Help!

[cells]

one of two things

1: your wife doesn’t trust you or respect you enough to listen to or understand your views

2: your wife trusts other peoples view that "house prices only ever go up" , or is stubborn enough to not listen to logic and reason

either way, don’t think house prices are your main problem!

[Havoc]

You were only 15 during the last crash, that would put you in your early 30s now, and you have 700k to spend!!

Definately a Bank Of Mom and Dad victim

[Schmalex]

You were only 15 during the last crash, that would put you in your early 30s now, and you have 700k to spend!!

Definately a Bank Of Mom and Dad victim

That's pretty offensive. Like many others, I have worked hard for every penny I have.

[Tommy]

Well your mortgage at 5.5% on 500k will be around 3k per month, or you could rent something like this for a year, pocket the 1k difference a month, plus interest from your equity, and find your feet in the area whilst trying to become the new Keith Moon.

5.5% on 500k interest only is 27,500 which is about 2,292 pounds a month.

Assuming you are right and to rent to rent a similar place is about 2k then he would be pocketing less than 300 pounds a month.

The interests on his equity (at 5% net) would be 833 pounds a month. So considering 0 house price inflation he would be 1,125 pounds a month better off renting.

Assuming however a 2% house price inflation, 2% of 700k is 1,167 pounds a month, which means that he would be already better off buying (42 pounds a month better off (on equity)).

Assuming a 4% house price inflation the equity would increase by 2,333 pounds a month, so he would be 1208 pounds a month better off buying than renting.

Assuming a -4% house price inflation he would be far better off renting!

and so on...

So it really depends on how things go, without the crystal ball you cannot be sure if renting is the right decision or not (and the same applies to buying of course).

[Guest d23]

You were only 15 during the last crash, that would put you in your early 30s now, and you have 700k to spend!!

Definately a Bank Of Mom and Dad victim

how to win friends and influence people the HPC way..........

this kind of warm greeting (combined with a liberal sprinkling of other troll / EA etc accusations) is absolutely going to win people over to the cause and convert any lurkers out there

I have friends in a similar position to the OP who are my age (35) and who have had no (or very little) help from their parents, so to call him a troll this early on seems very premature

[234SALE]

I seem pretty unpopular around here at the moment, so here goes.

You know a crash is coming, you know that prices will go down. Wait ....

Time is very fair,,,

But I also see a big correcton coming

If you want to pay me 1% i'll find a house for you

[Tommy]

You were only 15 during the last crash, that would put you in your early 30s now, and you have 700k to spend!!

Definately a Bank Of Mom and Dad victim

why?!

having 200k equity for someone in his early 30s is easy. For example if you bougth a house for 100k in your early 20s, now, 10 yers later is likely to be worth over 250k at least (if you are lucky even 300k). 250k - 100k = 150k + capital repayments in 10 years: easy to have 200k.

As for the other 500k...

Assuming a joint income of 140k gross per year, it takes a 3.5 x multiplier to get to the 500k.

So all he and his wife need is good jobs, 70k on average each. With over 10 years working experience is not impossible, and in places like london is even easier.

For example a couple of young doctors in their early 30s can easily get over 100k each and with >200k joint income they can easily get a 500k mortgage with no problem. This without any help from mum or dad.

[Havoc]

why?!

having 200k equity for someone in his early 30s is easy. For example if you bougth a house for 100k in your early 20s, now, 10 yers later is likely to be worth over 250k at least (if you are lucky even 300k). 250k - 100k = 150k + capital repayments in 10 years: easy to have 200k.

As for the other 500k...

Assuming a joint income of 140k gross per year, it takes a 3.5 x multiplier to get to the 500k.

So all he and his wife need is good jobs, 70k on average each. With over 10 years working experience is not impossible, and in places like london is even easier.

For example a couple of young doctors in their early 30s can easily get over 100k each and with >200k joint income they can easily get a 500k mortgage with no problem. This without any help from mum or dad.

Doctors in their early 30s earning over 100k - I don't think so

[Guest d23]

Doctors in their early 30s earning over 100k - I don't think so

do you really find it hard to believe that there are people in their early 30's earning over 100K?

I don't know about doctors but there are a fair few people in that fortunate position; theres at least 2 in my office

[winkie]

Having sold our house back in December 06 and rented since (the sale was for a job change that was eventually turned down), I am coming under sever pressure from "She Who Must Be Obeyed" to buy a house soon. However, I am pretty bearish about the housing market at the moment, mainly because I don't want to saddle myself with a ridiculous mortgage for the next 25 years.

We are looking to spend up to c. £700K for a place in the hampshire countryside. Not being old enough to remember the last crash (I was only about 15 then), I am unsure whether the potential falls of 20% / 30% / 40% that are often discussed may extend to older houses in more rural environments, or will mainly be confined to the "pack em in" 1 bed BTL flats that have been springing up in City Centres.

To throw into the mix, we also have a 3 1/2 year old son who will be starting school in Sept 08, so we need to start thinking about catchment areas etc pretty soon.

I would appreciate any advice (both from Bulls & Bears), as this conundrum is really "doing my swede" at the moment!!!!

Before anyone states the obvious, I will form my opinons but there is a lot of economics nouse on this site that I would like to tap into to help me with my thinking.

Thanks in Advance!!

Alex

If you have to buy at the moment, and you can afford it why not buy youself a perfectly adequate family home for £350k, then you would not be saddled with a ridiculous mortgage for the next 25 years. Invest any left overs in something that has more room for improvement.

[numpty]

This web site provides a counter balance to the medias obsession with house prices and the fact that house price inflation in excess of inflation is seen as a good thing. However a number of observers in the papers have commented that the site has many members who are green with envy about those who hold property at the moment and some members are hoping/praying that interest rates will trip them up so they can then buy the properties off them at knock down prices laughing at them as they sign the contract in front of them.

I find some of the comments on this tread particularly purile and offensive.

£700k is a perfectly respectable sum to spend on a property but particularly in the SE it will not buy perfection but a good solid detached family home in the better London surburbs.

Remember last year 4,500 people in London got paid £1m+ last year, average city worker earns £100k per year (in part effected by that small group earning £1m plus) A professional couple of DINKYS in their early thirties working in the city could easily be earning £200k to £250k per annum and with a reasonable amount of capital saved from earlier house purchases could fund a £1m property if they decide that children is not for them just now. God only knows what state of envy some people on this site must get into over these people

[Schmalex]

Crumbs, didn't mean to enflame so many passions!!!

Thanks to Crash 2006, F00l, John d uk, Bubble Pricker, RJG18, A Fool & His…., Silver Surfer, Kilroy, George FTB, Tommy, D23, Time, 234 Sale, Havoc, Winkie, numpty for all your insightful comments. Your comments are broadly in line with my thinking, so thanks for at least making me realise I am not barking up the wrong tree for insisting we continue to rent for the moment!!!

For the others, I am neither a troll, daddy's boy, ea, vi etc, etc. I am merely very, very lucky to have a good job and a wife who is also in a good job. For the record, we have NEVER received a penny from either of our parents and, like many other people who browse this site, work damned hard to ensure that we make the best of our opportunities.

[lewissheridan]

"I am absolutely sh*t scared that a 20 - 25% drop in house prices will wipe out all of that equity we have slaved to achieve over the last 10 years"

Let me guess, you bought a 2-3 bed house for £70-80k, overpaid mortgage and sold for £300k ? I'm disgusted slavery still exists in this day in age, you poor fella. But you have been rewarded for your hardwork, i'm sure you feel better about yourself.

[jonpo]

I'm dis apointed about the hostility on here but here it goes how much house do you NEED. If there is you the wife and a kid you need 2 beds not 2 doubles mind. buy a small house with a small/zero mortgage continue to save. trade up to a bigger house when you have the cash and you kid needs it. remeber once you have a house with zero debt you are made the magic 20 will be so much more attainable.

[Tommy]

Doctors in their early 30s earning over 100k - I don't think so

http://news.bbc.co.uk/1/hi/health/6157219.stm

average is 106k.

this is for GPs and not all doctors.

you might also want to read (which claims some GPs are getting even 250k):

http://news.bbc.co.uk/1/hi/health/4917454.stm

Tommy

[Guest wrongmove]

I'm dis apointed about the hostility on here but here it goes how much house do you NEED. If there is you the wife and a kid you need 2 beds not 2 doubles mind. buy a small house with a small/zero mortgage continue to save. trade up to a bigger house when you have the cash and you kid needs it. remeber once you have a house with zero debt you are made the magic 20 will be so much more attainable.

I would agree with Jonpo and Winkie - hedge. You are in a fortunate position and it does not have to be all or nothing. If you get something for around half the mortgage you can afford, you will have kept a lot of powder dry and be able to profit from a slump, but you still have a stake in HPI, if that happens, and plenty of spare income to diversify into cash, equities and even precious metals.

[Harry Sacks]

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[Guest wrongmove]

(OT) Jonpo, what's the magic 20?

[Schmalex]

(OT) Jonpo, what's the magic 20?

I was going to ask that, but have already been shot down a fair bit!!!!

[Pluto]

Having sold our house back in December 06 and rented since (the sale was for a job change that was eventually turned down), I am coming under sever pressure from "She Who Must Be Obeyed" to buy a house soon. However, I am pretty bearish about the housing market at the moment, mainly because I don't want to saddle myself with a ridiculous mortgage for the next 25 years.

We are looking to spend up to c. £700K for a place in the hampshire countryside. Not being old enough to remember the last crash (I was only about 15 then), I am unsure whether the potential falls of 20% / 30% / 40% that are often discussed may extend to older houses in more rural environments, or will mainly be confined to the "pack em in" 1 bed BTL flats that have been springing up in City Centres.

To throw into the mix, we also have a 3 1/2 year old son who will be starting school in Sept 08, so we need to start thinking about catchment areas etc pretty soon.

I would appreciate any advice (both from Bulls & Bears), as this conundrum is really "doing my swede" at the moment!!!!

Before anyone states the obvious, I will form my opinons but there is a lot of economics nouse on this site that I would like to tap into to help me with my thinking.

It is not a new house you need, but a new wife. Obey my left testicle.

Thanks in Advance!!

Alex

[jonpo]

your leverage is your ammunition once you have used it its gone and like you aknowledge your ass is then on the line. Once youve Blown your load you don't get a second chance. Imagine you buy your 700K house but another much sweeter one comes on the market at 770K in 2 years (reduced from 1.5 mil or so... ) if you got the ammo you can pull the trigger. if you ain't cos your equity is vanishing the chamber is empty...

[redwing]

your leverage is your ammunition once you have used it its gone and like you aknowledge your ass is then on the line. Once youve Blown your load you don't get a second chance. Imagine you buy your 700K house but another much sweeter one comes on the market at 770K in 2 years (reduced from 1.5 mil or so... ) if you got the ammo you can pull the trigger. if you ain't cos your equity is vanishing the chamber is empty...

That is an inspired analogy.

[DaggaDagga]

Even with a £200k deposit, I'd feel very uncomfortable with a £500k mortgage. In your position, I'd be inclined to go for the middle option and get a much cheaper house - around £200-300k.

If prices rise, you'll gain a bit of equity. If they fall, you don't lose the shirt off your back and a pound of flesh every month until you're dead.

IT sales jobs will be at the front of the firing line if the economy turns downwards.

Why do you want a £700k house? Do you have 12 kids and a few horses? Is it really that important that your friends go "ooh" and "aah" when they visit? Time for some re-appraisal of what's important perhaps? Think how broke they'll be in the depths of recession with their £200k negative equity and crippling mortgage payments.

[Schmalex]

Even with a £200k deposit, I'd feel very uncomfortable with a £500k mortgage. In your position, I'd be inclined to go for the middle option and get a much cheaper house - around £200-300k.

If prices rise, you'll gain a bit of equity. If they fall, you don't lose the shirt off your back and a pound of flesh every month until you're dead.

IT sales jobs will be at the front of the firing line if the economy turns downwards.

Why do you want a £700k house? Do you have 12 kids and a few horses? Is it really that important that your friends go "ooh" and "aah" when they visit? Time for some re-appraisal of what's important perhaps? Think how broke they'll be in the depths of recession with their £200k negative equity and crippling mortgage payments.

It is totally un-important to me that my friends go ooh aah & my priorities are quite well aligned, hence why I am digging my heels in at home & continue renting instead of jumping in. However in the areas we are looking at, our budget buys you a reasonably nice 3 / 4 bed detached house - kind of like the house my parents paid £80K for in the mid 80's & brought me up in!! Certainly nothing with acres of land.

[DaggaDagga]

So how would the missus feel about buying a two-up-two-down terrace then?