Confused about whether to try and get on the ladder just yet...

[DavidRa 10]

I'm looking for a bit of advice as a first time buyer.

 

I have been a student and then graduate in Sheffield for five years now renting various shared houses and now in a house rented with my partner.

 

I'm about to start a much better paid and permanent job and am pretty tired of paying other peoples' mortgages for them! I have tried to do some research on the subject of buying now but don't know if this is the right time?

 

Is a crash imminent realistically?

Is it true that interest rates are set to level out to the rate of inflation?

When are any or all of these things set to happen?

 

In this new job, I can expext a £6k pay rise in about two years time when I am fully trained so if any of these changes to my advantage are worth waiting for, then do people think I should bide my time and keep increasing my deposit?

 

Thank you for any help in advance, I find this stuff so confusing and overwhelming somtimes!!

You ask questions that are difficult to answer apart from.

Is it true that interest rates are set to level out to the rate of inflation?

The only way that would happen is if we had inflation in double figures.

If you can afford to buy now do so.

[Cyclone 10]

100 yr mortgage. What kind of stupid lender would lend that, the average working life is about 40 years.

Negative equity isn't the biggest issue for borrowers who are stretching to buy, it's the possibility of interest rates going up and increasing what they owe. But that looks like a very unlikely possibility in the short/mid term at the moment.

[basshedz2 10]

100 yr mortgage. What kind of stupid lender would lend that, the average working life is about 40 years.

Negative equity isn't the biggest issue for borrowers who are stretching to buy, it's the possibility of interest rates going up and increasing what they owe. But that looks like a very unlikely possibility in the short/mid term at the moment.

 

This happens in Japan - the mortgage is passed down through generations:

 

Clicky.

[Tomataheeed 10]

This happens in Japan - the mortgage is passed down through generations:

 

Clicky.

 

Exactly...and 40 year mortgages are more popular here than they were.

[Cyclone 10]

This happens in Japan - the mortgage is passed down through generations:

 

Clicky.

 

and makes sense in Japan as there has long been a culture of multiple generations living together.

There is no such culture (exactly the opposite) in the west, children want to move out, find their own space and they certainly don't want to inherit their parents mortgage.

[H.P 10]

I like the idea of a house staying in the family for generations, The family wanted to keep my grandmothers house when she went to the care home.

[basshedz2 10]

Its apparently common in Switzerland as well.

 

Clicky.

 

I'm not saying it's necessarily a good idea (and its certainly not right for me! - the kids are out the door ASAP ), but its a possibility.

[JimFX 10]

I don't think we'll see the sort of price rises that happened in the late 90s for a long, long time. Just think about it, a first time buyer earning around 20k a year has an upper limit to how much of their monthly income they can pay towards a mortgage. If house prices are pushing to 200k, there is no chance they are going to pay all of their take home pay just covering the mortgage! In the late 90s, a first time buyer could still purchase a decent home around 3 to 4 times their annual income, which usually meant less than 50% of their take-home pay. Now a decent home could mean over 10 times their annual income, meaning most of their take-home going towards paying the mortgage. It all points towards a price crash or at the very least, a drastic slow down as far I can see it. Its simple mathematical logic!

[Wizzzard 10]

There was rumour of a crash but I really doubt it will happen. Mortages are still possible to achieve.

The best advice we had was buy as soon as possible, house prices will only go up.

In the two years we bought our house ours has increased in value and I'm glad we got on the ladder when we did.

We were paying around 4k per year in rent previously and now we've paid that equivalent in mortage instead - which means that although the money isn't accessible we have the ability to get it back by selling - unlike the years of rent we paid!

[JimFX 10]

We were paying around 4k per year in rent previously and now we've paid that equivalent in mortage instead - which means that although the money isn't accessible we have the ability to get it back by selling - unlike the years of rent we paid!

 

That's not entirely true because the money paid in interest can't be got back unless the price of the property increases by the same or a greater amount. In the early years of a mortgage most of what one pays in is interest.

[Wizzzard 10]

That's not entirely true because the money paid in interest can't be got back unless the price of the property increases by the same or a greater amount. In the early years of a mortgage most of what one pays in is interest.

 

A valid point, however a mortgage is often cheaper than rent so it makes sense to us to put the money towards something we get to keep. Ulitimately in the long run IMO a mortgage makes alot more sense.

[sidewinder 10]

What is the definition of a crash in the housing market?

 

We always joke that we are waiting for a crash but would this just mean that people would just sit tight unless they really had to sell up, and there would be less property on the market for people to scrap over?

 

I find this whole thing so confusing! Is there anywhere I can get free mortgage advice? Is this actually something that exists?