how can/will i ever buy a house..advise

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  • how can/will i ever buy a house..advise
  • Surf-Mat
    Member

    How refreshing – a balanced discussion on STW!

    I think many also forget – they say their house is “worth” a certain amount – say £300k. Well try and sell that house at the moment for the market price. You will get nowhere. To actually sell it and sell it quickly, you need to stick it on for way under what some estate agent values it at in the majority of cases.

    I know our £xxxx in the bank is worth the figure shown. For a house, it’s worth is currently grossly overestimated until it’s actually sold.

    I am also convinced that the UK and US “must buy” society is there partly as a way of controlling the masses – with interest rates, etc. I am still dumbfounded at the huge number of people whose houses went up in value making them think they were loaded and then went on a spending spree and are now in the cr4p. It was the most artificially inflated market (and note it’s a “market”) I have ever seen.

    Like Northern Star, we’ll wait until saving and dropping house prices meet in the middle then buy where we want for sensible money.

    Until then, it’s a rather nice place to live to tiny monthly outgoings.

    gravitysucks
    Member

    Surf mats approach does work but obviously not in every circumstance.

    My Brother rented a house in a quaint village. He paid under £250pm for a detached 4 bed with big gardens. He was given free rule of the house to do any improvements decoration etc with a slight nod of the landlord (an old local farmer who had about 15 properties in the village and the next one).

    He was extremly lucky to find himself in a situation where the landlord wasn’t fussed about making a tidy profit. He just wanted tenants that kept his houses warm without him having to do too much.

    When he 1st moved in he put central heating in to the building and didn’t pay rent for the 1st 18 months to offset what he was paying on improvements etc.

    Lived there for 15 years and has just bought his own place out right after banging a big ass extension on it as well

    djglover
    Member

    Its still a gamble though, you are short selling the housing market rather than going long. So more risky IMO

    gonefishin
    Member

    we’ll wait until saving and dropping house prices meet in the middle then buy where we want for sensible money.

    You are of course assuming that house prices in the area that you want to live will actually drop. The UK housing market is not homogenenous and local variations will play a far bigger role than anything else. I live in Aberdeen so house prices are effectively tied, albeit loosely, to the oil price. There was negative equity on houses up here in the mid ’80s before it was even though about in the rest of the country.

    tiger_roach
    Member

    Put very simply an ‘asset’ is something which puts money in your pocket. A ‘liability’ is something that takes money out of your pocket.

    Well not in accounting terms as I said but I did speculate that this was what the book was getting at. You mention that gold has performed better than house prices in recent times, very true but how many saw that coming? Most people would spread their money and much would have gone into the stock market – well that’s performed very badly over the last 10 years – down about 10%. The great thing about property is the ability to borrow against it – i.e. get a mortgage. Most people are quite highly geared in their early years of house ownership which means in a rising market profits are significant. So say prices have doubled in the last 10 years then someone who bought a £100k house with £10k deposit and interest only mortgage would now have a property worth £200k and their £10k would now be worth £110k – that even beats gold right? But yes its higher risk as it only takes a fall of 10% at the start to wipe out your asset so timing is a big deal and someone buying a property now might surely wonder if they’ll lose money – in the short-term anyway. But how many would put a lot of money in gold now? Maybe it’ll rise for now but maybe it’ll drop back significantly sometime too – and you can’t live in your gold. In many ways gold is a terrible investment as it only gives capital growth. But then your house does too? Well no because you live in it so that’s a benefit – if you don’t live in it you’ll have to pay rent somewhere. Or live in a box.

    sobriety
    Member

    Just checked rental prices where I live and found that to rent a property of similar size to the one we’ve just bought is about £150 more than our mortgage payments. Winner. 🙂

    tiger_roach
    Member

    But what %age do you own? Need to compare the monthly rent of a property with the same value as your mortgage to what your monthly payment is.

    sobriety
    Member

    Need to compare the monthly rent of a property with the same value as your mortgage to what your monthly payment is.

    Surely that’s what I just did. Mortgage is X, rent is X +£150.

    Or you might mean comparing a property worth 67% of the one we’re living in as that’s the size of the mortgage, but that isn’t comparing apples with apples.

    tiger_roach
    Member

    OK well another way is to multiply your monthly payment by the right amount – 50% for you? Then there’s also all the other costs to consider that the landlord is responsible for such as maintenance. You will probably be paying more but that’s fine as there’s a premium that many of us are happy to pay in order to live in our own property with the freedom it brings.

    donks
    Member

    well i’m not sure if i will ever have my house paid off before I die so i guess i’ll never really own the thing, but one things for sure I’ll have two kids living there forever if the house prices dont get back down to a reasonable level.

    spacemonkey
    Member

    I know how you feel OP …

    I sold my house in 04 and made a tidy wedge that saw me through a 12 month career break and another 18 months of experimenting with what to do next.

    Have been renting a beautiful 400+ yr old cottage with my SO (and dogs, cat and now a 3 wk old son) since 06 – plenty of character, spacious garden, barn, loads of parking, 150m from the road, surrounded by woods, fields and a river – and devoid of any landlady intervention.

    There’s no way we could afford this (or any decent 3 bed) on a mortgage (North Downs, Surrey), and are not prepared to buy something affordable (which will still be grossly overpriced) for the sake of it.

    On the plus side we have a great quality of life – and from a selfish perspective, I’m only minutes from the trails.

    Saving for a deposit is tough, especially now it looks like 25% is the threshold. Having said that, I have kept my endowments going, all of which mature in 10-11yrs – so that will at least pay off a nice chunk of whatever we own at that time.

    Right now, quality of life is more important to us, with the expectancy that prices will drop and lenders will become more amenable.

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