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Am I silly buying a house now?

edited January 2009 in Not Sports Related
Serious question time chaps

Wifey and I are looking to move to a bigger house and we've seen the one we want. It's a new build and we are hopeful of getting a decent deal.

We are planning to Part Exchange as its a lot less hassle and trying to sell now is pretty tough. I appreciate we will get shafted on the valuation but I am happy with that if we get a similar reduction on the new house

Our mortgage is likely to go up to around £1500 a month I believe and this is serviceable (provided I don't lose my job - I am fairly secure I think but then who knows!!)

I was just wondering if anyone out there is "in the know" and could give me their opinion on whether I am a nutter to buy a house at the moment

Thanks in advance
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Comments

  • good time to buy but not new build - not for me - but that's my choice. Hell of a mortgage that Swis - as long as you happy with it go for it.

    You might be surprised with the selling bit. Depends on where you are. But deffo get a few local agents in to give you their price then at least you got a bargaining tool withthe Part ex if you go down that route.
  • No it's a good time to buy. The only downside i can see is that the fixed rate mortgages are quite high to offset the low variable rate at most mortgage lenders.
  • I dont think its a bad time to buy either. But again I'd be more likely to go for a house that isnt new build. Leaves more room for the property value to go back up. New Builds generally cant be sold until the entire development is completed because you're always going to be undercut by the new builder developers who can offer these deals and also tend to sell at top end of their value and the deals they offer realistically just mean you get the house for what its actually worth! Just my opinion of course!
  • Cheers guys - I am praying I can turn to the "Bank of Dad" to assist with the mortgage. If you don't ask you dont get!!
    We can afford it without him but I really would like to make things easier

    I take it onboard that new build is not too preferable for you guys but the development is almost finished now and it's a really nice development (Bocking Mill in Braintree). It will be so nice to have a blank canvas to work with and to make our own. Our current house is 130 years old and as much as I love it I hate decorating because I always seem to uncover something (ie spare room had 8 layers of wallpaper on it)

    The way I see it - lots of people make money in times of great hardship and I see this as a good chance to move up the property ladder. It's a 4 bed house so we can grow into it too and I don't envisage moving any time soon.

    I'm excited but also nervous......I worry I am too impulsive and I need to make sure we do whats right for my wife and daughter
  • I'd be a little concerned about the size of the mortgage, tbh.

    I can't imagine mortgage rates will ever again be much lower than they are at the moment - and the only way is up, in future.

    If the bank rate increases substantially in say a year or two's time, it could easily add another £500 pm to the cost of your repayments ...... just think how suddenly rates have dropped in the past 6 months, could you cope if they went back to previous levels and perhaps even higher?

    That's exactly what happened at the end of the 80's and early 90's.
  • 'Bocking Mill in Braintree'

    Near the Feynes very nice.
  • I'm holding fire. I have the cash but I'm convinced that prices will come down even further. At the moment there's a stand-off between buyers and sellers. Sellers won't, or are reluctant to, lower the price of their properties because they see what they were going for a year or so ago and buyers won't play ball because they read the headlines saying that the value of property is falling. I did very well out of the last property boom. I bought in 1997 and sold in 2007. As Harry Enfield would say...Loadsa equity.
  • Swis, a good time to buy, but not new build in a part ex deal.....the builders will value your prperty in the fire sale category, which in effect will negate whatever deal you do on the purchase. I had something similiar happen to me mate, but as they say, there is no such thing as a free lunch.
  • I'm with Tel on this,

    The key with buying now is to be able to "nail the seller to the wall" ie, if they have to move they'll accept a low offer.

    Also, mortgage wise- rates are good with 40% equity, ok with 25% and the less said ( currently) about loans with less than 25% the better so, if you haven't already, look at the whole of the market, don't just go back to your existing lender.
  • [quote][cite]Posted By: Valley McMoist[/cite]I'm holding fire. I have the cash but I'm convinced that prices will come down even further. At the moment there's a stand-off between buyers and sellers. Sellers won't, or are reluctant to, lower the price of their properties because they see what they were going for a year or so ago and buyers won't play ball because they read the headlines saying that the value of property is falling. I did very well out of the last property boom. I bought in 1997 and sold in 2007. As Harry Enfield would say...Loadsa equity.[/quote]

    Agreed working with a lot of big house builders there is still further falling in valuation to come IMO. There are some good deals out there at the moment but i feel in another 8 months with the loans these builders have they will be desperate to get the market going meaning good times if you have cash on the hip.
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  • edited January 2009
    [cite]Posted By: StanmoreAddick[/cite]I'm with Tel on this,

    The key with buying now is to be able to "nail the seller to the wall" ie, if they have to move they'll accept a low offer.

    Also, mortgage wise- rates are good with 40% equity, ok with 25% and the less said ( currently) about loans with less than 25% the better so, if you haven't already, look at the whole of the market, don't just go back to your existing lender.

    Stanny, would you agree mortgage rates are probably rock bottom at the moment - or is there scope to go a little lower?

    I feel that once this low bank rate period is over, mortgage rates will rise substantially again.
    History indicates that they probably will.
  • I reckon it's a good time to buy, Swis. There are good deals on new build at the moment as they can't shift them. I presume it is already built? More than a few have got stung by putting down deposits on new developments that have then put on hold due to the credut crunch.

    Amused by your 'bank of Dad' comment. I promised to buy my son and daughter-in-law a flat in London for their wedding present last August and we're only just progressing it. Glad we delayed because needless to say, we're getting a much better deal than we would have done six months ago. I'm not certain it's the greatest time to take out a big mortgage, though.

    Good luck if you go for it!
  • 'I feel that once this low bank rate period is over, mortgage rates will rise substantially again.'

    The synic inside me would say that the banks and government owned banks will want to recover the debt some how the only way i can see that happening is if all of a sudden interest rates rocketed and the general public get stung again.
  • tbh Oggs- no. Base rates maybe but not mortgage rates.

    What the market needs is for lenders to start to compete for business and then the products on offer, ie- fixed rates and tracker margins may ( hopefully) should fall....

    Mind you- i'm a mortgage broker, not an economist or clairvoyant....
  • edited January 2009
    Could be a great time to take on large debts if as i suspect inflation is about to rocket in the medium term. The key is obviously nailing down a long term fixed deal and a big discount from the vendor.
  • [cite]Posted By: Oggy Red[/cite]I'd be a little concerned about the size of the mortgage, tbh.

    I can't imagine mortgage rates will ever again be much lower than they are at the moment - and the only way is up, in future.

    If the bank rate increases substantially in say a year or two's time, it could easily add another £500 pm to the cost of your repayments ...... just think how suddenly rates have dropped in the past 6 months, could you cope if they went back to previous levels and perhaps even higher?

    That's exactly what happened at the end of the 80's and early 90's.

    That repayment was based on a 5.9% mortgage - we still have 7 or 8 months to run on a really good rate mortgage and we can port that across.

    I know we will get our valued at "fire sale" prices but my wife and I agree on the maximum price differential between old and new.

    The new house is up for £290k (was £329k last year)
    Ours we won't accept less that £150k

    I am planning to say we don't want more than a £100k differential so if we only get £150 we want to pay no more than £250k
    That's our startpoint and we'll go from there.

    I guess I am in a strange & lucky position that I know when my father is no longer alive I will be pretty well off so I guess that tends to become a factor in my impulsive decisions and that's why I feel ok taking a risk like this where some might baulk at the thought
  • There's already a lot of house owners desperate to sell.
    And it's from the desperate seller that you can get that bargain price.

    Whether developers will offer you such bargains at the moment, I've no idea.

    Good time to buy?
    Probably - but even if prices fall lower, any time is a good time to buy if you own that house long enough - and don't sell.

    As your Dad and others of his generation will no doubt tell you.


    Regardless of what Estate Agents and the media tell you, a house is only worth what somebody is prepared to pay for it.
  • But from what I have seen - developers are more inclined to reduce prices on their houses than private sellers.

    Admittedly we have not put an offer in on a private sale house but that seems to be the impression I am seeing
  • Good luck, Swizz ..... it's obviously the house that you and your missus have set your heart on.
    So that can be good enough reason to go ahead, especially if you see that house as your long term family home.

    The bargain purchase tends to be had if you are not fussed about a particular property.

    You could even put an advert in the local paper saying "Wanted, 3-bed house, garage, garden, recent construction, Max price £175,000, etc".

    You may be amazed at the response you get, and the choice of properties that would normally fetch a much higher value.
  • My view would be that. If the house is one you really want, and you can afford it (even if rates go up by a few percent just to give yourself some wiggle room), then for you now is the right time to buy.
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  • edited January 2009
    Entirely depends on you. If you want to move and you find your perfect house that you will be in for a long time and have no worries about meeting the mortgage there is in my opinion never a bad time to move as prices will always go up in the long run. If however you want to wait till the market has bottomed out and get absolutely best value for your money you are probably a few months early. No one really knows but my GUESS is that you are looking at late summer at least and that is subject to banks being more liquid and starting to lend again...otherwise it could well be another year on top of that before prices bottom out.

    The cheapest place to get a house now is at auction, absolutely wonderful bargains to be had but not for the faint hearted and you would really need to take advice if you were to go down that route.

    If buying new build my suggestion would be to negotiate hard, homes are just not selling and housebuilders are desperate for cash back therefore you are in the driving seat and can i would have thought (although i have no direct experience) be able to push them down quite a bit from whatever asking price they start on.

    As for your mortgage, if you can get a fixed rate then i would go for that, once inflation starts to take off at the end of this year Base Rate will be forced rapidly upwards IMO and if your mortgage is only just affordable now you dont want that happening in a short space of time...you could always use 'bank of dad' to give you a larger deposit to put down, hence qualifying for the 60% deals that you read about being so much better at the moment, then agree to pay your dad interest on what he lends, after all if he puts his money in a bank at the moment he would not get better than say 3% and that would be taxed, so if you paid him 3% all in it would be of benefit to both of you potentially...

    I am certainly no expert, but they are my thoughts.
  • edited January 2009
    Would just add that you can do better negotiating on a new build if they are approaching the end of their sales quarter - like car dealers, they will drop just to get the sale done by 31 March or whenever - might be worth checking their co details to find out when the year end is, and work out the quarters from that.
  • Cheers IdleHans - good thinking batman!
  • Simple

    Selling now BAD

    Buying now GOOD
  • Need any carpets ?
    ;-)
  • If you really want that house and only that house now, can afford it, go for it. But new builds are still over-priced and agree that hard bargaining is the way to go. We just gave the maximum that we were prepared to pay, they laughed and so we left. Got phone call two days later agreeing to our price. But we turned it down for other reasons, they came back to us with a further price reduction. Depends on how well those properties are selling and whether or not it's one of the building firms that are in a precarious financial position. Bigger houses are apparently holding their value better at the mo.
  • [cite]Posted By: stilladdicted[/cite]If you really want that house and only that house now, can afford it, go for it. But new builds are still over-priced and agree that hard bargaining is the way to go. We just gave the maximum that we were prepared to pay, they laughed and so we left. Got phone call two days later agreeing to our price. But we turned it down for other reasons, they came back to us with a further price reduction. Depends on how well those properties are selling and whether or not it's one of the building firms that are in a precarious financial position. Bigger houses are apparently holding their value better at the mo.

    Thats the way I see it - we do not HAVE to move right now - so if they can't meet fit in with out needs then we will walk away - at the end of the day they want to sell it to me so they need to be receptive to our needs.

    If you don't mind me asking - what kind of price were you looking to pay and what was list price? and what was their final take it or leave it price?
  • Was told by a mate who worked for Barratts that they sometimes sell for one third less than their list price.
    You've have to talk to the Sales Director and play real hard ball, but nothing ventured, nothing gained.
  • Asking £285k, we offered £250K, ended up at £245K. We still walked away though as we were downsizing and wanting to free up cash. Ended up not selling as two other desperate to sells in our road dropped their prices so much (subsidised by their companies) that, after costs, we would have ended up with not much cash at all so it wasn't worth it. Have decided that those who can sell, and then temporarily rent are in the very best position. Difficult to call the market right now, so good luck whatever you decide.
  • [cite]Posted By: SE10Addick[/cite]Was told by a mate who worked for Barratts that they sometimes sell for one third less than their list price.
    You've have to talk to the Sales Director and play real hard ball, but nothing ventured, nothing gained.

    Good mate at work is engaged to PA for the Sales director for the region at Barratts - they do the same house style on the development so I am trying to get an idea for the minimum they would sell for - then can use that as a starting point for our battle
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