Sold Our House - Forced Into Renting By Cautious Banks!

[Pie Eater]

Hi,

As the topic title says, we've just accepted an offer on our house, so subject to everything going as we hope it will, we should soon be leaving the property market temporarily.

It was our first house. My husband and I are in our mid to late twenties and we bought in Wigan for £136,500 in 2005; the offer we've accepted is £145,000 so I think we've done OK given today's conditions. Our plan was to move up the ladder into a bigger better house, but we've been stumped as we only have a 5% deposit and everyone is now demanding 10% minimum.

However, despite the fact that our decision to STR was based on circumstance rather than design, we are both as certain as we can be that it will actually work out for the best this way. If we were able to raise the 10% deposit and get a bigger mortgage I'm fairly sure we would have done so, even knowing that a property crash is likely, just because that felt like “the done thing”, so having been forced into renting is probably the best thing that could have happened to us.

I've been lurking on this site for around six months - the time it has taken to sell our house - sometimes in despair, willing you all to be wrong about house prices given that I was trying to get a good price for mine! Now though, I'm taking comfort from the postings and willing your predictions to be correct - 30% off our dream home sounds good to me!!

I have actually been surprised that many people have agreed with us that renting is the wisest choice for today - I wonder how many would have agreed a year ago. Still, there are a good number of friends and acquaintances who appear to feel sorry for us, and are trying their best to help us come up with ways of buying another house (making an offer that requires the vendor to gift us the remaining deposit for example). I just hope that in 12 months time (or more, but hopefully not too much more) we will have saved enough to get a mortgage, and house prices will have dropped enough to make it sensible to buy again. My new worry is that our dream home will have dropped significantly, but the banks will make mortgages even more difficult to get hold of. It could take years for us to save 20 or 30% for a deposit!!

Anyway, that's our story, and we have never rented before so this site will continue to be a useful source of information to guide us through potential pitfalls we may encounter. I never thought I would register, thinking that once we sold our house I would lose interest in the subjects being discussed, but it looks like I’m going to be around for some time!

Jayne x

[BarryM]

For the moment, at least, you may find that your monthly outgoings to rent are considerably less than to buy, taking in to account mortgage interest, ground rent, service charges, buildings insurance, maintaining/replacing white goods, central heating servicing, repairs etc.

My own brother is doing the same thing. Taking in to account monthly outgoings and the interest on his equity he is far better off, in the short term, and provided that house prices do not start going up too quickly.

As far a s the "buyers gift" idea - that's one of the reasons that mortgage companies are tightening up on lending criteria! It's a mechanism all to often of moving over valued properties to the less credit worthy.

Why not stay renting, get a deposit together, get mortgage offer in priciple and THEN go house hunting? Makes sense to me.

[Guest KingCharles1st]

Well Jane,

Whatever else you did or didn't do, you have FREEDOM, you have market position, and you have a brain, you have also used gut instinct, something that very few understand.

Good luck to you both, and if you ever feel down because you don't currently own, just think about how much money hassle and worry you are currently not spending out on a "dream!" Spend all your energy concentrating on that bigger place you are going to be buying for a snip around 2011

[gilf]

My new worry is that our dream home will have dropped significantly, but the banks will make mortgages even more difficult to get hold of. It could take years for us to save 20 or 30% for a deposit!!

Thats one of the dangers however, in that scenario (as we are already seeing) it will mean the masses will not be able to buy anyway so will cause prices to fall further in the long run, what you have done is locked in your equity as prices continue to slide you deposit gets bigger and bigger, not by virtue of it getting bigger in value terms but because it's value as a percentage deposit on a house it will become better and better.

With upward prices people are able to afford the deposit on the new place via equity on the way down thats just not possible. The ladder is about to become a snake.

[Pie Eater]

Thanks all for your words of encouragement. The survey's being done tomorrow, fingers crossed no big issues identified in this big milestone on the way to completion!

In a strange way I'm quite looking forward to the challenge of living as frugally as we can and saving as much as possible.

[ColinS]

Hi,

As the topic title says, we've just accepted an offer on our house, so subject to everything going as we hope it will, we should soon be leaving the property market temporarily.

It was our first house. My husband and I are in our mid to late twenties and we bought in Wigan for £136,500 in 2005; the offer we've accepted is £145,000 so I think we've done OK given today's conditions. Our plan was to move up the ladder into a bigger better house, but we've been stumped as we only have a 5% deposit and everyone is now demanding 10% minimum.

However, despite the fact that our decision to STR was based on circumstance rather than design, we are both as certain as we can be that it will actually work out for the best this way. If we were able to raise the 10% deposit and get a bigger mortgage I'm fairly sure we would have done so, even knowing that a property crash is likely, just because that felt like “the done thing”, so having been forced into renting is probably the best thing that could have happened to us.

I've been lurking on this site for around six months - the time it has taken to sell our house - sometimes in despair, willing you all to be wrong about house prices given that I was trying to get a good price for mine! Now though, I'm taking comfort from the postings and willing your predictions to be correct - 30% off our dream home sounds good to me!!

I have actually been surprised that many people have agreed with us that renting is the wisest choice for today - I wonder how many would have agreed a year ago. Still, there are a good number of friends and acquaintances who appear to feel sorry for us, and are trying their best to help us come up with ways of buying another house (making an offer that requires the vendor to gift us the remaining deposit for example). I just hope that in 12 months time (or more, but hopefully not too much more) we will have saved enough to get a mortgage, and house prices will have dropped enough to make it sensible to buy again. My new worry is that our dream home will have dropped significantly, but the banks will make mortgages even more difficult to get hold of. It could take years for us to save 20 or 30% for a deposit!!

Anyway, that's our story, and we have never rented before so this site will continue to be a useful source of information to guide us through potential pitfalls we may encounter. I never thought I would register, thinking that once we sold our house I would lose interest in the subjects being discussed, but it looks like I’m going to be around for some time!

Jayne x

Jane,

Your story is remarkably similar to my own and have so done the right thing. Only difference for me is I have yet to find a buyer and my place is now in Neg Eq so count yourself lucky.

Good luck with your survey

[Pie Eater]

Thanks Colin, best of luck with finding a buyer. This time two weeks ago we had given up all hope of finding one and had resigned ourselves to staying in our house for another 2, 3, 4 or however many years it took for it to be financially viable to move again.

We had had a measly 4 viewers in total in 5 months, and then the weekend before last we got 2 lots of viewers, both made an offer and we went with the cash paying downsizers. Interestingly, or not (!) we had no first time buyers at all.

[ColinS]

Thanks Colin, best of luck with finding a buyer. This time two weeks ago we had given up all hope of finding one and had resigned ourselves to staying in our house for another 2, 3, 4 or however many years it took for it to be financially viable to move again.

We had had a measly 4 viewers in total in 5 months, and then the weekend before last we got 2 lots of viewers, both made an offer and we went with the cash paying downsizers. Interestingly, or not (!) we had no first time buyers at all.

Gives me hope then. We have been for sale for a month and zero viewers. We cant drop our price too much more cause of the Neg Eq so if we dont get lucky in the next month or so, we will be stuck for several years or have to hope for a dramatic change in the market (like yourself I have always read this fourm hoping everyone was wrong and that is still the case for me).

Let us know how the survey goes.

[Pie Eater]

It is a crappy situation for you to be in. A month isn't too bad, it took us 6-8 weeks to get our first viewing. Granted the further we get into the year, the fewer viewers there are likely to be around, but there will always be a few downsizers and people who have to move. Hopefully your house is priced attractively and will appeal to someone soon. Also, we had friends who put their house on at the same time as us, had no viewers whatsoever for 8 weeks, then the first and only viewer put in an offer - £13k more than what they paid for it last year, no less!! They completed 2 weeks ago.

Best of luck

[BarryM]

Thanks all for your words of encouragement. The survey's being done tomorrow, fingers crossed no big issues identified in this big milestone on the way to completion!

In a strange way I'm quite looking forward to the challenge of living as frugally as we can and saving as much as possible.

Good luck with the survey. I think most people are tightening their belts to live within their means. We're seeing a lot of people do the same as you and renting short term - it's pushing up prices of more affordable flats to rent in London.

I strongly recommend you keep a keen eye on the sales market in your area of interset. When confidence returns, I suspect there's going to be alot of pent up demand from people like yourselves to buy.

[spud]

Hi

We're from Wigan and renting is cheap we are paying £400 mth for 3 bed terrace (springfield), rent has gone up a bit the only advise i'd give is to avoid B+B estate agents they'll try and sting you for the fees again once your 6mths are up. Good luck Prices have to drop in this area when tou look at the prices these terraces were selling for in 2000 £14000 and now they are £100000 it just doesn't make sence!

Spud

[Pie Eater]

Thanks for the advice Spud. We have actually sold our house through B&B (subject to survey, contract etc). Pardon my ignorance, but what fees do you pay to the agent other than the £x pcm rental charge?

Thanks

Jayne

[spud]

B+B were about £120 last year Healy simpson doesn't chrage any fees and the others tend to range between £110 - £140 plus your deposit

spud

[Pie Eater]

Well, we've had the results of our buyers survey. There is a lot of stuff that needs doing including damp treatment and a wall in the attic is bowing and needs taking down and rebuilding - these appear to be the most serious areas of concern. The buyer has reduced their offer by £3k but is still very keen to proceed, so good news!!

Unfortunately, the amount of cash we will walk away with after selling fees, etc is quite a small amount, but we will work on boosting this over the coming year or two. I just hope house prices don't recover before we have managed to save enough to put a deposit down!!! That would be quite gutting!