Buying a house
31-03-2008, 08:51 PM
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PassionFord Post Whore!!
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Buying a house
Do you think it would be a good time to start to looking for a house ??
Been renting since we have been down here in Berkshire
Been renting since we have been down here in Berkshire
31-03-2008, 09:27 PM
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PassionFord Post Whore!!
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Hi matey
The market is in a reasonably difficult time at the moment, and it is a brave man that really tries to give you a definative decision on this. I am a Chartered Surveyor, and even I dont really want to answer the question, but I will help you look for some key signs of what is going on. The list is not exhaustive, but it may help
The house prices may be on the way down IF any or all of the following are true....
1. Banks withdraw 100% markets. Even if you dont need such a mortgage, this affects you! Basically, a bank doesnt want to take any risk whatsoever. If you default on your payments, the bank expects to be able to sell your house, and make back ALL of the money that it has invested in you. As such, 100% mortgages tend to be offered in a steady/ improving market, as the banks are telling you that they anticipate that your house will increase in value.
2. Estate Agents have "Sale weekends" etc. Basically, dont every forget that Estate Agents are not selling their own houses - they are selling other peoples houses! Soooooo - if they suddenly offer houses for £20k less for a weekend, what does that tell you? It tells you that they are desperate to sell their house! Also it means that the estate agent is a little quiet that month, and is desparate for some commissions! Remember, if a house that you like is in such a situation, then make that bid after the weekend ends - odds on that they will still take the deal!
3. Look at the other types of mortgages being offered. This is slightly trickier. The bank pays people lots of money to anticipate the market, and they also get it wrong. We have established that the 100% mortgages are a dead give away, but there are more subtle indicators. For example - the banks will offer you capped and fixed mortgages typically when they dont anticipate big rises in interest rates. Sooooo the old adage was that 'if the bank offer you a capped mortgage, go variable! and if they dont, then you really should have one'.
Interest rates rises outside of B of E base rates - A little trickier this - recently a couple of the banks have raised their interest rates despite the fact that the Bank of England have not done this with their own rates. This means that the bank basically has a finite amount of money to lend, and this means that they can afford to increase the rate that they lend at. Whilst this doesnt direclty reflect the market, it does tend to have a slight stalling effect on those that are borrowing, hence slowing the market.
So - in a nutshell, based on the above, and based on recent headlines, I would suggest that the current moment is not necessarily the greatest time to be buying, but with that said, that doesnt mean that you will be in serious trouble if you do - this will be the gamble that we all take.
So long as you make sure that you negotiate hard on the house that you buy (use that lack of confidence!), and that you can if possible fix your payments and you can afford them, then your house will eventually be worth more than you currently pay for it.
I would finally add that in this country, Demand fundamentally outweighs supply in housing. This has to a greater degree led to the boom that we have experienced in the last 8 years. This hasnt changed, and is not likely to be easily fulfilled in the short term.
HTH!
JJ
The market is in a reasonably difficult time at the moment, and it is a brave man that really tries to give you a definative decision on this. I am a Chartered Surveyor, and even I dont really want to answer the question, but I will help you look for some key signs of what is going on. The list is not exhaustive, but it may help
The house prices may be on the way down IF any or all of the following are true....
1. Banks withdraw 100% markets. Even if you dont need such a mortgage, this affects you! Basically, a bank doesnt want to take any risk whatsoever. If you default on your payments, the bank expects to be able to sell your house, and make back ALL of the money that it has invested in you. As such, 100% mortgages tend to be offered in a steady/ improving market, as the banks are telling you that they anticipate that your house will increase in value.
2. Estate Agents have "Sale weekends" etc. Basically, dont every forget that Estate Agents are not selling their own houses - they are selling other peoples houses! Soooooo - if they suddenly offer houses for £20k less for a weekend, what does that tell you? It tells you that they are desperate to sell their house! Also it means that the estate agent is a little quiet that month, and is desparate for some commissions! Remember, if a house that you like is in such a situation, then make that bid after the weekend ends - odds on that they will still take the deal!
3. Look at the other types of mortgages being offered. This is slightly trickier. The bank pays people lots of money to anticipate the market, and they also get it wrong. We have established that the 100% mortgages are a dead give away, but there are more subtle indicators. For example - the banks will offer you capped and fixed mortgages typically when they dont anticipate big rises in interest rates. Sooooo the old adage was that 'if the bank offer you a capped mortgage, go variable! and if they dont, then you really should have one'.
Interest rates rises outside of B of E base rates - A little trickier this - recently a couple of the banks have raised their interest rates despite the fact that the Bank of England have not done this with their own rates. This means that the bank basically has a finite amount of money to lend, and this means that they can afford to increase the rate that they lend at. Whilst this doesnt direclty reflect the market, it does tend to have a slight stalling effect on those that are borrowing, hence slowing the market.
So - in a nutshell, based on the above, and based on recent headlines, I would suggest that the current moment is not necessarily the greatest time to be buying, but with that said, that doesnt mean that you will be in serious trouble if you do - this will be the gamble that we all take.
So long as you make sure that you negotiate hard on the house that you buy (use that lack of confidence!), and that you can if possible fix your payments and you can afford them, then your house will eventually be worth more than you currently pay for it.
I would finally add that in this country, Demand fundamentally outweighs supply in housing. This has to a greater degree led to the boom that we have experienced in the last 8 years. This hasnt changed, and is not likely to be easily fulfilled in the short term.
HTH!
JJ
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31-03-2008, 09:35 PM
#8
PassionFord Post Whore!!
Thread Starter
Hi matey
The market is in a reasonably difficult time at the moment, and it is a brave man that really tries to give you a definative decision on this. I am a Chartered Surveyor, and even I dont really want to answer the question, but I will help you look for some key signs of what is going on. The list is not exhaustive, but it may help
The house prices may be on the way down IF any or all of the following are true....
1. Banks withdraw 100% markets. Even if you dont need such a mortgage, this affects you! Basically, a bank doesnt want to take any risk whatsoever. If you default on your payments, the bank expects to be able to sell your house, and make back ALL of the money that it has invested in you. As such, 100% mortgages tend to be offered in a steady/ improving market, as the banks are telling you that they anticipate that your house will increase in value.
2. Estate Agents have "Sale weekends" etc. Basically, dont every forget that Estate Agents are not selling their own houses - they are selling other peoples houses! Soooooo - if they suddenly offer houses for £20k less for a weekend, what does that tell you? It tells you that they are desperate to sell their house! Also it means that the estate agent is a little quiet that month, and is desparate for some commissions! Remember, if a house that you like is in such a situation, then make that bid after the weekend ends - odds on that they will still take the deal!
3. Look at the other types of mortgages being offered. This is slightly trickier. The bank pays people lots of money to anticipate the market, and they also get it wrong. We have established that the 100% mortgages are a dead give away, but there are more subtle indicators. For example - the banks will offer you capped and fixed mortgages typically when they dont anticipate big rises in interest rates. Sooooo the old adage was that 'if the bank offer you a capped mortgage, go variable! and if they dont, then you really should have one'.
Interest rates rises outside of B of E base rates - A little trickier this - recently a couple of the banks have raised their interest rates despite the fact that the Bank of England have not done this with their own rates. This means that the bank basically has a finite amount of money to lend, and this means that they can afford to increase the rate that they lend at. Whilst this doesnt direclty reflect the market, it does tend to have a slight stalling effect on those that are borrowing, hence slowing the market.
So - in a nutshell, based on the above, and based on recent headlines, I would suggest that the current moment is not necessarily the greatest time to be buying, but with that said, that doesnt mean that you will be in serious trouble if you do - this will be the gamble that we all take.
So long as you make sure that you negotiate hard on the house that you buy (use that lack of confidence!), and that you can if possible fix your payments and you can afford them, then your house will eventually be worth more than you currently pay for it.
I would finally add that in this country, Demand fundamentally outweighs supply in housing. This has to a greater degree led to the boom that we have experienced in the last 8 years. This hasnt changed, and is not likely to be easily fulfilled in the short term.
HTH!
JJ
The market is in a reasonably difficult time at the moment, and it is a brave man that really tries to give you a definative decision on this. I am a Chartered Surveyor, and even I dont really want to answer the question, but I will help you look for some key signs of what is going on. The list is not exhaustive, but it may help
The house prices may be on the way down IF any or all of the following are true....
1. Banks withdraw 100% markets. Even if you dont need such a mortgage, this affects you! Basically, a bank doesnt want to take any risk whatsoever. If you default on your payments, the bank expects to be able to sell your house, and make back ALL of the money that it has invested in you. As such, 100% mortgages tend to be offered in a steady/ improving market, as the banks are telling you that they anticipate that your house will increase in value.
2. Estate Agents have "Sale weekends" etc. Basically, dont every forget that Estate Agents are not selling their own houses - they are selling other peoples houses! Soooooo - if they suddenly offer houses for £20k less for a weekend, what does that tell you? It tells you that they are desperate to sell their house! Also it means that the estate agent is a little quiet that month, and is desparate for some commissions! Remember, if a house that you like is in such a situation, then make that bid after the weekend ends - odds on that they will still take the deal!
3. Look at the other types of mortgages being offered. This is slightly trickier. The bank pays people lots of money to anticipate the market, and they also get it wrong. We have established that the 100% mortgages are a dead give away, but there are more subtle indicators. For example - the banks will offer you capped and fixed mortgages typically when they dont anticipate big rises in interest rates. Sooooo the old adage was that 'if the bank offer you a capped mortgage, go variable! and if they dont, then you really should have one'.
Interest rates rises outside of B of E base rates - A little trickier this - recently a couple of the banks have raised their interest rates despite the fact that the Bank of England have not done this with their own rates. This means that the bank basically has a finite amount of money to lend, and this means that they can afford to increase the rate that they lend at. Whilst this doesnt direclty reflect the market, it does tend to have a slight stalling effect on those that are borrowing, hence slowing the market.
So - in a nutshell, based on the above, and based on recent headlines, I would suggest that the current moment is not necessarily the greatest time to be buying, but with that said, that doesnt mean that you will be in serious trouble if you do - this will be the gamble that we all take.
So long as you make sure that you negotiate hard on the house that you buy (use that lack of confidence!), and that you can if possible fix your payments and you can afford them, then your house will eventually be worth more than you currently pay for it.
I would finally add that in this country, Demand fundamentally outweighs supply in housing. This has to a greater degree led to the boom that we have experienced in the last 8 years. This hasnt changed, and is not likely to be easily fulfilled in the short term.
HTH!
JJ
it made alot of sense
25-02-2020, 04:37 AM
#11
Virgin
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Owning a new house
To determine if you are ready to buy a house? if you can get a mortgage with a monthly payment that is no more than 28% of your gross income and that suits your budget and lifestyle then you can get one. You just choose only the trusted home developers in your area like Paradise Developments (check their site) if you really intend to buy one.
25-02-2020, 05:01 PM
#14
VR46 The G.O.A.T
Yeah, we've had our house 5 years and just remortgaged and ours has gone up by 30k which normally would be great but we had to use the government 'Help to buy' scheme as it was the only way we could do it which meant a 30k increase in the value means we've had to pay the government back a shit load more than we borrowed.
The help to buy scheme is one big con as its sold to you as a interest free loan from the government, but it's far from it. You borrow 20% of the value of the house 'interest free' for five years and then get a mortgage for the rest minus your 5% deposit. If you dont pay the help to buy off, after five years you have to start paying interest at 1% I think. However, if you do pay it off, in or at the end of five years you pay back 20% of the current value of your house which means if your house goes up in value, you pay more back and if it goes down (unlikely unless the country goes tits up), then you pay less.
When we bought our house we always knew this was the case, but like I said it was the only way we could do it. We always planned to fix the mortgage for 5 years and then when we remortgaged we would pay off the help to buy, which I think is what most people do. We borrowed 36k from the government and because our house has gone up in value by just over 16%, we then owed the government 16% more than we borrowed, so 42k!
Now i think a 16% interest rate on 36k over 5 years is bloody high.
Now, if we chose not to pay it off, that amount would only get bigger as the years went on providing house prices continue to rise plus it would also start accruing the 1% interest as well. So best to get it out of the way now really which we have done.
So if any of you are in the position where 'help to buy' is your only option to enable you to own your own home then just be aware of the sort of figures you are going to be looking at when you come to pay it off cos chances are your 'interest free' loan from the government is likely to turn out to be a rather high interest loan.
I'm just glad we have got it off our back now cos I was always a little bit worried as to how much we'd have to pay back and how it would effect our monthly repayments.
Oh and if you dont pay it off and you sell your house, you pay the government 20% of what you sell it for plus the added interest if its after 5 years.
The help to buy scheme is one big con as its sold to you as a interest free loan from the government, but it's far from it. You borrow 20% of the value of the house 'interest free' for five years and then get a mortgage for the rest minus your 5% deposit. If you dont pay the help to buy off, after five years you have to start paying interest at 1% I think. However, if you do pay it off, in or at the end of five years you pay back 20% of the current value of your house which means if your house goes up in value, you pay more back and if it goes down (unlikely unless the country goes tits up), then you pay less.
When we bought our house we always knew this was the case, but like I said it was the only way we could do it. We always planned to fix the mortgage for 5 years and then when we remortgaged we would pay off the help to buy, which I think is what most people do. We borrowed 36k from the government and because our house has gone up in value by just over 16%, we then owed the government 16% more than we borrowed, so 42k!
Now i think a 16% interest rate on 36k over 5 years is bloody high.
Now, if we chose not to pay it off, that amount would only get bigger as the years went on providing house prices continue to rise plus it would also start accruing the 1% interest as well. So best to get it out of the way now really which we have done.
So if any of you are in the position where 'help to buy' is your only option to enable you to own your own home then just be aware of the sort of figures you are going to be looking at when you come to pay it off cos chances are your 'interest free' loan from the government is likely to turn out to be a rather high interest loan.
I'm just glad we have got it off our back now cos I was always a little bit worried as to how much we'd have to pay back and how it would effect our monthly repayments.
Oh and if you dont pay it off and you sell your house, you pay the government 20% of what you sell it for plus the added interest if its after 5 years.
Last edited by nick46; 25-02-2020 at 05:03 PM.
25-02-2020, 05:18 PM
#15
10K+ Poster!!
It is not 16% "interest rate" on 36k, that would be a lot more as interest like that would be annual. (16% rate would be an extra £28,800 on the 36k to repay and that’s without roll up)
many help to buys will also drop in value (relatively against other houses) around the 5 yr point as the new build excitement has gone, others will go on the market and the houses do not look as they did when new (in some cases). We have seen a lot of properties hit the 5 yr point and be worth less than the original price....in the south of England.
i think you just have to grin and bear it as you couldn’t buy it any other way and it was an interest free loan for the deposit, the government has just shared 20% of the uplift....you get the rest. You can also buy them out early and often your 3 valuations could be less than open market and they don’t care too much, in my experience with clients I have worked with.
many help to buys will also drop in value (relatively against other houses) around the 5 yr point as the new build excitement has gone, others will go on the market and the houses do not look as they did when new (in some cases). We have seen a lot of properties hit the 5 yr point and be worth less than the original price....in the south of England.
i think you just have to grin and bear it as you couldn’t buy it any other way and it was an interest free loan for the deposit, the government has just shared 20% of the uplift....you get the rest. You can also buy them out early and often your 3 valuations could be less than open market and they don’t care too much, in my experience with clients I have worked with.
Last edited by Caddyshack; 25-02-2020 at 05:22 PM.
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