is that it's all too good to be true. I was planning to be in my current house for 3-5 years and then sell it and move on... it is in classic terms a 'starter home'. I'm going to be in a position to sell in 3/4 months time... so I'm going to keep a close eye on the pulse of the property market and just try to pick the best time to sell... That's easier said than done though... the property market is still very bullish in Belfast. I'd much prefer a stable market... for example - the problem of how does one trade up?... but I'm just going to have to play this one as best as I can.

So, to conclude... if you're looking at this flat solely as an investment/money making opportunity then I wouldn't advise it.

If you're looking at it as a home then...

Have a good think about living in a ground floor flat.

[ii] Factor in the genuine possibility of an HPC in the not too distant future.

... On the info provided... just make sure if property market goes down you can ride it out financially and also whether you will be happy living there... never buy anything, including property, just for the sake of it... the grass isn't always greener on the other side.

Best of luck in whatever you decide to do.

[gfromls]

always ALWAYS do what you want.

you can seek advice from all sorts of people

some will be part right - some will be part wrong

take there advise..... and think about it

...................................................................

my opinion;

anyone who buys a house now is a fool

and will spend years regretting it.

...................................................................

but ALWAYS do what you think is best

good luck

[It is different this time]

Yeah, just dive straight in.

With a 20% deposit you might only end up with 20% negative equity, better than someone with a 100% IO mortgage, so yeah, go for it.

well you ask for the advice here it is and I won't charge you for it! keep saving what you think only 15-20% deposit could suddenly become 50% deposit, no you don't have to invest it but just wait, remember " Good things come to those who wait"

[enworb]

You know the area far better than any of us do. If the kind of flat, or location has been popular for many years, they probably will continue to be. My guess is that they are considerably less expensive than new builds...and possible larger too.

I've followed the property market in my area for well over 5 years myself and wouldn't be pinning my hopes on an unbiased advice....particularly that I live in Slough (I'v e forgotten the poem about droppings bombs ).FYI, I bought a second property in May of 2005 and would have kicked myself if I hadn't.

If you didn't go for it, would you regret having less of a deposit in the future, and with it, not such a good mortgage deal?

It depends on where you think property prices in your area and IR's are heading. Best of luck anyhow....let us know what you decide.

[LargelyIgnorant]

If you want to keep a cat, go for it - personally speaking, it's the only reason I'd buy a ground floor flat. Being a paranoid bear, I wonder why the estate agent phoned about this flat - were they finding it difficult to sell? Check out the previous selling price and year it sold. Maybe ask for people's advice on a website such as moneysavingexpert.com, where they don't necessarily believe house prices are going to fall. As other posters have said, make up your own mind - you'll be the only person who has to live with the consequences of your decision.

[dude wheres my house]

I am in the position where i could also be a FTB but i am choosing not to. If i look at someone in the same position as me even 5 years ago what they could buy then and a what i can buy now there is no comparison.

I am going to rent a property worth about 3 times what i could buy for less than half of what i have to pay a month and that seems like a good idea to me.

The only people that i speak to who think that prices are going to rise in the immediate future, are those who own multiple property investments just now and i think they have their head in the sand.

I can afford to buy, but not in an area or a house that

a) i want to live in now

i could ever see myself in 10 years down the line with possibly a family.

I am happy enough to rent and save up the extra cash each month, if the flat you are looking at is somewhere that you would genuinely be happy to be in in 5 years go for it, otherwise sit tight. You really need to think about how you would feel if the prices dropped and you could then afford somewhere twice as nice but cant because of -ve equity. Good luck, i know how you feel but i really cant see prices accelerating away again outside millionaires row in London.

[cells]

ask yourself

1what would it mean to me if HPC happened

2what would it mean to me if house prices stagnated

3what would it mean to me if house prices rise

ask yourself that question in both cases of renting and buying

4then ask yourself what the chances of a HPC are

5what the chances of stagnation are

6what the chances of a rise are!

If I where asking myself I would be thinking

1. If I bought, oh crap it means I overpaid which is the worst thing to do with my biggest asset. If I rented, hahahhahaha I can now get a bigger better place for the same price

2. If I rented, noting much since I still have the money and house prices cost the same. I would loose a little in ret but not a lot due to interest on mortgage. If I bought, doesn’t bother me much

3: if I bought, WOOT. If I rented. AHHH CRAP

4: likely since no “normal” person can afford a “normal” house, interest rates seem to be rising!

5: could happen, but would have to be many years of stagnation.

6: no chance, or in 5 years your average family won’t even be able to afford a 1bed ex-council 16th floor flat.

[nme]

WoW! - Thanks for the response! Thanks everyone for all your input, it's much appreciatted. Just to respond to a few points:

Yeah, just dive straight in.

Seriously, this site is called housepricecash.co.uk, you know what kind of advice you are going to get here. This is not the place for impartial financial advice.

Valid point, and just to clarify, I specifically posted to this website because I wanted to get the opinions of those who are possibly better armed with information around the likelyhood of a price crash, because having read a few of the emerging stories in the mainstream press, I'm inclined to believe that a crash is more likely now, than any time in the past three or so years, and this opinion seems to have recently becom more widely accepted.

If you want to keep a cat, go for it - personally speaking, it's the only reason I'd buy a ground floor flat. Being a paranoid bear, I wonder why the estate agent phoned about this flat ...

These are the exact thoughts I've been having after reading the recent reports of house price problems in the press. Has the agent finally called me, after the usual investors have declined the opportunity? hmmmm...

If you've gone to the trouble of saving and thus being able to afford a 20% deposit, then assuming you have no other debts - you're fairly careful with money and prefer to stay in the black rather than the red.

If you do go through with the flat purchase... then just get a fixed rate for a fairly longish term [5-10 years?] and a repayment mortgage. As long as you've got job security and continue to be a frugal consumer then if a HPC does occur, then obviously you won't be making the huge profits of recent years... the book price will have to drop from an initial 20% to be in negative equity... but you will not be in any immediate danger of losing your home.

I've rented ground floor flats before... they were both in a central/student type area... so noise at night is more noticeable than if you were up a floor or two. Have a look at the area where this flat is located at night time - if you haven't already. I wouldn't think of renting a ground floor place again - you also have to factor in who will be living above you. I've had upstairs neighbours who were as quiet as church mice... and others who raved all weekend... think of the base on a powerful stereo acting as a mighty metronome.

Nobody can predict if and when a HPC will occur... but I do think the conditions behind one are ripening all the time & I think it's a definite possibility... basically because people don't suddenly have large amounts of money than they did a couple of years ago... they're just borrowing more and that can't go on indefinitely.

I can sympathise with your situation... I was an FTB 30 months ago in Belfast... saved for a year before hand... literally lived on beans, spuds and tuna and didn't order any heating oil the last winter I was renting - that was perhaps not the best money saving ploy. Drying one's shirt for work in front of the kitchen oven is as cumbersome as it is unorthodox.

Saved up a 10% deposit & then started looking, though the property market was insane back then... 6 months and 60 viewings later finally bought a terraced house.

Along with the deposit, I got a 4x multiplier standard 25 year repayment mortgage [fixed rate of course!]... Now with wage increases and over-payments I made I'm now down to a mortgage that is roughly 3x my salary. However, the house has more than doubled in value - I though the market was mental when I bought... but now it really is bonkers in Belfast.

The property market is still powering ahead as far as I can see, houses are selling in a few weeks in my area and book prices are still going up. Check out last week's article in the Belfast Telegraph about the latest property hotspot in Belfast...

http://www.belfasttelegraph.co.uk/news/loc...icle2187479.ece

In terms of property prices over here... my gut reaction is that it's all too good to be true. I was planning to be in my current house for 3-5 years and then sell it and move on... it is in classic terms a 'starter home'. I'm going to be in a position to sell in 3/4 months time... so I'm going to keep a close eye on the pulse of the property market and just try to pick the best time to sell... That's easier said than done though... the property market is still very bullish in Belfast. I'd much prefer a stable market... for example - the problem of how does one trade up?... but I'm just going to have to play this one as best as I can.

So, to conclude... if you're looking at this flat solely as an investment/money making opportunity then I wouldn't advise it.

If you're looking at it as a home then...

Have a good think about living in a ground floor flat.

[ii] Factor in the genuine possibility of an HPC in the not too distant future.

... On the info provided... just make sure if property market goes down you can ride it out financially and also whether you will be happy living there... never buy anything, including property, just for the sake of it... the grass isn't always greener on the other side.

Best of luck in whatever you decide to do.

Having read all the replies to my post, I think the crux of my decision, comes down to whether I'm 100% happy with the flat that i'm looking at buying. To be honest, Although it's exactly where I would like to be, its not 100% exactly what I want, and thats probably the one issue thats most important. As I'm not buying for investment purposes, but instead to live in for the next four or so years (I forsee that I would probably like to move up the ladder after this timeframe), in which case any iminent house price crash is mostly irrelevent. I would not be in a position of having to sell (all else being equal) under adverse market conditions. However, the only reason I may wish to sell during this time period, was if I was not completely happy about the in the place I was living in. If the market was to crash then this would mean that I would not be in a position to do that, which is where I think my concerns come from. I guess thats why I've been giving so much thought to whether there will be a house price crash, because if there is I dont want to be in a position where I am stuck.

I think I'm going to go and see the flat once again, and will decide on whether its exactly what I want, and if it isn't I'm willing to hold on until I find the right one. In the interim it'll be interesting to see what the february rate rise will bring.

Thanks to all for your comments, they really did help me to understand better the reasons for my uncertainty, and hopefully now i'm better prepared.

Thanks all

Edited February 1, 2007 by nme

[pod]

If you like the flat and the location and you can afford it, I'd say go for it.

Edited February 1, 2007 by pod

[mickeymouse]

Dont do it then!! Another better property will surley emerge and you will only kick yourself if you buy this one.

Another point is its usually dead this time of year for EAs so they fill their time with calling on clients they have in their "Hot " box. Ie if you are in a position to buy you are Hot e'g if you have just sold your house, or not quite so hot a FTB. If they were busy they wouldn't have had time to call you. In fairness it could just be a seasonal thing. It usually gets busy come March.

[SickOfIt]

If you come to a site like housepricecrash.co.uk you clearly have doubts.

If I had any doubts over spending 100k+ I simply would not buy - its just common sense. Don't be the next lemming.