Buying your first house in the UK in 2007

Has no-one really not said location, location, location, yet?

Think about when you want to sell it on. Which may seem daft but put yourselves in the shoes of the seller now. They're probably playing up the 'quiet' aspects. When we sold our last house all everyone asked us about noise and neighbours. People want a bit of a quiet (at least some of the time). The houses in our road keep on going up and people keep buying 'em because it's a quiet cul-de-sac with a field at the end, and despite the fact it's in an unfashionable part of the unfashionable east midlands.

The second one is above a hi-fi shop so expect noise during shop hours obv. The first one seems to belong to a surfer dude. I don't know if this is good or bad.

Also ask them why they're moving. Then sue them later when they lie.

The first one is on a lease. I've never bought anything on a lease. Does it matter?

I can probably match the hi-fi shop for noise, if needed.

But they'll be playing all those over-compressed CDs!

Not when I live upstairs, they wont.

also living above subway = entire flat smelling of proving bread forever (a bad thing, in my opinion)

That's a good point.

http://www.rightmove.co.uk/viewdetails-14595761.rsp?pa_n=2&tr_t=buy

Aye, we've spotted that one. It's a possibility. What does 'offers in region of' mean, at a practical level? 10% less?

I can probably match the hi-fi shop for noise, if needed.

I hope you like Hotel California, Diana Krall and Sting. You'll be hearing them a lot.

I hope they like Rita Lee and Acoustic Ladyland.

id make sure your mortgage multiple isnt excessive, id get a longer fixed rate as you'll only have to spend ££ arranging another fix in 2 years otherwise, and theyll say when you spread the arrangement fee over 25-30 years its nothing, but its only to get you the initial period, so its actually spread over 2 years - also if you take a fixed rate out of less than 5 years, id make sure you could pay the mortgage if interest rates were 10% instead of 5.5%

id make sure you have the facility to overpay the mortgage to bring the capital down, but i wouldnt necessarily do that. rates are going up and yours will be fixed, so you might be better putting hte rest of your money in high interest savings, then overpaying in bulk periodically

This fills me with fear. The idea of me sitting around with loads of spare money and saying "what on earth shall I do with this? i know - i'll overpay some of the mortgage" just seems like a wild fantasy, probably involving the lottery.

I've just gone for a variable rate again for another two years because the fixed rate ones are much more expensive than the (discounted) variable ones. I know interest rates could go up, in fact they probably will go above 6% some time this year, but until they do I'm better off, and they probably won't go much higher than that, and they might go back down again some time next year. If they went up to anything remotely like 10% I'd be completely fucked, but then surely nearly everyone would be? It would be even worse than the meltdown at the start of the nineties.

Don't spend the entire budget on the house/flat: you *always*need to spend more money on repairs and such. Everyone I know (incl my parents) have miscalculated on this aspect.

What does 'offers in region of' mean, at a practical level? 10% less?

i think it depends on the place. all this crap about gazumping is overplayed, if it was going to go quick, it would already be gone, right? you'll have to judge - to me, looking at other stuff around ex4, that one seems well priced, but there could be reasons for this. but dont forget you can pull out or lower your offer post-survey, so your not committed

they probably won't go much higher than that, and they might go back down again some time next year. If they went up to anything remotely like 10% I'd be completely fucked, but then surely nearly everyone would be? It would be even worse than the meltdown at the start of the nineties.

DINGDINGDING well spotted

^^ just because it'll fuck a lot of people up doesn't mean it won't happen

...but when we had the crisis in the early 90s, first of all inflation was much higher than it is now (and had been higher throughout the 80s than it has been for the past decade or more) which meant that banks had to have higher interest rates, and secondly we were locked into the ERM and had to follow German interest rates (or something).

Now we're in such a long period of low inflation that people have been getting their knickers in a twist about inflation hitting 3%. The Bank of England are supposed to keep it within a certain range - if they think it's going to go too high then they'll raise interest rates.... but only within reason, surely? I can't see a meeting of the committee sitting down and saying "well, what with the increased problems with energy costs, and some exhuberant pay deals, I think on balance there's a danger of inflation overshooting the Chancellor's targets again so we need to double interest rates and trigger a massive recession the like of which this country has never seen leading to half of the nation having their homes reposessed."

whats 'within reason'? and do the inflation figures count the one thing that has inflated the economy most of all - houseprices?

you're probably right that they wont go anywhere near like as high before (but i also wouldnt be fooled by things like '6% is the new 10%')

There is no way they are going to go anywhere near 10%, I bet my house on it.

I put this here as a challenge to future generations to look it up and say "Ha! You were wrong, grandad".

Seriously though even if it does go up a bit - hang on in there. There are a few of us on here who have lived through this, a friend of mine was in so-called "negative equity" for a few years but stayed put and is now sitting on a goldmine.

Literally, they found gold in his backyard...

Did he live in Them Thar Hills?

The choice I had to make the other day was between a variable one which is currently 5.38% (actually lower than the base rate - I don't understand how this is possible) on a discount for two years and the equivalent two-year fixed rate deal which was 5.78%. I went for the variable. If interest rates don't change at all for two years I'll be much better off with what I've chosen. If they go up by half a percentage point in the near future and stay there for the rest of the two years I'll be slightly out of pocket, but no problem. If they go up by a whole percentage point and don't come back down, it'll be annoying and costly, but not the end of the world. If they go up by four whole percentage points I will be fighting tens of thousands of other people to get to the tastiest morsels at the bottom of other people's dustbins. Most predictions I've looked at say there'll probably be another couple of rate rises within three months or so, then things will probably stay as they are for a year, then maybe start to come back down after that.

if they get ahead of inflation instead of chasing it, then yes, but they seem reluctant to do that for fear of knocking the housing market over (cake and eat it syndrome)

Bumpity.

jesus, buying a house is absolutely fucking terrifying. this thread, while extremely helpful (thankyou) is not making me any less shit-scared.

have you been to see the one i linked yet? that looks good, compared to the others on there

inflation is way above 3% people, jesus.

Is that one above the shop near the station/ Imperial?

inflation is way above 3% people, jesus.

-- That one guy that quit

which is why i wouldnt bank on interest rates stopping at 6

My latest fix lasts till December 2009 so fingers crossed it'll peak and drop back before then.

inflation is not above jesus

Nor is above 3% any more, if you use the Consumer Price Index as the measure, which I think is what Nasty, Brutish & Short was referring to - it's been the official one, for which the Bank of England has targets, since 2003.

I remortgaged just before Christmas and got a fixed-rate deal and BOY am I glad. Think the interest rate has risen four or five times since (I've lost count).

If you're looking for an up-and-coming area, find somewhere that has a Blockbuster and no other chain stores. This worked for me (actually it was Global Video but what the hey) and my flat is worth quite a bit more than it was in 2003.

Having said that, the thing I value most is having neighbours I know and get on well with. It's really nice to have a chat over the privet and be all domestic like. So do try to find out what the neighbours are like.

The two things I wish I'd known before I moved in are:
- My bedroom is 25m from the main route of all the Orange walks, so I get woken by ye pipes and drums early every weekend at this time of year
- I may have had the budget to fix the rising damp the survey picked up, but I really didn't have the energy and am still recovering after all this time. I wouldn't ever take on another flat knowing there was major work to do (I guess you can't help the odd bit of surprise fixing).

Nor is above 3% any more, if you use the Consumer Price Index as the measure, which I think is what Nasty, Brutish & Short was referring to - it's been the official one, for which the Bank of England has targets, since 2003.
I know desperately little about these matters, but our wise business desk bod tells me that this is only so low because the CPI excludes just about everything to do with property -- rent, mortgage payments, house prices. If they were included, you'd get a much more accurate picture of inflation. Which, he says, is soaring.

"Do I buy a house just now," I asked
"In markets the time to sell is when the last bear turns bull," I think he replied. "Tthe time to sell your house is when the last cynic starts buying. The people that have held out that long waiting for the crash buy, there's nobody left to prop it up, it crashes".
"Does that answer my question?"
"No. But if you do buy, be prepared to have to stay there a while, paying a bigger mortgage. The price always goes up, in the long game"

that pretty much covers it (not convinced about rents rising though - i pay less rent than i did 5 years ago - market is saturated with places to rent because of buy-to-let)

as far as i can tell the official inflation figures are basically kind of meaningless, considering they dont include the most inflationary thing of all. but because cheap imported bits of electronic tat stay cheap apparently inflation is low;) and you can pretend inflation is whatever you like, but markets won't be fooled, and this is why you shouldn't bank on interest rates staying as incredibly low as they are right now

i think hes kind of right about it being a pyramid scheme (hence rate cut of 2005 to bring more people into the game), but its also the fact that prices can only be high if people have money to spend, and people only have money to spend if banks lend them those sums. banks tighten their belts and theres less money, and therefore less buyers, and prices come down.

yes when it happens people are going to be stuck where they are, not able to move (with many having to let go because of being overextended). im still not entirely convinced that property 'always' goes up in the long run (as people mix up real and nominal prices)

as stated upthread, the real problem now is that a crash can have severe repercussions for the uk economy, seeing as it appears to be basically propped up by credit fuelled consumer spending, which will stop immediately

the impending collapse of buy-to-let is i guess just the latest of endowment mortgages, dotcom shares, stock market crash, etc etc, where the great british public saw an opportunity to throw their money down a well

anyway, whats interesting is that in britain - we've separated out our society in such a way that many of us think that current times are the default setting, the traumas of 73-85 and the transition away from manufacturing a distant memory, as we have all become 'rich' through heavy borrowing, but this doesnt mean there aren't other transitions ahead

the impending collapse of buy-to-let is i guess just the latest of endowment mortgages, dotcom shares, stock market crash, etc etc, where the great british public saw an opportunity to throw their money down a well

OTM. I just wish the 'inevitable' would hurry up and happen so I can buy a house. Been waiting since 2005.

If buy to let crashers there is a danger that any price drop will be knocked out by an inrush of pent up first time buyers.

Average cost of moving house is now £22,000

That's a slightly bizarre survey.I can't begin to explain why 'cos I've got to take the kids to school but I think it can be safely ignored.

as far as i can tell the official inflation figures are basically kind of meaningless, considering they dont include the most inflationary thing of all. but because cheap imported bits of electronic tat stay cheap apparently inflation is low;) and you can pretend inflation is whatever you like, but markets won't be fooled, and this is why you shouldn't bank on interest rates staying as incredibly low as they are right now

But the Bank of England's base rate is set by a committee who are told to try to keep inflation within a range determined by the government, and the government chooses to define inflation as something which excludes house prices. If the prices of 'cheap imported bits of electronic tat' and all other goods continue to rise at a rate that falls within the government's target band and are expected to do so for the forseeable future then there is no reason for the Bank of England to increase interest rates. If the government suddenly decided to include house prices in the measure of inflation, but kept the same target band, then the Bank of England probably would raise rates considerably higher - but if this then triggered the house price crash that everyone is predicting then this would also lead to deflation and inflation would be below the government's target and so the Bank of England would have to start cutting the interest rate to bring inflation back up. Wouldn't it?

CPI doesn't exactly exclude everything to do with housing - it tracks rental prices. These are often out of sync with house price increases, yes (and, of course, mortgage repayments), but there are good reasons for taking them out of the equation in a lot of cases, because they skew things so heavily, and house price rises at least, if not mortgage repayments, affect people in different way to other costs of living. It's not just a "massage the figures" thing.

The RPI (including mortgage repayments) is currently at 4.3%, which is down from a high of 4.8% two months ago, so it's not really soaring any more. It's still much higher than it was a year ago, but the recent trend is down.

x-post

If buy to let crashers there is a danger that any price drop will be knocked out by an inrush of pent up first time buyers.

well, yes, you would think so, except.

once theres a glut of property from buy to let crashing, buyers will be much more choosy, so you better be selling the right kind of flat in the right kind of area, plus buyers will know they now have the upper hand. also, in a falling market, people will pull out much more easily if other places keep on popping up, slightly lower each time

secondly, the conditions that help a buy to let crash may also affect first time buyers, banks more cautious, rates higher etc, in relative terms it mightnt become any easier to buy

thirdly, sentiment. if the newspapers are screaming crash, just as theyve screamed 'buy at any cost', buyers will be a LOT more wary

Would you contemplate buying RIGHT now?

In Exeter... huge new shiny shopping redevelopment in centre of town about to open, university, Met Office, apartment developments all over the shop...

Also, what's etiquette of making an offer on somewhere newly refurbished? And what does 'offers in region of' mean? 10% below? More? Less?

Just done various phonecalls and we've now officially accepted, providing we can find somewhere to bid on in a timely fashion! Which shoudn't be a problem.

Crazy madness.

Congratulations! Go for the one you love I reckon.

Oops, this whole thread is excellent, I'm all ashamed of my glib contribution now. Will memorise for future reference.

There's one more that I'm viewing tomorrow morning (Emma's working) which I've got high hopes for, but I've booked a second viewing on the one we fell in love with for Monday morning, and told them we've had an offer accepted. Which made the agent excited!

But yeah, I reread much of this thread yesterday, and it is really awesome.

congrats

Just been re-reading loads of my posts on this thread from 5 years ago which I have no memory of making. In case anyone's been on tenterhooks for 5 years, I can reveal: my gamble on variable rates paid off massively as interest rates fell to the floor and stayed there, and Ned T Rifle was right - there was no way on earth they were ever going to rise to 10%.