The first-time buyer thread... eeek!

[pembrokestephen]

Carrying on renting, the house market is going to dive like a dead cat out of the window.

*nods* I've been saying that for about two years, but it has to happen: the only thing that's really holding it up is low interest rates and a stable economy, and I'm not optimistic that either of them is going to remain the case indefinitely. And I suspect it's only going to take a little wobble to have the whole house of cards tottering - property prices are built on confidence, and it wouldn't take much of an upset to leave a lot of people with a nasty cold.

 

[Donna Ferentes]

Bit of a mixed metaphor there.

 

[pembrokestephen]

Yeah, let's all wait for people to be turfed out of their houses so we can buy 'em cheap. Lovely.

If those people overcommitted themselves - certainly, pre 1988, people were doing just that - out of sheer greed, why on earth should I feel sympathy for them? I could just as easily been one of them back then, only I smelled the wind and went for renting for 3 years instead. And if I hadn't, I wouldn't have expected the next buyer down the pike to have any interest in my affairs other than whether I'd sell him my home at the going rate...

 

[Donna Ferentes]

If those people overcommitted themselves - certainly, pre 1988, people were doing just that - out of sheer greed, why on earth should I feel sympathy for them?

Indeed, why display any humanity at all ever?

 

[zed66]

Dougal is making a lot of sense to me. What I would say if you do decide to go ahead...

1)If you are going for a repayment mortagage (don't go for an endowment)work out what the payments would be if interest rates changed (15% as worst case maybe). What contingency plan would you have if this happened? Would the lender allow you to suspend capital payments and just pay the interest for a 6-12mth period? The alternative is to look for a fixed rate deal-potentially more expensive but gives total security against fluctuating interest rates.

2)If you are looking at a mortgage work out the total cost over 25 years. A 70,000 mortagage at 5% over 25yrs will cost approx 120,000 in total repayments. One that offers short term benefits may be more expensive over the entire term.

3)Fixing houses is expensive.Central heating, secure doors & double glazing, plumbing and electrics are all expensive. Basic decoration and carpeting is relatively cheap.If you were buying a car that needed work doing you would haggle the price down, a house is no different. Be realistic about your DIY abilities.Consider a full structural survey.

4)If you are viewing a house, go for a second, third or fourth viewing at different times of day. Take somebody who has been throught the housebuying process with you-they will recognise what is likely to cost money to put right and what is cosmetic.

Oh and good luck

 

[llantwit]

Thanks very much for all of this folks!
I'm very grateful. And very worried.

 

[moonsi til]

I am a 1st time buyer and moved into my 1 bed flat last December. i have a lease hold flat so I pay a silly amount per month (about £50) to a management company that goes toward buliding upkeep. I had very little stress ,the asking price was 72k I offered 62k estate agent told me the vendor was looking for minimum 68k but in the end we settled for 65k. The vendor was a nice guy and left loads of better than I had white goods and furniture behind. I used a solicitor suggested by the estate agent and he turned out to be very helpful and informative . I went for lots of mortgage advice and found they all said the same i:e if you have graduated within the last 5 years Scottish Widows were doing the best deal etc. I am only paying about £75 more per month than I had with rent and that includes the lease fee and insurance.
Good luck .

 

[LilMissHissyFit]

If there's a fucking hole in the roof, it's your problem.

Yeah, let's all wait for people to be turfed out of their houses so we can buy 'em cheap. Lovely.

well we are and have absolutely no qualms about doing so.
Life is about choices, if through their own greed people have taken on mortgages they cannot afford if the interest rates rise and saddled themselves with shitloads of secured and unsecured debt and then it all comes on top and they get the house reposessed thats their problem.
Ive chosen not to do that and not to take on any debts we cannot afford to pay off one income, never mind two
If I benefit becuase someone else has lost out and manage to buy a house at a price that isnt sickeningly obcene then I wont lose any sleep over it- they could have made the choices we have, they didnt. Too bad

 

[zed66]

well we are and have absolutely no qualms about doing so.
Life is about choices, if through their own greed people have taken on mortgages they cannot afford if the interest rates rise and saddled themselves with shitloads of secured and unsecured debt and then it all comes on top and they get the house reposessed thats their problem.
Ive chosen not to do that and not to take on any debts we cannot afford to pay off one income, never mind two
If I benefit becuase someone else has lost out and manage to buy a house at a price that isnt sickeningly obcene then I wont lose any sleep over it- they could have made the choices we have, they didnt. Too bad

I can see where you're coming from but I don't think everybody who has a house reposessed falls into this category. It must be heartbreaking to lose your home and be screwed over by a bank/building society into the bargain.Nobody knows what is around the corner and even if you are in well paid employment buying a house is always going to involve some element of risk, although I would agree that the degree of that risk can be mitigated to a large degree by common sense.

 

[LilMissHissyFit]

Yes it must be heartbreaking but its naieve in the extreme of DF to suggest anyone should feel guilty for buying a reposession

I wouldnt think twice about it at all and I wouldnt feel in the slightest bit guilty and I dont think people shuld be made to
heartbreaking yes, but certainly not the problem of the person buying them out of the crap theyve got themselves into- forcibly yes but would it be better for none of the money to be recouped and eviction to simply be the only penalty for non payment with peope in financial shit being forced to repay their debts forever?

 

[Dougal]

I think the job market is about to go very sticky too in some areas. Look out for the closure of large DIY type shops in the next few months. This will herald a wave of redundancies leading to belt tightening all round leading to more shop closures etc. It does not take much for it all to go awry.

 

[pembrokestephen]

Indeed, why display any humanity at all ever?

I think I know what you mean: there are those who would take a level of predatory glee at the idea of cleaning up (financially) at the expense of someone's misfortune, and perhaps press their advantage to the limit.

But the system is the system: it so happens that house prices in this country are part of a free market economy, and if you want to buy and own property, you're part of that economy, whether you like it or not.

It didn't give me any particular pleasure to buy a flat whose next-door flat had sold two years earlier for £69k, and paying only £50k for it, but on the other hand, the seller was perfectly free to stick out for a higher price if there had been a buyer willing to pay that price: as it was, they were happy to sell at the price I offered - I didn't MAKE them accept it! - and that was that. Nor did I express any glee, beyond the fact that my own stretched finances were a little bit less stretched than they would have been if I'd paid more.

And I was well aware of the risk that by buying a property in a market that was in free-fall, I was quite likely to find myself owing more than I owned, in any case, even temporarily. As it happens, only one of the other flats there was on the market at the time, and the seller took it off the market, so we have no way of knowing, but there's little doubt that property prices in the area continued to trend downwards for some time afterwards, so I DID take something of a risk.

I can't actually see what you're trying to suggest anyone in that position SHOULD do - what, offer £5k over the asking price "just to be fair", or something?

 

[Donna Ferentes]

Well, possibly one could avoid the "why should I feel any sympathy?" crap.

 

[pembrokestephen]

Thanks very much for all of this folks!
I'm very grateful. And very worried.

Being complacent or thinking "ah, it'll all be OK" is the enemy of many a house purchaser (and seller). You're right to be worried - well, nervous might be a better state of mind - and be sceptical of all the assurances you get along the way.

But keep it in perspective - provided you're sensible, and are prepared to walk away if something doesn't "feel" right, you're fairly unlikely to get caught out too badly, and property is likely to be a fairly secure investment, long-term, for a good long while to come.

I'd especially recommend the advice above regarding making sure you can make the commitments, even if interest rates rise - too many people who get caught out do so because of one thing, and it isn't the value of their property: it's taking on a mortgage that looks affordable today, but won't be affordable if rates rise by 2, 3, 5, 10% in the future. How pessimistic you decide to be depends on your own attitude to risk, but I'd DEFINITELY factor in a 2-3% rate rise and see how the numbers look then. It may even be worth it taking on a mortgage on such a basis, and overpaying to the +2-3% level: you'd be surprised how significant even a small overpayment can be in terms of paying down capital, and it means that, if the rates do go up, a) you're used to it, and b) your capital may have gone down enough to insulate you against a further 1 or 2% rise in the rate.

When we first bought, the opposite happened: rates were at about 9%, and we could just afford our mortgage on that. They dropped pretty regularly throughout the life of the mortgage, but we held our payments the same, and it made a surprising difference. We also tried to store up some capital each year and pay a couple of thousand off at year end, and ended up paying off a 25 year mortgage in 9 years, though a few pay rises over that time helped a lot...

 

[pembrokestephen]

I can see where you're coming from but I don't think everybody who has a house reposessed falls into this category. It must be heartbreaking to lose your home and be screwed over by a bank/building society into the bargain.Nobody knows what is around the corner and even if you are in well paid employment buying a house is always going to involve some element of risk, although I would agree that the degree of that risk can be mitigated to a large degree by common sense.

Yes, it would be heartbreaking. But, surely, rather less heartbreaking than having a mortgage you cannot afford, and no-one to buy the property.

FWIW, bank/building society reposessions generally result in MUCH smaller prices being achieved for a property, and - contrary to popular myth - no matter what the property goes for, your obligation to your mortgagor does not discharge until you've paid all of it back.

A property near us (this is post 1988 boom) that would, on paper, have been worth around £55k went to repossession - the man living there was silly, and held out way longer than he was wise to before putting it on the market, then doing the throwing-the-keys-at-the-building-society-and-walking-away routine. It went at auction for £37k. I suspect that his mortgage was at least £10k more than that: a purchaser coming in and making what DF might see as being a predatory offer of (say) £48k would have left that man at least not saddled with a defaulted mortgage and £10k of delinquent debt. It's fair to say that a purchaser offering so much under the asking price would STILL have been a white knight, even if the vendor hadn't seen it that way.

 

[pembrokestephen]

Yes it must be heartbreaking but its naieve in the extreme of DF to suggest anyone should feel guilty for buying a reposession

I wouldnt think twice about it at all and I wouldnt feel in the slightest bit guilty and I dont think people shuld be made to
heartbreaking yes, but certainly not the problem of the person buying them out of the crap theyve got themselves into- forcibly yes but would it be better for none of the money to be recouped and eviction to simply be the only penalty for non payment with peope in financial shit being forced to repay their debts forever?

Just to add...

There are some quite good reasons for NOT buying a repossession. It's quite often the case that a repossessed property is in, ah, a sub-optimal state of repair, and resentful occupants have often either stripped it of anything of value (light, bathroom fittings, fitted kitchen), or gratuitously damaged it.

On the other hand, it's going at well below market prices, so the risk and cost of having to do lots of decorating and refitting may well be outweighed by that. Caveat emptor probably applies to a considerably greater extent in this situation than for a "normal" purchase, though...

 

[pembrokestephen]

Well, possibly one could avoid the "why should I feel any sympathy?" crap.

Well, "should's" a very punitive word. Personally, I would (and did) feel some sympathy with someone in that position. On the other hand, sympathy's not going to help them very much, and I can't see that shedding crocodile tears at their misfortune is going to be at all useful. Yes, it's sad. No, there's fuck-all I can do about it.

 

[gentlegreen]

I'm starting to feel guilty for coveting an ex-council semi as a possible next move.
I would like a bigger garden so I can grow my own food ... with off-road parking and potential for making more noise late at night - though annoyingly I would have to completely rearrange the insides so that the living room didn't adjoin next door's

.

 

[gracious]

i'm just looking at flats/houses to buy aswell. i started to do it because i got offered a job in new york, and couldnt bring myself to go... i guess it made me realise that im not going anywhere any time soon.

i dont think the housing market will crash, precisely because of the negative equity in 80s still being in recent memory. i think people are thinking very carefully when they take on mortgages what would happen if interest rates went up....

the area im looking in is also getting the tube in a few years - it will link up with east london which is getting a whole lot of redevelopment due to the olympics... on top of that the council are bulldozing some horrid estates in the area. i think i should be on to a reasonably good investment, especially if i can grab me a period property (not easy).

i'd echo the sentiment that you have to live somewhere, if you know where the best town/area is, and you can afford mortgage repayments, you might aswell bite the bullet.

 

[LilMissHissyFit]

Just to add...

There are some quite good reasons for NOT buying a repossession. It's quite often the case that a repossessed property is in, ah, a sub-optimal state of repair, and resentful occupants have often either stripped it of anything of value (light, bathroom fittings, fitted kitchen), or gratuitously damaged it.

On the other hand, it's going at well below market prices, so the risk and cost of having to do lots of decorating and refitting may well be outweighed by that. Caveat emptor probably applies to a considerably greater extent in this situation than for a "normal" purchase, though...

indeedy, but if you are priced out of the market,a fixer upper which will be worth considerably more once youve done the work is a good investment.
You certainly cant afford to be precious about it though, nor expect anything more than you can see nor what appears on the survey

 

[LilMissHissyFit]

Well, "should's" a very punitive word. Personally, I would (and did) feel some sympathy with someone in that position. On the other hand, sympathy's not going to help them very much, and I can't see that shedding crocodile tears at their misfortune is going to be at all useful. Yes, it's sad. No, there's fuck-all I can do about it.

Ditto, we were buying a repo last year until the IFA shit on us and we lost out.
I felt sorry for the guy who was having to leave, he was mentally ill and his ex wife was behind the bankruptcy proceedings I believed becuase she wanted her money out of the house

But thats their affair, if we'd been providing them with the money, we'd have actually have been helping them out and the guy desperately wanted a nice family in the house to make it nice rather than flog it to a builder

 

[Echo Base]

Why do people always go on about this "property crash" that's been coming since 1998? Hasnt it only happened once in like 50 years?

 

[AnMarie]

If you read the financial pages in the broadsheets they are talking of rate rises globally and the end of capped and fixed rate deals.

Do you have a source for that please?

 

[LilMissHissyFit]

yup sunday times money section, the week before last
If you can find it be my guest, unfortunately mines gone in the bin

 

[pembrokestephen]

Why do people always go on about this "property crash" that's been coming since 1998? Hasnt it only happened once in like 50 years?

It happened post-1988. And we had a bit of a worrying time mid-1970s when the country went onto a 3 day week - in that case, the market stagnated, rather than crashing, but it's a much more dynamic market now.

Put it this way: the timespan between the last two "booms" was somewhat less than 15 years. Granted, no crash has happened yet, but I detect a distinct "won't happen to me" vibe in the market, and I fear that it probably will, sooner or later. And probably sooner.

 

[gracious]

the government estimate supply of housing in london and the south east will outstrip demand for at least another 50 years. if there is another crash, theres bound to be a recovery - its simple economics if supply is bigger than demand, prices have to be high.

if you are in it for the long haul and want to live in the place you bought, you're fine.

personally i think that if there was going to be a crash in london it would have been sparked by the 7/7 bombings - housing was supposedly 20% overvalued at that time..... no evidence of even any slowing where i live.

 

[gracious]

does anyone know what the difference between leasehold and freehold is?

 

[Chester Copperpot]

Freehold = You own the land and the building, basically the whole lot.

Leasehold = You rent the land on a long lease, say 99 years, and pay a ground rent each year to the freeholder or land owner. Technically when the lease runs out the land and building reverts back to the ownership on the freeholder, however, you have the right to extend your lease but they’ll charge you money to do so. The lower the lease the more they’ll charge you. Leasehold is normally associated with flats where you have more than one property occupying one plot of land. Although you do occasionally get leasehold houses.

 

[gentlegreen]

the government estimate supply of housing in london and the south east will outstrip demand for at least another 50 years. if there is another crash, theres bound to be a recovery - its simple economics if supply is bigger than demand, prices have to be high.

if you are in it for the long haul and want to live in the place you bought, you're fine.

personally i think that if there was going to be a crash in london it would have been sparked by the 7/7 bombings - housing was supposedly 20% overvalued at that time..... no evidence of even any slowing where i live.

If I remember correctly :-
I paid £17,500 for my Bristol house in 1984.
It went up to 50K then crashed down to 30K at the end of the 80s
the past few years has been insane - "well presented" houses in my street are selling for 120K now

£82,000 Feb-06
£125,000 Nov-05
£116,500 Sep-05
£125,000 Sep-05
£105,000 Aug-05
£119,995 Jul-05
£120,000 Apr-05
£110,000 Feb-05
£85,000 Jan-05
£124,000 Nov-04
£114,995 Oct-04
£121,750 Jul-04
£103,950 May-04
£104,887 Mar-04
£86,000 Dec-03
£56,000 Nov-03
£80,000 Nov-03
£90,000 Oct-03
£100,000 Aug-03
£79,500 Jul-03
£97,000 Oct-02
£71,560 Sep-02
£85,000 Sep-02
£95,000 Aug-02
£94,000 Aug-02
£96,500 Aug-02
£62,500 Jun-02
£65,000 May-02
£68,500 Mar-02
£62,000 Feb-02
£45,000 Jan-02
£70,000 Jan-02
£64,000 Dec-01
£71,000 Dec-01
£70,000 Sep-01
£45,000 May-01
£45,000 Aug-00
£57,000 Jul-00
£60,000 May-00
£53,000 Apr-00
£35,500 Apr-00

Looks like I missed a few bargain doer-uppers

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[swampy]

Check out:

http://www.housepricecrash.co.uk/index.php

or:

http://www.pricedout.org.uk/

Personally I think prices are gonne start falling soon, rising interest rates and unemployment being the triggers!