Viewing 35 posts - 1 through 35 (of 35 total)
  • getting on the housing ladder early
  • hungrymonkey
    Free Member

    ok, so anyone who knows me and my current financial position will giggle at me asking, but i’ve been wondering about how/when to get on the housing ladder.

    is it worth buying a cheap house (90-100k) as soon as one can afford the mortgage repayments?

    if you had money for a deposit available, say 20k, and the mortgage calculator reckons £360/m repayments, is it something to do if you’re earning 18-20k? £360 is little more than rent in a shared house.

    or is it better to rent for a few more years, earn more, and then buy something at £130-150k?

    chakaping
    Free Member

    Great idea. wish I had been able to do it myself.

    good time to buy now I reckon.

    trail_rat
    Free Member

    tom ordinarily id say getting on early is best (thats what ive done) but you move about ALOT. and given your earning instability wont you struggle to gt a mortgage ?

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    King-ocelot
    Free Member

    My fiancée got on the ladder at 19, with an apartment it’s now being rented with the rent covering the remainder of the mortgage. We have a seperate joint mortgage on the house we live in. It’s not done her any harm, the apartment would sell now for a little more than what she paid for it (inc fees) when the market picks up a bit more.

    Can you really afford it if say the boiler broke? Is your job secure? Do you have legal fees?

    mrmo
    Free Member

    The question i would ask, in a few years will that house cost 130k? can you predict the future?

    I left uni 16 years ago, IF i had stretched myself then i could have bought a house at 3 times salary, i chose not to, now i am still renting and that same house is 7 times my current salary.

    How stable is your job/lifestyle, do you see yourself staying in the same area for a while etc.

    hungrymonkey
    Free Member

    is 18-20k enough to start paying a mortgage? (would anyone lend to someone on that income?)

    edit – its not an imminant decision, but am hoping to nail down an income etc soon, and can see myself living in the same place for a while.

    things like boiler breaking is, i guess, what would make it go from affordable to a financial nightmare.

    munrobiker
    Free Member

    We’re not doing it for at least 10 years. We have a leaky roof just now- could you afford to fix that?

    druidh
    Free Member

    Are you asking him to quote for it?

    ebygomm
    Free Member

    What percentage interest rate are you putting in the calculator? Repayments look a little low for 20% deposit on a 100k house

    hungrymonkey
    Free Member

    FWIW, only reason i asked is that i saw a place which looks good, and got a bit of an itch (rent is due soon, and i seem to resent paying someone when i’d rather be purchasing my own place!). the reality is that it’ll be a little while until i’m in the position.

    guess i just wanted to know the practicalities of buying property on a relatively low income.

    cynic-al
    Free Member

    If you are confident that you will stay there for a while, and can afford upkeep, I’d say yes, but it’s unlikely to be an investment like the old days…

    hungrymonkey
    Free Member

    ebygomm – that was just the estate agents suggested repayment guide.

    trail_rat
    Free Member

    luke i used to think like that but after 3 years of throwing good money after bad renting – and moving every year into a very limited market of country cottages i got pissed off and decided i just had to buy somewhere.

    i went decided to go the other way rather than cheap and cheerful step on and stretched my self a little (while staying comfortable) to get somewhere i wouldnt have to move from for a good few years …. 3 bed ex council semi.

    ill tell you something ive done nothing as stressful as buy a house EVER even some of the projects ive done at work were nothing like as stressful…. guess it wasnt my money with work 😉

    Edukator
    Free Member

    Maintain your mobility and ability to seize opportunities as they arise without worrying about a house and you might make enough cash to buy a house when you feel you need one. If I’d had a mortgage I doubt I’d have walked out of a teaching job – a decision that meant I was able to make enough money to buy without needing a mortgage shortly after.

    mudshark
    Free Member

    If you’ll be happy in the house you want to buy for quite a few years and are comfortable with the commitment and the repayments then may as well but don’t assume you’ll be better off in, say, 5 years time. Prices might fall, maybe dramatically or interest rates might go up a lot. Would be good if you can rent out a room, that’s what I did when I started with the buying thing 16 years ago.

    ebygomm
    Free Member

    They might be calculating it over 40 years or similar I suppose, and is it £360 on a fixed rate or variable, if fixed how long for?

    hungrymonkey
    Free Member

    so much to learn! 😳

    Pieface
    Full Member

    Don’t buy somewhere for the sake of getting on the ladder, however if you find somewhere you like and are happy to stay there for 5 years then it could well be worth it. Despite buying at the peak of the market, having 6 years of good history opens me up to some good deals with my current lender – I really feel for 1st time buyers ATM, partly fuelled by my need for 1st time buyers to buy my house!

    teef
    Free Member

    Why do you call it a ladder and not a snake?

    trail_rat
    Free Member

    pieface talks sense

    i just did the sums and interest only (you have no chance of getting a mortgage at this) is the only way i can get your sums to work or your getting 2.75% – unlikely also ….

    petrieboy
    Full Member

    It’s only a ladder if it’s going up – which it isn’t at the moment.

    I benefited greatly from buying very young in the late 90’s when things were going mental (and given the average age on here I bet a load of people here did also) first place doubled in price in 6 years. Thing is, can you really see that happening again any time soon? It might, but none of the professionals are predicting it do it’s pretty unlikely. On that basis, buying stands to gain you no more than renting, and it sounds like the flexibility afforded by renting is quite useful to you. So I’d say don’t buy (for investment purposes) but do buy if you want to.

    fizzicist
    Free Member

    A case study for you:

    I bought a place for £78k in 2003, sold it in 2007 for £125k. A quick and easy way of making £47k.

    Spunked all the equity on a place worth £225k in 2007.

    Which I have just sold for £218k. An easy way of losing money.

    What I’m trying to say is that it works both ways – if I had bought the house I was renting for a couple of years before then, I’d have had another £50k of equity. However, those days are gone – you will not get rich by owning a house now – the market is stagnant. However, if you have a deposit and can get a cheap enough mortgage, generally speaking it is cheaper to buy than rent at the moment, plus you are all the time paying down the debt, whereas with rent, you’re giving someone else money.

    hungrymonkey
    Free Member

    thanks – lots to think about and some useful info, in my hypothetical world!

    footflaps
    Full Member

    Market might be stagnant now, but on a crowded island where it is highly unlikely the government (this or the next few) will invest in massive house building, house prices will keep rising whilst the population rises and/or household occupancy is dropping.

    The current stagnation (in some areas) seems to be brought about by an unwillingness to lend rather than a lack of demand.

    esselgruntfuttock
    Free Member

    Check out if you can still buy a house from your local council after you’ve rented it for a period of time. I rented mine for 2 years then bought it for 34K (10 yrs ago). That week the house next to mine which was already bought went for 90K. I wasn’t allowed to sell it for 3 years without paying back some of the discount & I’ve still got it & currently similar ones are going for 75-80K. My mortgage is £196 a month.
    You might be a snob though & not want to slum it for a while but hey ho, It’d be your loss.
    Just seen that you have to rent for 5 years….
    http://www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/HomeBuyingSchemes/DG_4001398

    andy8442
    Free Member

    YES YES YES. And not only get on the ladder as early as possible, but keep stepping up whenever you can. You could get to 50 and be mortgage free and with a whacking big house and/or a few properties. See it as your pension scheme, because your pension will be worth Jack by the time you retire.

    Mugboo
    Full Member

    I’m 41 and bought my first house at 24.

    That house along with another is now rented out due to buying one as a pension and then meeting a girl, who is now my wife and moving in with her.

    We are about to arrange a buy to let on her house to buy a house with a garden now we have a child.

    After all that, my conclusion is, buy a house to rent out as an investment and rent a house to live in to give yourself flexibility. Every house you buy, especially if it’s not new and a women is involved will need at least £20.000.00 spending on it. Whereas if you do one up to rent out then rent one you like, if plans change just rent another 🙂

    Disclaimer: I might be wrong..

    Tom-B
    Free Member

    I’ve just done it and I’m 26 (married though so it was on a joint mortgage) the figure looks bang on to me-if anything i’d say that £360 a month is a few quid too much…

    Mugboo
    Full Member

    Foot flaps is right I reckon, as soon as the purse strings are loosened people will forget all about this..

    edhornby
    Full Member

    I think that house prices are going to stagnate for a long time but this is just a personal opinion

    if you are renting, do it as absolutely cheaply as you can, don’t bother with buytolet as it’s not the cash cow that everyone thinks it is (people with btl’s don’t consider the time/cost taken to keeping them maintained or the difference between investing the money in other things) and get a deposit together if you are going to buy, stuff like flash cars and travelling are the likely barriers to a good deposit. If you are going to buy be sure it’s where you actually want to live.
    Some people want to just make money and some want to have a home, both are acceptable options but you’re either one or the other and as long as you are honest with which one you are then you’ll be fine, trying to do both successfully is unlikely these days….

    good luck

    Mugboo
    Full Member

    Edhornby is right, house prices ain’t going anywhere and buy to let isn’t a cash cow.

    Edukator
    Free Member

    If pensions are “worth Jack” so will houses.

    Work out how much you’ll have to repay if interest rates rise to say 7%.

    swampi
    Free Member

    In my opinion a lot depends on if your settled location wise, if you go for a career move to another part of the country moving is a costly exercise,for me I got a mortgage at 18 and now at 36 am mortgage free.
    But having a house I had to sacrifice having a car and big holidays etc for quite a few years but in my eyes it was a worthwhile sacrifice….

    teamhurtmore
    Free Member

    Good luck with your thinking, but be very diligent and cautious with any plans. The housing market is very, very difficult to understand and predict right now as essentially both supply and demand are broken. Excuse the free-market speak here, but the result is that the market has yet to clear properly and find any kind of equilibrium positions. So what? Well this means that prices remain too high, possibly by as much as 20% on average with significant regional variation. So there are two risks here (1) the value may go down and (2) the value will stay broadly the same for a long time. I guess what I am saying is do not enter this with the view that it will be an easy short term money making punt.

    The good news in all of this is that we face a future of financial repression with interest rates remaining below inflation as the government attempts to reduce the burden of debt in the economy. On the face of it, that should be good for buying assets via debt but with the caveats above and the fact that banks are still rationing the supply of mortgages.

    By al means do the maths, but plan on conservative assumptions about basic pay levels (ignore one off payments), keep your personal gearing as low as possible (these remain challenging times) and be very careful if a broken boiler really would mean financial nightmares. This comment made me feel nervous for you but I think the final line in your OP suggests that your are fully in top of this.

    Good luck with your decisions. It really is a very difficult decision to make right now. Take lots of advice first though and of course, test the banks early. They may give you a very quick answer (sorry, not credit)!

    djglover
    Free Member

    I bought a house when me and the Mrs were on similar wages. We spent 76K. That was 12 years ago. One of the best decisons I made in respect of Finance and Housing, I even raised the deposit with cash back credit cards. I should be mortgage free in 2 years (at 38)

Viewing 35 posts - 1 through 35 (of 35 total)

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