View Full Version : House Buyers 2007.... Why?
Dymetrie
07-11-2007, 23:28
Don't get me wrong, I think that owning your own house is a great thing, or could be a great thing, or might be a great thing...
But...
In 2007, why?
It's been proven that it's no longer a saving to own your own house and for someone like me (ie: unlikely to have children or even a family) then there seems little point.
To break it down...
Good Points:
You own it.
You can do what you want to it (within the terms of the lease).
It's something for your children to inherit (HA!).
It gives you security and equity.
It is your home.
Bad Points:
You own it.
Something ****s up, you have to deal with it.
It's something your children expect to inherit.
It is your home, for better for worse yada yada yada.
Twenty, even ten years ago then it made sense to own your own home, but more recently then it's making less and less sense. My brother bought his flat three years ago and since then has been paying twice as much as he was when he was renting (he's a teaching in London so it doesn't phase him, the git), but from my perspective then it makes no sense.
I like living where I am, but I enjoy the flexibility of being able to move, being able to change where I am, what I'm doing and so on. If I bought my own place then it'd either have to be with more people than I want to own a house with, or so far away from where I work that I'd spend more time travelling to and from work than I would at home (shush Stan).
Add to that the fact that if the boiler packs in (which it has) or the roof starts leaking (which it has) then I don't have to pay to fix it, I just have to swear at the right people the right amount and it gets fixed (joking there, I'm very nice and polite to the landlord.... *sniggers*)...
Considering the fact that I am always going to be me, am not going to have children and am likely to remain somewhat of a drifter, buying a property is not something that I find enticing.
Despite this then I have a lot of respect for my contemporaries (several of them are here *waves*) who have decided to take that option, but from my point of view then I can't understand it. Maybe it's because I live in London where everything is skewed anyway, or maybe it's just because it's not something I feel is an important or required investment.
Someone tell me why I should be looking to buy my own property. Then if they could tell me how.... :p
You shouldn't. For exactly the reasons you've described because in your situation, it would be a waste.
Dymetrie
07-11-2007, 23:39
As for house buying, it still costs me less after all the rate increases to pay my mortgage than it did to rent. If it was now, I'd probably not bother, tbh.
That's exactly what I'm getting at.
You've had your house/mortgage for a few years. Given the overinflated house prices and buggered up mortgage rates then what point is there in buying a house now? Especially in London where the prices have gone beyond the roof and are scraping the atmosphere!
Turning stuff around to give a bit of balance. :)
A few pros to renting:
You can move around easily if you need to.
If stuff breaks, you can ask the landlord to fix it.
If the housing market sinks, you're not the one with negative equity.
And a few cons:
You get a **** landlord. They don't care if stuff breaks. You end up fixing it, or having to move.
You get a **** landlord who wants £10,000 p.a. for 'maintenance fees'.
Your rent payments line someone else's pockets. For you, the money is gone with nothing lasting to show for it.
However, for you, you're still relatively young and I suspect you're not settled yet. Don't tie yourself down before you're ready to do so.
With the housing market as it is, I'd advise anyone to give it serious thought first. Whether the market is going to sink, and if so how far, depends a lot on where you live (for London/SE England it doesn't look good), but with average prices apparently at 8x average earnings, I think some correction is likely - though I'm no expert and the real experts are very divided on the subject. If the market is on the downturn, now seems like a silly turn to buy, but that in itself would cause a downturn.
Dymetrie
07-11-2007, 23:52
And a few cons:
You get a **** landlord. They don't care if stuff breaks. You end up fixing it, or having to move.
Mmmmm knowledge of housing law (both leasehold and tenanted) is good ;)
You get a **** landlord who wants £10,000 p.a. for 'maintenance fees'.
That, my friend, is just daft
Your rent payments line someone else's pockets. For you, the money is gone with nothing lasting to show for it.
This is the only thing which you have said here which concerns me, and it doesn't even bother me that much. If you think about it then with a mortgage then you can pay a mortgage for 20 years, lining the bank's pockets, and then default on it and you can end up with nothing.
Or similarly have the same thing as happened with my family/father. Work hard for 20 years, split up with your wife, end up getting next to nothing out of the sale of the house...
Mmmmm knowledge of housing law (both leasehold and tenanted) is good ;)
Now I think about it, the second case was leasehold, but it happened. The other classic with leasehold where you have to cross someone else's property to get to yours is to randomly start charging 'access charges' - also of several thousand p.a.
As for the rest, knowing the law is one thing, enforcing it, well good luck if they've buggered off to god knows where and left a dodgy management company in charge. :/
This is the only thing which you have said here which concerns me, and it doesn't even bother me that much. If you think about it then with a mortgage then you can pay a mortgage for 20 years, lining the bank's pockets, and then default on it and you can end up with nothing.
Or similarly have the same thing as happened with my family/father. Work hard for 20 years, split up with your wife, end up getting next to nothing out of the sale of the house...
All entirely true - but then I already suggested buying iwan't for you anyway (at least not yet). :)
Personally I could never feel settled in rented accomodation. There was always the thought in the back of your mind that the landlord could at any point decide to give you your notice and sell up. Suddenly you're looking for somewhere else to live. Then there's the landlords rules to abide by, even doing something as simple as putting a nail in a wall to hang a picture on you'd have to make sure that you'd be able to tidy it up again before moving out. It just never felt like home.
Financially I think comparing rent to mortgage payments is a bit false. Whilst at the time you buy the house your mortgage payment may be more than you were spending renting, in the longer term rents will go up with inflation, mortgage payments will stay the broadly the same (obviously subject to rate increases). Assuming I haven't moved house/remortgaged then in 15-20 years time I know my mortgage payment won't be too much more than I'm paying now, how much will your rent have gone up in that period?
Admiral Huddy
08-11-2007, 12:30
I agree with what Kaiowas says. When I look at my property and the mortage I have on it, it's nearly a third of what it would cost to rent. For example, my mortgage per month is £500 but next doors rent in nearly £1,400 per month. Yes, I bought it 10 years ago but if i had rented then, then the inflated cost of the rent would have cost me long term whereas the mortgage has remianed pretty much static.
However, I think anyone would be mad to move or buy at the moment. Not only is there the prospect of facing possible negative equity but to hand over all that hard earned cash in stamp duty.
I feel for first time buyers.
btw - you don't own a mortgaged propery until its fully paid off.
Matblack
08-11-2007, 13:23
At most points in the economic cycle renting is a false economy, right now its probably the right thing to do until things shake down.
Our circumstances are different to most peoples, we bought at the right time and have been able to borrow money against our house to make improvments and still have equity in the property due to increasing house prices. Our mortgage is small enough and our building society flexible enough to enable us to own our house outright well within the next 10 years. At that point upscaling or major expenditure aside we will be mortgage free and be exceedingly well off by our own standards. This all happend because we bought at the right time, in my eyes now is not 'the right time' and there is little advantage in buying.
MB
There might be a crash, there might not. It depends on if you are buying a house for profit or buying to have a home. Yes the property is overvalued but I think that in the next few years having a house is going to become a real commodity. All the new builds recently are flats in my area. Where I am, 200k (minimum) for a new 2 bed flat or 200k for a 2-3 bed terraced. Would you truthfully buy the flat?
As someone who did buy this year, I would say that if you paid full market price (in the SE) then you are nuts. In my case as you all know I got a repossession property that was well below market rate. I have a pretty good idea of what its worth now, but there is no way I would pay that for it (but people are desperate and they will). Until they start building homes and not flats the demand is going to be there.
However you need to remember that I am outside of London and therefore relatively cheap when compared directly. I did look at renting, but landlords are cashing in on the fact that we are actually not that far from London. So my mortgage payments and bills come in the same amount as renting. Its clearly better to have an assett rather than just putting money into a pit. I do have an aim to be mortgage free asap (as does everyone), but I certainly think this is do-able within the timeframe I have set myself.
You raise an interesting point on the marriage and splitting front. Your best bet is to cover yourself as much as possible. In my family my cousin was done over by a gold digger. Within 5 mins of meeting the girl it was damn obvious what she was after but he was too stupid to realise.
I know a few examples of people back home who have gone from rented accommodation into purchased accommodation and the mortgage payment is barely half the rent payment for a similar size abode. London really is a bit of an abberation when it comes to prices. Even back home is to an extent (£130k for a 1 bedroom flat is a joke!)
It depends on the who and wherefores of it all. I want a place of my own. I don't want to be shelling out money month on month in rent which is just lining someone else's pocket. Provided you're sensible about the mortgage you take out (i.e. don't listen to what the bank tells you you can afford as they're rather keen on over stating the amount), keeping its size and payment rates reasonable, then there is little reason for you to default on a mortgage; particularly if you're sensible enough to have payment insurance on it so you're covered in case of redundancy.
To be honest, unless something drastic happens to our economy a crash is unlikely. At most what we're liable to see is a cool down in price increases. Bricks and Mortar should still be a fairly safe investment.
There are other difficulties associated with buying over renting.
I currently rent a flat for £x per month which I have no problem paying every month, however, no bank will give me a mortgage for £x per month since they claim I can't afford it based on my salary. I know that I am better at managing my money than most people, but it's ridiculous that if I wanted to buy a house I'd need to settle for something cheap, because a computer somewhere doesn't believe that I can pay that much despite the three years of previous evidence.
Having said that, my landlord is selling up so I need to be out in three months. Renting can be a pain, too.
We had that problem too. When I was working for Caterpillar, I could barely scrape enough money together to pay for a mortgage on a caravan. When I moved to Rolls-Royce, it was the first time they'd lend me anything that would afford bricks and mortar. We bought £25k under our budget and I am SO glad we did. We have a fixed rate mortgage, but we'd have really been struggling to afford the extra payment on a higher mortgage. It's hard enough as it is.
Renting for us just wasn't an option. We wanted a home to live in and make our own. You just can't do that with a rental property. We've not bought it as a big investment to make masses of profit on. We just had to make the leap at some point and get on the property ladder. It's a small first time buyer property with a garage, so it'll always be in demand and we're doing it up very slowly. Even if we do have a big housing crash, we'll just have to ride it out until the market stabilises again... which it will. As long as we can afford to pay our mortgage, we'll be OK.
Even if we do have a big housing crash, we'll just have to ride it out until the market stabilises again... which it will. As long as we can afford to pay our mortgage, we'll be OK.
The problem is employment is linked to the economy. If there is a crash it will be down to the economy and if the economy is porr then it can lead to job losses meaning people can't just ride it out. But hey, we're all in the same boat :)
Buying vs Renting - I couldn't say which was the better option. It depends on who you are, your lifestyle and commitments, where you live, renting price vs buying price.
I know I couldn't even consider renting over buying but thats just me. It's stood me in good stead though. I doubt I could find anywhere to rent for £160 pcm.
Yeah, but you can buy a castle where you live for about thruppence! :)
I doubt I could find anywhere to rent for £160 pcm.
£160 a month? :eek: I wish :(
But hey, we're all in the same boat :)
Arf!
I got my mortgage offer just before the first rate rise last year :cool:.
They're starting to hint that the base rate might be cut next month because of the US issues affecting our economy.
At the minute, I don't think anyone can come close to giving a solid arguement as to wether prices are going to crash or stay still or go up. Pretty sure they're not going to be going up as quickly as they have though...
Yeah we got our mortgage offer in the Summer 2006 just before 2 interest raises at the back end of last year. Phew!!!
Lynnie_pitch nee Leigh
11-11-2007, 10:52
As I am buying a house in 2007, the point is I want my own place, David and I want to set up on our own and we want to do that before getting married, just in case we decide we dislike each other. We eventually do want a family. :)
Our reasons to move now:
I want freedom, I’ve never lived away from home!! (NEVER!!). I want to live with David and share our lives together doing what we want, when we want and not having to tell anyone what we’re doing!
Want to live together for at least a year before getting married (yes we could change the date of the wedding but he can bugger off I’m not waiting until I’m 30 odd to get married!)
We eventually want to have kids
We want it to be ours and be able to do what the hell we want with the house
Buying a house does not suit everyone and if people are happy renting they should rent, if they want to buy now or later and can afford it, then that’s up to them
As for kids expecting to inherit houses, if my mum wanted to sell up and live in sheltered accommodation in later years and spend the money and whatever then that’s up to her I don’t expect to get anything from the house, if she leaves it to us that’s her decision. But I understand not all people take the same view as me when it comes to that kind of thing. :)
Basically the reasons to buy a house are personal and will differ from person to person, not everyone should buy a house. We are in the position now where we can afford a mortgage and there is a house we like up for sale. So we’re doing it now
I have to say, I look at the inheritance thing the same way as Lynnie does. My parents' house belongs to them, not me. They're the ones who've paid the mortgage for 30y years and I would never just expect them to leave it all to me and my brother. If I were them, I'd remortgage once I reached a certain age and spend the money on holidays and stuff. I've told them that as long as they don't leave us in debt, that's fine by me :D They've dedicated their lives to bringing up their two lovely kids (see what I did there ;) ), so they owe us absolutely nothing!
With regards to buying a hosue instead of renting, I have to say that a lot of it has to do with having your own place. I think sometimes that your heart rules over your head in these matters, and that it's not necessarily a bad thing. Renting was simply not an option for us. If we do go into another recession then we'll be in the same boat as a lot of other people and we'll just have to deal with it as and when. People managed to survive the last one! :)
goldilocks
11-11-2007, 12:18
we rent.
the flat we live in is a large, 1 bedroom, flat, walking distance into the city centre, but on a quiet, leafy street in the south east of england.
a flat in our block, identical to the one we live in, was recently sold for £160k.
we could not get a 160k mortgage, but the price we pay to rent here, is less than half the monthly repayments on a mortgage of that value.
but i would love to buy - why?
here we can't put pictures up, change the carpets / curtains, and we haven't bought any of our own furniture, (because the sort of stuff we like really wouldn't look right here) we can't get any more pets, we don't have our own garden, a garage, and some evenings it's a fight for a place to park. realistically, we aren't going to be able to buy a place we like, in a decent area, and still have money left over for a social life - for a few years.
however - we're both young, i'm 21 and he's 22, i'm only 3 pay checks out of graduation and buying was not an option when we both moved out of the family homes.
for me, the most important thing was about living with him - we've moved 140 miles away from our families, got jobs, and moved in together - at the moment that's what it's all about.
My back door has a smallish hole in it.
It had a hole it in when I moved in (April), in fact it had a hole in it before I moved it.
I'm fully expecting it to still have a smallish hole in it in 5 years time unless someone actually puts their boot through it first in which case it'll have a large gaping hole in it.
This is the same landlord who took over a week to come and repair the roof tile that had come loose. Oddly, I've never met my landlord and I've been here 8 months.
LeperousDust
15-11-2007, 01:51
we rent.
the flat we live in is a large, 1 bedroom, flat, walking distance into the city centre, but on a quiet, leafy street in the south east of england.
a flat in our block, identical to the one we live in, was recently sold for £160k.
we could not get a 160k mortgage, but the price we pay to rent here, is less than half the monthly repayments on a mortgage of that value.
but i would love to buy - why?
here we can't put pictures up, change the carpets / curtains, and we haven't bought any of our own furniture, (because the sort of stuff we like really wouldn't look right here) we can't get any more pets, we don't have our own garden, a garage, and some evenings it's a fight for a place to park. realistically, we aren't going to be able to buy a place we like, in a decent area, and still have money left over for a social life - for a few years.
however - we're both young, i'm 21 and he's 22, i'm only 3 pay checks out of graduation and buying was not an option when we both moved out of the family homes.
for me, the most important thing was about living with him - we've moved 140 miles away from our families, got jobs, and moved in together - at the moment that's what it's all about.
That makes me feel like i'm doing something wrong here. I'm 21 and i'm back in my first year of uni... I do wonder sometimes...!
Davey_Pitch
15-11-2007, 10:38
With regards to buying a hosue instead of renting, I have to say that a lot of it has to do with having your own place.
Absolutely. I've moved around a bit in my life, lived with gf's and their parents, owned my own home with an ex, and rented a place with someone, and it's definitely better (for me at least) to own your own home. Knowing it's your home, and that you don't have to ask permission to do what you want in it, beats everything else in my eyes. It's why I can't wait until Lynnie and I move into our place :)
I dread the day I make my move. As soon as I've paid of all my loans, I'll start looking at renting a place. I really love where I work, so I'll need to be in this area, which means silly prices.
For me personally its all about what choice will mean i have more money in my pocket. In essence theres two ways you can look at this short term or long term. We bought a house in 2006, and thankfully houses prices in our area soared just after we bought it. So at that point in time in made sence.
2007 is altogether another matter though, as the market seems to be slowing down and based on current house prices a mortgage would be very hard to afford. And you would be unlikely to make money short term or long term.....
I say we all move to Mauritius!!!! Nice beaches, decent internet connection, Very good house prices....
Why you little... :angry: :p
I agree with what Kaiowas says. When I look at my property and the mortage I have on it, it's nearly a third of what it would cost to rent. For example, my mortgage per month is £500 but next doors rent in nearly £1,400 per month. Yes, I bought it 10 years ago but if i had rented then, then the inflated cost of the rent would have cost me long term whereas the mortgage has remianed pretty much static.
However, I think anyone would be mad to move or buy at the moment. Not only is there the prospect of facing possible negative equity but to hand over all that hard earned cash in stamp duty.
That's the scary thing Huddy, if I were to buy the house next door to you tomorrow my mortgage would cost closer to £1800 per month. I don't know how much you earn but I could be earning a damn sight more than you and still not be able to afford to have kids, a pension or probably even run a car. This is the point Dym's making. It's fine if you bought a while ago but you'd be crazy to buy now.
You're in a very very lucky position to have bought when the market was flat on its face but it's right round the other way now. You have to put down such a huge deposit you face losing so so much right now.
It certainly is a crap situation. I'm lucky in that I got in just in time for me...many of my friends didn't.
I've now come to terms with the fact that it's very unlikely we'll be able to afford anything bigger than what we have now. We're stuck in a small 2 bedroom house for a very long time now, I just don't see how we could move up to anything bigger without taking a massive risk.
It's one of the reason that we'd hope we can build an extension and loft conversion out back, it's the only way we can get more space when we need it.
I'm now stuck, not that it's that bad, at home with my parents still at 26. I never earned enough to move out when I should have so now I have to wait till either I get a very large pay increase or there is a housing price crash. At the moment renting is still a no no as there is no way I could afford to move out and live anywhere near comfortably and since nearly everyone else I know is already living with someone I'm scuppered :(
Want to know something great about having a mortgage? Getting your mortgage statement after a whole year of payments and being told that the total value that you've actually paid back on your loan is just under £1500. The rest has gone on interest. :( Think I'll be screwing these up in future. Sux! On the bright side, we now own 1.4% of our house. WOOHOO!!!!!!
Dymetrie
19-12-2007, 18:40
Want to know something great about having a mortgage? Getting your mortgage statement after a whole year of payments and being told that the total value that you've actually paid back on your loan is just under £1500. The rest has gone on interest. :( Think I'll be screwing these up in future. Sux! On the bright side, we now own 1.4% of our house. WOOHOO!!!!!!
That's still over £1000 a month you've paid off of your house :)
Although considering that I pay less that £300 a month in rent I feel this compulsion to....
*points and laughs*
:embarassed:
On the bright side, we now own 1.4% of our house. WOOHOO!!!!!!
I can't remember - did you not pay a deposit?
That's still over £1000 a month you've paid off of your house :)
Although considering that I pay less that £300 a month in rent I feel this compulsion to....
*points and laughs*
:embarassed:
I think you misunderstand. Out of all the money we've paid back on our mortgage in the last year, just £1500 of it has actually paid for the bricks and mortar which surround us. The rest has gone on interest. We don't even pay £1000 per month on the mortgage, so I'd be well happy if I was paying that much off the house value per month :D :p
Oh, and considering I only pay about £450 per month (my proportion of the mortgage), I think I'm actually getting better value for money than you, cos I get a house at the end of it.... allbeit after 25 years ;) So take your pointy laughing elsewhere thankyouverymuch :p
Mark - No, no deposit. I'd be even more gutted if we'd paid a deposit and had STILL only paid £1500 of the house value. :eek:
Piggymon
20-12-2007, 08:22
Although considering that I pay less that £300 a month in rent I feel this compulsion to....
*points and laughs*
:embarassed:
We only pay £800 a month and don't have to share with anyone ;)
Dymetrie
20-12-2007, 08:46
My maths sucks :(
Del Lardo
20-12-2007, 18:13
Well despite a slowdown in the market towards the end of this year one of the things I plan to do next year is buy a house. Simple reason is that next year I should be able to afford somewhere, not compromise my quality of life (too much) and I am completely fed up with renting.
I would like to buy in Cambridge but on my budget at best I'd get a tiny 1 bed place so I've been looking at the villages surrounding Cambridge as for the same money I can get a 2 bed place that I would happily stay in for quite a few years should the market go tits up.
That's exactly what we did Del Lardo. Bought something well within our budget that is a comfortable size, so that if there is a crash or interest rates do fly up, then we can afford to sit tight until it's all over. :) Wise choice!
We only pay £800 a month and don't have to share with anyone ;)
Similar here. We pay around £720 per month and don't have to share with anyone either :D r0x0r! :cool:
The best thing about owning your own place and not sharing with anyone is being able to walk around naked,.
FACT!
;)
BB x
I tried that but my children were not amused.
I might try that regularly, but have to make sure the net curtains haven't blown open - otherwise the neighbours might get more than they bargained for. :D
I have to say, I look at the inheritance thing the same way as Lynnie does. My parents' house belongs to them, not me. They're the ones who've paid the mortgage for 30y years and I would never just expect them to leave it all to me and my brother. If I were them, I'd remortgage once I reached a certain age and spend the money on holidays and stuff. I've told them that as long as they don't leave us in debt, that's fine by me :D They've dedicated their lives to bringing up their two lovely kids (see what I did there ;) ), so they owe us absolutely nothing!
Exactly the same with my parents. In reality there will be stuff "left behind" but that's only because you never know when that time will come. My mother says that, if she knew exactly when they were going to "check out", she'd budget accordingly and fly everywhere first class :)
As someone once said, the cheque you write for your funeral should bounce :)
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