Pragmatopian Posted February 12, 2007 Share Posted February 12, 2007 I'm going to wait until the market corrects itself - house prices have grown at a rate totally out of proportion to earnings over the last ten years. Ultimately something's gotta give... People have been posting that line on this very forum for years, and nothings giving. Property inflation had slowed but there's no indication that prices will drop, in fact the uk national figures show price inflation is on the up again, 9.4% nationally which is the best it's been since 2005. If houses were unnafordable, they simply wouldn't be selling, but they are. Interest rates are rising currently, if there was a danger of a price crash, the rates would be dropping. House prices have grown at a rate out of proportion to earnings, but interest rates have also dropped over the same period. Also rental prices are in line with house prices, and the markets footing that bill fine. I've also been saying it for about 5 years, and I still believe it - it's not a case of if, but when. I earn above the national average wage and yet getting a mortgage at the current average price in the UK or Isle of Man would cripple me financially. So either: - First time buyers continue to buy, and use a substantial proportion of their income paying their mortgage > disposable income down > retail sales down > manufacturing down > you know the rest. - First time buyers stop buying. Either prices correct themselves or a new 'landed gentry' develops. I saw this happen a lot - people who bought before the boom able to borrow against the growing equity in their own property to purchase cheaper properties and rent them out. The younger generation is economically screwed over. In thirty years the UK is going to have a workforce who will retire at 70+, most still renting with net wages subdued to pay the price for the generous final salary schemes which allowed their parents to retire at 60 or younger and of financial mismanagement by government... or supporting the parents whose generous final salary schemes collapsed. But I'm not bitter Link to comment Share on other sites More sharing options...
3v0 Posted February 12, 2007 Author Share Posted February 12, 2007 Exactly the same as the place we just bought. "you'll have to put an offer in quck, I have a developer interested who's looking for a new project". Our first offer, which I thought was a cheeky low offer was accepted (Doh, always makes me think I should have gone lower!) and the interested developer suddenly dissapeared. The property I bought previous to this one, I put in a very silly cheeky offer, and had that accepted to my utter disbelief. I think it's definately worth doing if you've not got your absolute heart set on the property. If thats the case, the only way to secure it completely is to offer the asking price, or close to it. Always try to get into a property before anyone else, you'll be on side with the agent as he wont want to be arsed to show anyone else around. Properties that have been on the market for ages are usually the worst to put an offer in on, because they're either overpriced or owned by people too stubborn to drop their prices Ahh so this phantom property developer is quite common then! We decided to go for initial cheeky offers because like you say if they accept it straight away you can't help but feel you went too high! Apparently they are looking into building new houses around this location so hopefully they will have some in our price range + also I hope they lower the value of this sellers house! (not that i'm bitter either!) Link to comment Share on other sites More sharing options...
Roger Smelly Posted February 12, 2007 Share Posted February 12, 2007 I know the feeling, i myself have decided to just save my money and when i retire i will buy a place in spain or somewhere and move there. I save about £500 a month and put it away for a rainy day, i know its probably the right thing to do, if in the future i do decided to buy i can throw a lump at a house and have a small mortgage. My advice to anyone these days is save up and pay as ig a deposit as you can. Link to comment Share on other sites More sharing options...
Slim Posted February 12, 2007 Share Posted February 12, 2007 I know the feeling, i myself have decided to just save my money and when i retire i will buy a place in spain or somewhere and move there.I save about £500 a month and put it away for a rainy day, i know its probably the right thing to do, if in the future i do decided to buy i can throw a lump at a house and have a small mortgage. My advice to anyone these days is save up and pay as ig a deposit as you can. A strategy that'll work if interest rates beat property inflation prices. Over the last ten years property inflation has stuffed interest rates, and the current reported national rate of house inflation is roughly double what you'll get for your cash in the bank. Local variations apply of course. We saved up for ten years to buy our house, basically timed it so I'd have the mortgage paid off by age 60, all being well. It's not easy though, you've got to save hard, forget about the surround sound system, holidays to the carribean and suberu imprezza that many people feel they're entitled to. Link to comment Share on other sites More sharing options...
Slim Posted February 12, 2007 Share Posted February 12, 2007 I've also been saying it for about 5 years, and I still believe it - it's not a case of if, but when. I earn above the national average wage and yet getting a mortgage at the current average price in the UK or Isle of Man would cripple me financially. But mortgage rates are in line with rents. Assuming you're above the breadline, how can you afford a rent and not a mortgage? Link to comment Share on other sites More sharing options...
Mr. Sausages Posted February 12, 2007 Share Posted February 12, 2007 Most people who pay rent could afford mortgage repayments, but they might not be able get a mortgage. Daft, but that's the way it is. Link to comment Share on other sites More sharing options...
Mutley Posted February 12, 2007 Share Posted February 12, 2007 Just calculated that we got ours for 7.4% less than the advertised price. Sounds more when it's in cash! With regards to mortgages, if you can do it go for the shortest term you can afford. The interest you end up paying is a lot less - although others will argue that interest over the longer term is wiped out by pay rises etc. Link to comment Share on other sites More sharing options...
Mutley Posted February 12, 2007 Share Posted February 12, 2007 I've also been saying it for about 5 years, and I still believe it - it's not a case of if, but when. I earn above the national average wage and yet getting a mortgage at the current average price in the UK or Isle of Man would cripple me financially. But mortgage rates are in line with rents. Assuming you're above the breadline, how can you afford a rent and not a mortgage? Not so much the case now IMO, it might have been true five years ago but house prices really have stormed on over that period of time, whereas rents haven't increased much at all. (Real world example, in 2003 we were renting a three-bed semi in Ramsey for £750 per month, up until the end of last month, four years later, we were renting a two bed detached bungalow in Ramsey for..... £750 per month.) It's possible to rent a nice flat on the IOM for around £550 per month, £700-£800 will get you a decent house to rent. Compare and contrast with a mortgage, even "starter" apartments will set you back around £125K, and for a house you're looking at £150K and more. Even with a £10K deposit, that'll leave a mortgage of let's say £140K, which over 25 years means repayments of £915 per month at an interest rate of 6%. Admittedly it's not a massive amount more, but add in all the extra costs associated with moving, and having to find things like rates (which are usually included with rent), and I reckon some folks can afford to rent, but can't afford to buy. But at the end of 25years you have your own property worth £xxxx. In 25years time you'll still be paying rent (if you so choose to) - that IMHO is dead money. Link to comment Share on other sites More sharing options...
hannahsmummy1 Posted February 12, 2007 Share Posted February 12, 2007 My husband is still laughing from our last house sale! We have moved house 5 times in 5 years! The last time was in December last year (2 weeks before christmas with your inlaws arriving on boxing day- not a good time to move!) anyway, when we were trying to sell our house hubby was working away (hence the reason for the move) and i was left to show the estate agents round- the small town we lived in had 4 estate agents and we had all 4 round to get the place valued and see who had the lowest commission rate! Then the commission prices ranged from 2% to 3.5%. We decided to go for the one who offered the middle valuation as they seem to shift their houses pretty quickly and thats what we wanted- well we put our house on, and we knew it wouldnt be a problem selling it as it was across the road from the best primary school in the area- so we waited a week and nothing happened- no viewings and no word from the agents! so hubby rang up on the saturday and within the hour 3 couples were coming round to view the house & we sold it that afternoon for full asking price of 179,000- therefore making a 11,000 profit- the best bit though was when agreeing the commission- i had got some paperwork muddled up and hubby ended up saying to the estate agent 'oh i see that you have offered 1% commission' the estate agent kind of spluttered into his coffee and said something like 'i dont normally go that low' but since they hadnt bothered to pull their finger out- hubby got him to give us the 1% commission!- Great! Link to comment Share on other sites More sharing options...
Slim Posted February 12, 2007 Share Posted February 12, 2007 Not so much the case now IMO, it might have been true five years ago but house prices really have stormed on over that period of time, whereas rents haven't increased much at all.(Real world example, in 2003 we were renting a three-bed semi in Ramsey for £750 per month, up until the end of last month, four years later, we were renting a two bed detached bungalow in Ramsey for..... £750 per month.) I think then you're quote fortunate to have a landlrod that's not applied any inflationary rises on you. I dont think that's a typical price for a three bed semi to rent though. Check out current rates on the likes of prosearch.co.im and harmony homes sites. Unlike house prices, advertised rental rates are generally correct. I'd say 850 a month rent for a 3 bed semi will equate to about 140k mortgage. Add a 10% deposit, and you can buy: http://search.estate-software.co.uk/detail...rtyID=465089235 ...for about the same as the cost of rent. Compare and contrast with a mortgage, even "starter" apartments will set you back around £125K, and for a house you're looking at £150K and more. Even with a £10K deposit, that'll leave a mortgage of let's say £140K, which over 25 years means repayments of £915 per month at an interest rate of 6%. Why would you be at 6%? I worked it out to around 850 a month on current first time buyers mortgage deals fora 140k mortgage. Admittedly it's not a massive amount more, but add in all the extra costs associated with moving, and having to find things like rates (which are usually included with rent), and I reckon some folks can afford to rent, but can't afford to buy. I think your right, but I dont think the problem is mortgage payments or house prices, I think its the ability to save. People can't save, they borrow. They borrow on credit cards, store cards, finance for cars, holiday by installments, all that shit, so they're bogged down with monthly payments and can't save a depsit. If you can't put down 10%, then the cost of buying is greatly increased. Link to comment Share on other sites More sharing options...
Slim Posted February 12, 2007 Share Posted February 12, 2007 But at the end of 25years you have your own property worth £xxxx. In 25years time you'll still be paying rent (if you so choose to) - that IMHO is dead money. Hmm, be careful though. A very small percentage of your mortgage goes on repayment, the rest is interest which is just as dead as rent. Not that you've got any choice if you want to eventually own your house, but still... Link to comment Share on other sites More sharing options...
Miss Take Posted February 12, 2007 Share Posted February 12, 2007 But at the end of 25years you have your own property worth £xxxx. In 25years time you'll still be paying rent (if you so choose to) - that IMHO is dead money. Hmm, be careful though. A very small percentage of your mortgage goes on repayment, the rest is interest which is just as dead as rent. Only if you pay the absolute minimum. Get an offset mortgage and overpay. The more you overpay, the less of a percentage the interest is and the quicker you will be mortgage free. it means you need to keep a sharp eye over your finances, but as long as you don't get run over by a bus before you're living the mortgage free high life, it will be worth it. Even overpaying a small amount can take years off your mortgage - hey, i sould like one of them commercials! Link to comment Share on other sites More sharing options...
Cambon Posted February 12, 2007 Share Posted February 12, 2007 Only if you pay the absolute minimum. Get an offset mortgage and overpay. The more you overpay, the less of a percentage the interest is and the quicker you will be mortgage free. it means you need to keep a sharp eye over your finances, but as long as you don't get run over by a bus before you're living the mortgage free high life, it will be worth it. Even overpaying a small amount can take years off your mortgage - hey, i sould like one of them commercials! The best advice I was given was to take out a repayment mortgage (in the 80s) over the longest term possible. However, fix your repayments as high as you can afford in order to pay back early. By doing this I paid off my mortgage 10 years early and did not fall into the endowment miselling trap. Slim is right though, people don't / wont save these days. In addition, when they do buy a house they want everything in it to be brand new and they want it all right now. That attitude is asking for trouble. Link to comment Share on other sites More sharing options...
b4mbi Posted February 12, 2007 Share Posted February 12, 2007 Only if you pay the absolute minimum. Get an offset mortgage and overpay. The more you overpay, the less of a percentage the interest is and the quicker you will be mortgage free. it means you need to keep a sharp eye over your finances, but as long as you don't get run over by a bus before you're living the mortgage free high life, it will be worth it. Even overpaying a small amount can take years off your mortgage - hey, i sould like one of them commercials! Yep, but generally mortgage providers over here will accept (depending on t&c of your mortgage of course) lumpsum repayments into a mortgage (>£5000ish?) but not sure about regular monthly "overpayments". Anyone done this with an IOM provider? Not sure that true offset mortgages are offered by manx providers though, I haven't seen any readily advertised... i.e. where you sacrifice receiving interest your savings which then effectively are used to reduce the capital balance that mortgage interest is charged on, whilst still giving you access to your savings if you need them. Anyone know of an IOM Provider that does this? would be very interested to know... Link to comment Share on other sites More sharing options...
Mutley Posted February 12, 2007 Share Posted February 12, 2007 I have a £100k mortgage over 5 years with the option to pay back more as and when we can afford it. Overall the interest we will pay back (in relation to the principle) is very little as a result. Does mean beans on toast for a while though although in five years time we will be debt free and able to afford toilet paper again... Link to comment Share on other sites More sharing options...
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